The Scope of Riba#

 
 

Question: What is the true scope of the transactions to which the bar of Riba# is applicable? Can the term Riba# be also applied to the commercial or productive loans advanced by the banking and financial institutions and to the interest charged thereon?      Answer: As already explained in the answer to the previous question (Explanation 3), the basis for determining the meaning of the word Riba# is usage. There is nothing in the meaning of the word or in the context in which the Qur’a#n has prohibited Riba# that specifies that Riba# on loans extended for commercial or productive loans does not fall within the scope of the meaning of this word. In fact, the following verse of the Qur’a#n clearly shows that in Qur’a#nic times people used to give loans for these purposes, and that the Qur’a#n has condemned the practice of charging Riba# on such loans:  And the Riba# bearing loan1 that you give that it may increase in the wealth of others does not increase with Allah; and the Zaka#h that you give to earn Allah’s pleasure, these are the people who shall get manifold [in the Hereafter]. (30:39)     Javed Ahmad Ghamidi says of this verse:2   The expression ‘... that it may increase in the wealth of others’ is not only inappropriate for application to Riba# based loans given to the poor for their personal use, but is also clearly indicative of the fact that Riba# based loans for commercial purposes were given generally, and in this way ‘increased in the wealth of other people’.     Nevertheless, some scholars hold on the basis of 3:130 that the Riba# the Qur’a#n prohibited referred only to exploitative interest. For further details on why this viewpoint simply does not fit in with the Qur’a#n, see Appendix 3.

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1. The word Riba# has been used herein a manner which, in Arabic linguistics, may be referred to as Tasmiyyatu'l-shay' bima# ya'u#lu ilayh, that is ‘naming a thing on the basis of its origin’. In other words, the loan which results on the basis of a Riba# based transaction is referred to as Riba# here. This is a literary style and is used here without prejudice to the denotation of the word Riba#. For example, figuratively, one night say Inni# a's@i#ru khamran (verily, I squeezed / pressed wine), whereas the person actually squeezed or pressed grapes not wine. For more information on this style, see Ami#n Ah@san Is@la#h@i#, Tadabur-i-Qur’a#n, 5th ed., vol. 6 (Lahore: Fara#n Foundation, 1989) p. 99.  2. Javed Ahmad Ghamidi, ‘Devouring Wealth through Evil Means’ [Translated by Shehzad Saleem] Renaissance, IX (March 1999), 14.