النص المفهرس

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Some additional details about Riba
Since riba has become the supporting pillar of the prevailing
trading system today, it is commonly noticed that people are usually
disposed to balk at the idea of its unlawfulness when confronted with
its prohibition under the verses of the Book of Allah and the
Traditions of the Holy Prophet . Rather than understand and
explain its real nature, they tend to diffuse the issue with excuses. I
wish to state humbly that the issue has to be first analysed and
discussed sanely by taking up each aspect in its proper setting,
without which we are sure to end up confusing issues. There are three
parts of this discussion:
1. What is the real nature of riba in the Qur'an and Sunnah, and
what forms it does it cover?
2. What is the wisdom behind the prohibition of this riba?
3. Granted that riba, no matter how evil it may be, has become a
pillar of the economic system all over the contemporary world.
Now if we were to abandon it, under injunctions of the Qur'an,
how will the system of banking and trade run?
To begin with, the word, ly, (Riba) is a well-known word in the
Arabic language. This word was known, not only since the blessed
appearance of the noble Prophet , but also during the time when
Arabia was pagan and the Qur'an was not yet revealed. Moreover, the
verses of Surah al-Nisa' also tell us that the word riba and its related
dealings were equally well-known during the times of the Torah,
where too, it was declared haram (unlawful).
It is obvious that riba was knowr. since ages in Arabia and its envi-
rons. Continuous transactions were being made as an established cus-
tom. When the Qur'an was revealed, it not only prohibited riba but
also gave the information that riba was made unlawful for the commu-
nity of Musa WI ue as well. How then, can the nature of this word be-
come something so ambiguous that it starts presenting difficulties in
understanding and explaining its meaning and applications?
This is the reason why, in the year of Hijrah 8, when the verses of
Surah al-Baqarah relating to the unlawfulness of riba were revealed,
there appears no report from the noble Companions anywhere which

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may indicate that they had to face any doubt in understanding the
real nature of riba, and that they had to go as far as to verify it with
the Holy Prophet g himself, something they did in other matters. On
the contrary, just as they immediately acted upon the injunction
prohibiting liquor the moment it was revealed, very similarly, they
abandoned all riba transactions the moment the injunction prohibiting
riba was revealed. The Muslims just cancelled all riba amounts that
non-Muslims owed to them on all their deals made before the
prohibition. Then, the case of Muslims who did not wish to give riba
amounts they owed was brought to the court of the Amir of Makkah.
He inquired the Holy Prophet . The deciding injunction was
revealed by Allah Almighty through the verses of Surah al-Baqarah
which declared that it was also not permissible now to give or take
riba amounts that belonged to the previous times.
Here the non-Muslims might have found the ground to question as
to why should they suffer loss of money because of an injunction of
Islamic law? Therefore, in order to offset that possibility, the Holy
Prophet @ made it clear in his Address of the Last Hajj that this
injunction of Islamic law affects, not only the non-Muslims, but also
the Muslims in an equal degree. And the very first amount of riba that
was written off was the enormous amount which belonged to Sayyidna
،Abbas رضى الله عنه , the respected uncle of the Holy Prophet
In short, when riba was prohibited, its meaning was no secret. It
was a known practice. It was the same riba as the Arabs used to give
and take it and called it as such. The Qur'an made it haram, and the
Holy Prophet & enforced the ruling, not in the form of some moral
teaching, but as the law of the land. However, he did include certain
forms of transactions under riba which were not generally held to be
riba. It was the determining of these very forms that posed difficulties
for Sayyidna 'Umar ate J +) , and here it was that the leading jurists
of Islam differed; otherwise, the real riba, which the Arabs knew by
that very name, was never doubted or questioned by anybody as there
was no reason to do so.
Now let us find out what riba the Arabs were used to. The
renowned commentator, Ibn Jarir has reported from Sayyidna
Mujahid that the riba practised in pagan Arabia which was prohibited

