The Supreme Court of Pakistan, in determining the applications and implications of the term “Riba” asked for assistance of religious scholars and other interested people of the country. For this purpose, answers to ten questions were sought. The second among these questions was:
What is the true scope of the transactions to which the bar of Riba is applicable? Can the term Riba also be applied to the commercial and productive loans advanced by the banking and financial institutions and to the interest charged thereon?
My Reply to this question follows:
As should be clear from my answer to the first question, there is nothing in the meaning and the connotation of the word “Riba” on the basis of which one may say that its implications are restricted to loans for personal non-business/non-commercial use only. In view of this fact we are bound to interpret from the verses of the Qur’an, which prohibit “Riba” that they apply equally to “Riba” earned on personal as well as commercial loans.
If anyone is of the opinion that the related verses of the Qur’an refer specifically to Riba earned on personal loans and not on commercial/business loans, the onus of evidence to this effect, in such a case, shall be on that person. An acceptable evidence, in this case shall be either 1) one that proves that the word “Riba” in the classical Arabic language applies to interest on personal non-business loans only; or 2) one that shows that the words and the context of the verses of the Qur’an do not allow us to include commercial/business loans in the scope these verses.
In the absence of this evidence there is no basis for us to restrict the application of the related verses to a particular kind of loan.This evidence becomes even more indispensable when we see that in Al-Room 30: 39, the Qur’an has explicitly referred to the fact that people, during the times when the Qur’an was revealed, used to give commercial and business loans and charge interest on such loans. The Qur’an says:
وَمَا آتَيْتُم مِّن رِّبًا لِّيَرْبُوَ فِي أَمْوَالِ النَّاسِ فَلَا يَرْبُو عِندَ اللَّهِ وَمَا آتَيْتُم مِّن زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّهِ فَأُولَٰئِكَ هُمُ الْمُضْعِفُونَ
And whatever interest bearing loans you give away so that it increases in the wealth of others, it does not increase in the eyes of God. And whatever Zaka’h you give away to earn the pleasure of God, these are the people that are sure to get an increment.
The words: “…interest bearing loans you give away so that it increases in the wealth of others”, is an adequate evidence to the effect that in the days of the revelation of the Qur’an financial loans were given for commercial and business purposes besides personal/non-commercial purposes. Thus, in the presence of the above verse and in the absence of either of the two evidences mentioned above, my answer to the second question is: the prohibition of Riba applies to all kinds of loans whether taken for personal/non-business usage or for commercial purposes. The word “Riba” and the implication of the verses of the Qur’an in which this word is used also applies to the commercial and productive loans advanced by the banking and financial institutions and to the interest charged thereon.