My quetsion is regarding Interest (riba). It is unanimously accepted that interest is haram in Islam. I have heard various scholars who give references to various verses of the Holy Quran to support this notion. However I disagree with the interpretation of such verses. In the time of Holy Prophet (PBUH) interest was used as a means to take advantage of the poor by giving them loan and taking it back with excessive interest. However it is no longer a means to take such advantage. Interest, today is merely used as a tool to regulate the economy and also to control the supply of money. So if you say Interest is haram, you automatically imply that Islam is against the capitalistic econmies prevalent today, and we being a part of it are all sinners, no matter if we work in banks or other organisations.
Secondly, the currency used during the time of Holy Prophet (PBUH) was gold and had an intrinsic value to it. I agree that taking interest on something that has real value is forbidden by the Holy Quran. However, currency used today is simply a piece of paper and has no value of its own. Its value is simply derived from how much confidence you have in that particular currency. So in my opinion when Quran forbids interest it means to forbid interest on gold (real asset) and I do not think that it applies to currency used today (piece of paper).
Please comment on this.
There are a few fundamental assumptions and flaws in what you posit that need clarification and correction.
In the time of Holy Prophet (PBUH) interest was used as a means to take advantage of the poor by giving them loan and taking it back with excessive interest.
The same could be said of any age before or after that. Besides, the Qur’an does not support this notion as a fact. Actually, if you read the verses carefully it mentions the tiniest amount of interest; therefore, it is clearly not merely a concept of criminal usury but the most minute amount of interest that is of concern. Consider that if one were to buy a house for $200,000 at 5% interest over a 30 year loan; by the time the house is paid the total amount would double or more. That is only five percent, you would agree that is not “excessive interest.”
So if you say Interest is haram, you automatically imply that Islam is against the capitalistic econmies prevalent today, and we being a part of it are all sinners, no matter if we work in banks or other organisations.
Interest is not capitalism. Interest is a financial instrument with a function. Thus, Islam is clearly not against capitalism and history has been witness to that effect. Moreover, we could not be sinners unless we take interest not merely for living in a society that accepts it.
Secondly, the currency used during the time of Holy Prophet (PBUH) was gold and had an intrinsic value to it
Gold has no intrinsic value. For anything to have value, people have to assert that it is worth what we say it is worth. Thus, people have given gold its value because it otherwise would have none had we decided that it is useless. Besides, it would be stretch to claim that the Qur’an would have only mentioned gold because silver was used as well at the time and before and after then a variety of metals were used as currency.
The unjust and potentially destructive nature of interest is what makes it forbidden in Islam. In addition, interest is inherently an attempt to get more out of someone even if they have paid for something in full. This creates a disregard for our fellow beings. With that in mind, we respectfully disagree with your premise. Please use the search engine for more on Riba.
The following is an excerpt from Mizan by Javed Ahmad Ghamidi and Amin Ihsan Islahi’s writing, which should shed more light on the matter:
It is an indisputable fact that in the Arabic language the word riba, irrespective of the aim of the lender and the condition of the borrower, just implies a pre-determined increase acquired on a loan. Consequently, the Qur’an itself has clarified this fact: during its own period of revelation, lending on interest for business purposes was quite rampant and these loans were given with the intention of prospering through the wealth of others. The Qur’an says:
وَمَا آتَيْتُم مِّن رِّبًا لِّيَرْبُوَ فِي أَمْوَالِ النَّاسِ فَلَا يَرْبُو عِندَ اللَّـهِ ۖ وَمَا آتَيْتُم مِّن زَكَاةٍ تُرِيدُونَ وَجْهَ اللَّـهِ فَأُولَـٰئِكَ هُمُ الْمُضْعِفُونَ
That which you give as loan on interest that it may increase on [other] people’s wealth, it has no increase with Allah; but that which you give as zakah seeking Allah’s countenance, it is these people who shall get manifold [in the Hereafter] of what they gave. – Al Room 30:39
The expression “…that it may increase on [other] people’s wealth” is not only inappropriate for application to interest-based loans given to the poor for their personal use, but is also clearly indicative of the fact that interest based loans were generally given for business purposes and in this way they “increased on other people’s wealth” according to the Qur’an.
It is to this fact that the following verse also points:
وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ ۚ وَأَن تَصَدَّقُوا خَيْرٌ لَّكُمْ ۖ إِن كُنتُمْ تَعْلَمُونَ
And if the borrower is in difficulty grant him respite until it is easy for him to repay and if you write off [the debt], it is better for you, if you only knew. – Al Baqarah 2:280
Amin Ahsan Islahi comments on this verse in the following words:
Today some naive people claim that the type of interest which prevailed in Arabia before the advent of Islam was usury. The poor and the destitute had no option but to borrow money from a few rich money-lenders to fulfill their personal needs. These money-lenders exploited the poor and would lend them money at high interest rates. It is only this type of interest which the Qur’an has termed as riba and forbidden. As far as commercial interest is concerned, it neither existed at that time nor did the Qur’an prohibit it.
The verse categorically refutes this view. When the Qur’an says that if the borrower is in difficulty, he should be given respite until he is able to pay back his debt, it clearly points out that in those times even the rich used to acquire loans. In fact, if the style and stress of the verse are correctly understood, it becomes clear that it was mostly the rich who used to procure loans. Indeed, there was a strong chance that the borrower would find himself in difficulty even to pay the original amount. The money-lender, therefore, is directed to give him more time and if he forgoes the original amount it would be better for him. The words of this verse strongly indicate this meaning. The actual words of the verse are: وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ. The particle of condition ِانْ (if) is not used for general circumstances, but, in fact, is used for rare and unusual circumstances. For general circumstances the particle اِذَا (if) is used. In the light of this, it is clear that the borrower in those times was generally affluent (ذُوْمَيْسَرَة), but in some cases was poor or had become poor after acquiring the loan and in that case, the Qur’an has directed the money-lenders to give them a time rebate.
He has concluded this discussion by saying:
Obviously, the affluent would have turned to the money-lenders not to fulfill their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today. –source
I hope this helps.
God knows best.