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by the Qur'an consisted of giving loan for a fixed period and then
taking a fixed increase over and above the principal. If the loan was
not paid back on the fixed date, an extension of time was granted on
condition that the riba was to be further increased. The same
information has been reported from Sayyidna Qatadah solo, and
from other leading commentators. (Tafsir Ibn Jarir, page 62, volume 3)
Abu Hayyan al-Gharnati, the famous commentator from Andulusia
(Spain) has, in his commentary - al-Bahr al-Muhit, reported the same
form of riba prevailing in pagan Arabia, that is, they advanced a loan,
took their 'profit' on it, and if the time for repayment was to be
extended beyond the first due date, they increased the amount of
interest in that proportion. This was called riba. These were the people
of the same pagan Arabia who said that taking 'profit' when they give
their money on loan should also be permissible similar to buying and
selling where taking 'profit' is permissible. The Holy Qur'an declared
this to be haram and made it clear that the injunctions governing
buying and selling were different.
The same subject has been authentically narrated in all reliable
books of Tafsir, such as, Tafsir Ibn Kathir, al-Tafsir al-Kabir and Ruh
al-Ma'ani etc.
Ibn al-'Arabi has said in Ahkam al-Qur'an:
الربو فى اللغة الرباوة والمرادبه فى الاية كل زيادة لا يقابلها عوض (ج ٢ ص ١٠١)
Lexically, riba means increase, and in the verse, it means the
increase against which there is nothing in exchange but a
loan and its time.
Imam al-Razi has said in his Tafsir that riba takes two forms. It
could be riba in trading transactions, and in loans. This second form
was what commonly prevailed in Jahiliyyah or pagan Arabia. The
known practice was that they would give their money on loan to
someone for a fixed period of time and receive 'profit' against it every
month. If the borrower failed to pay back at the appointed time, the
time-limit was extended on condition that the amount of riba was to be
further increased. This was the riba of the Age of Ignorance
(Jahiliyyah) which was declared haram (unlawful) by the Holy Qur'an.
In Ahkam al-Qur'an, Imam al-Jassas defines riba as follows:

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هو القرض المشروط فيه الأجل وزيادة مال على المستقرض
The loan given for a certain time on condition that the borrow-
er will pay an increased amount above the principal.
In hadith, the Holy Prophet & has defined riba by saying:
کل قرض جرنفعا فهوربا
The loan that draws profit is riba.
This hadith appears in al-Jami' al-Saghir and al-Azizi calls it hasan.
To sum up, the giving of loan and then taking 'profit' on it is riba,
which was widely known and practised during the Jahiliyyah in
Arabia, which was clearly declared haram by the subject verse of the
Holy Qur'an, and which was abandoned by the noble Companions the
moment these verses were revealed, and the Holy Prophet e enforced
its prohibition through his judgments in the legal suits. As there was
no ambiguity in its connotation, nobody faced any doubt or difficulty in
understanding the term.
However, the Holy Prophet did include some forms of buying
and selling within the range of riba which the Arabs did not take as
riba. For instance, in the buying and selling of six comn.odities on
barter basis, he ruled that they be exchanged like for like, equal for
equal, and hand-to-hand. Any deviation in measure, more or less, and
any credit-oriented transaction with regard to these commodities will
also fall within the purview of riba. These six commodities are gold,
silver, wheat, barley, dates and grapes.
Under the same principle, the Holy Prophet , after the
revelation of the verses of riba, ruled that some forms of transactions
in vogue known as al-muzabanah57 and al-muhaqalah58 come under
riba, and therefore, declared them to be haram. (Ibn Kathir with reference to
Mustadrak Hakim, page 327, Volume 1).
57. Al-muzabanah (ml;l) is the sale of fruit upon its tree by taking fruit
already plucked on the basis of conjecture.
58. Al-muhagalah (Jsblt) is the sale of grains, such as wheat, chick-peas etc,
still in the ears of their standing crop by taking dried and husked wheat or
chick-peas on the basis of conjecture. Since conjecture has the possibility of
things turning out less or more, it was prohibited.

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Here the question worth consideration was: Are these six
commodities particular as such, or there are other commodities also
which fall under the same injunction? If there are some, what shall be
the the basis for including other commodities under the same rule?
What forms shall be taken to have come under riba? This was the
difficulty faced by Sayyidna 'Umar we All go, because of which he said:
إن آية الربوا من آخرما نزل من القرآن وإن النبى صلى الله عليه وسلم
قبض قبل أن يبينه لنا فدعوا الربوا والريبة
The verse of riba is among the last verses of the Qur'an. The
Holy Prophet & was taken away before he could make its
details clear for us. So give up not only riba but also all the
doubtful transactions. (Ahkam al-Qur'an, Jassas, page 551 and Tafsir
Ibn Kathir, with reference to Ibn Majah, page 328, volume 1).
Here Sayyidna 'Umar, algo, is talking about the particular
forms of buying and selling transactions, and their details, which were
not taken as riba in Jahiliyyah. Bringing these under the category of
riba, the Holy Prophet & made them haram. As regards the main riba,
which was commonly known in Arabia and which was abandoned by
the noble Companions and was enforced by the Holy Prophet
announcing its prohibition publicly during his Address of the Last
Hajj, it was not possible at all that Sayyidna 'Umar wells, would
have faced any difficulty or doubt in understanding it. Moreover, when
Sayyidna Umar رضى الله تعالى عنه did face doubt in certain forms of riba, he
resolved the problem by proposing that the forms where there is the
least doubt of riba should also be abandoned.
But it is surprising that some of those who are slavishly impressed
by the veneer of glamour, wealth and the interest-based trading
system of today, have deduced from this saying of Sayyidna 'Umar
that the sense of riba had thus been left abstract and that there is
room for personal opinion here, the error of which has already been
proved by a lot of material before us. In Ahkam al-Qur'an, Ibn
al-'Arabi has strongly refuted those who had used the words of
Sayyidna 'Umar to classify the verses of riba as abstract.He says:
ان من زعم أن هذه الاية مجملة فلم يفهم مقاطع الشريعة فان الله تعالى
أرسل رسوله الى قوم هو منهم بلغتهم وانزل عليه كتابه تيسيرا منه بلسانه

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ولسانهم والربا فى اللغة الرباوة والمرادبه فى الاية كل زيادة لا يقابلها
عوض
He who claimed that this verse is abstract did not understand
the clear and confident affirmation of the Shari'ah because
Allah Almighty sent His messenger to a people of whom he
was one, sent him (speaking) in their language, revealed His
Book to him so that they comprehend it easily in their
language, and in their language the word riba means
'increase'; and in the verse, it means the increase that has no
financial consideration against it, (but simply time).
Imam al-Razi has said in his commentary that riba is of two kinds -
the riba on loans and the riba of taking more on barter. The first kind
was well-known in Jahiliyyah and people during those days used to
transact it freely. The second kind is what comes through the hadith
which rules that increase or decrease in the barter of certain
commodities is also included under riba.
It appears in Ahkam al-Qur'an of al-Jassas that riba is of two kinds
- the riba in buying and selling and the riba without buying and
selling. The riba of Jahiliyyah belonged to this very second kind. By
definition it means the loan on which 'profit' is taken on the basis of
time duration. Ibn Rushd has, in Bidayah al-Mujtahid, taken the same
view, and has further proved the unlawfulness of the riba of taking
profit' on loans, on the authority of the Qur'an, the Sunnah and the
consensus of the Muslim community.
In Sharh Ma'ani al-Athar, Imam al-Tahawi has taken up this
subject in great detail. He has said that the riba mentioned in the
Qur'an is, openly and clearly, the riba that was given and taken on
loans, and it was known as riba in Jahiliyyah. After that, it was
through the statement of the Holy Prophet , and his Sunnah, that
the other kind of riba became known, and which was identified with
increasing, decreasing or non-cash dealing in particular types of
buying and selling activity. That this riba is also haram stands proved
by repeated ahadith of the Holy Prophet . However, in the absence
of fully clear details governing this kind of riba some Companions of
the Holy Prophet faced difficulty and jurists differed. (op cit., page 232,
vol. 2)

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Shah Waliullah has said in. Hujjatullah al-balighah that these are
two separate things. One is the riba in real terms, and the other is that
which is included in the prohibition of riba. The riba in real terms
means something additional claimed over the principal in a
transaction of loan. But the hadith has included in the prohibition a
transaction of bartering certain commodities whereby an additional
measure is claimed in exchange of the same commodity. When it
appears in the hadith of Sahih al-Bukhari that JI; y! ty : "There is
no riba except in nasi'ah {loan)", it simply means that the real and
primary riba, the one that is commonly understood and termed as riba,
is nothing but taking 'profit' on loans. Excepting this, all other kinds
have been annexed with it by extending prohibition to all of them.
Summing up the discussion
1. Riba was already a known transaction before the revelation of
the Qur'an. The taking of increase on loans given for a certain time
was called riba.
2. The noble Companions, all of them, abandoned this riba the
moment its unlawfulness was revealed in the Qur'an. None of them
had any difficulty or doubt in comprehending or explaining its
meaning.
3. In the barter transactions of six commodities it was declared by
the Holy Prophet & that whenever any one of these is bartered with a
similar commodity, both of them must be equal in weight or measure.
Any increase or decrease in such transactions has been declared as
included in the prohibition of riba. This much was expressly told by the
Holy Prophet . But the question was whether this special type of
prohibition is restricted to these six commodities alone or it extends to
some other commodities also, and if it extends to some other
commodities, on what basis one can identify those commodities. This
question needed a deeper insight into the juristic issues involved, and
the Muslim jurists came out with different suggestions to answer this
question. It was this very question that agitated the mind of Sayyidna
"Umar رضى الله عنه . Since the Holy Prophet a had not stated these rules
himself and because doubt lurked therein, Sayyidna 'Umar & dl»,
regretfully wished how good it would have been if the Messenger of
Allah had set the relevant rules himself which would have given

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them peace of mind in doubtful situations. Then he said that not only
riba, but also the very doubt of riba, wherever it may be, should be
avoided.
4. It is certain that the real and primary riba, which the Muslim
jurists have called "riba al-Qur'an" (the riba of Qur'an) or "riba
al-Qard" (the riba of loan), is exactly what was known and practised in
Arabia, that is, claiming 'profit' on loan against the time allowed for
repayment. Other kinds of riba identified in hadith are all annexed to
this very riba and come under the injunction governing it. As regards
the difference of opinion that rose in the community was exclusively
related to this second type of riba deals. The first kind of riba is called
riba al-Qard' or "the riba of Qur'an"; that it is categorically haram
(forbidden) has never been disputed in the Muslim community.
In short, the riba of today which is supposed to be the pivot of
human economy and features in discussions on the problem of
interest, is nothing but this riba, the unlawfulness of which stands
proved on the authority of the seven verses of the Qur'an, of more than
forty ahadith and of the consensus of the Muslim community.
The second kind of riba which occurs in buying and selling is
neither common in practice, nor requires any discussion here.
Upto this point, effort was made to clarify the meaning of riba as
contemplated in the Qur'an and Sunnah, which is the first step
towards understanding the problem of interest.
The Wisdom behind the Prohibition of Riba
Now comes the second part of the discussion which relates to the
wisdom behind the prohibition of riba and to the spiritual and
economic harms of riba transactions because of which Islam has
declared it to be such a major sin.
First of all, we should realize that there is nothing in the entire
creation of the world which has no goodness or utility at all. Even in
serpents, scorpions, wolves, lions, and in arsenic, that fatal poison,
there are thousands of utilities for human beings. Is there anything in
this vastness of nature which could really be called bad? Take theft,
robbery, villainy, bribery - not one of these remains without this or
that benefit. But, it is commonly recognized in every religion and

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community, in every school of thought, that things which have more
benefits and less harms are called beneficial and useful. Conversely,
things that cause more harm and less benefit are taken to be harmful
and useless. Even the noble Qur'an, while declaring liquor and
gambling to be haram, proclaimed that they do hold some benefits for
people, but the curse of sins they generate is far greater than the
benefits they yield. Therefore, these cannot be called good or useful; on
the contrary, taking these to be acutely harmful and destructive, it is
necessary that they be avoided.
The case of riba is not different. Here the consumer of riba does
have some temporal benefit apparently coming to him, but its curse in
this world and in the Hereafter is much too severe as compared to this
benefit.
An intelligent person who compares things in terms of their profit
and loss, harm and benefit can hardly include things of casual benefit
with an everlasting loss in the list of useful things. Similarly, no sane
and just person will say that personal and individual gain, which
causes loss to the whole community or group, is useful. In theft, and in
robbery, the gain of the gangster and the take of the thief is all too
obvious, but it is certainly harmful for the entire community since it
ruins its peace and sense of security. That is why no human being calls
theft and robbery good.
After these introductory remarks, let us look at the problem of riba.
A little deliberation will show that its spiritual and moral loss as
compared to the casual or transitory profit earned by the
riba-consumer is so severe that it virtually takes away the great
quality of being 'human' from him. Again, it should be borne in mind
that the transitory gain that comes to him is restricted to his person
only. As compared to this, the entire community, victimized by
economic crisis, suffers great loss. But, strange are the affairs of the
world. When something becomes the craze of the time, its drawbacks
go out of sight. One looks for nothing but gains - no matter how small,
mean and casual be those gains. Nobody cares to look at the harm
lying under them - no matter how fatal and universal it may be.
Custom and practice act like chloroform on human temperaments.
They make them insensitive. There are very few individuals who

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would investigate into prevailing customs and practices and then try
to understand how beneficial or harmful they are. Bad coming to
worse, even if such harms are identified and people are openly warned
of the dangers, the conformity to prevailing custom and practice is
such that the right course is just not taken.
Riba has become an epidemic in modern times holding the entire
world squeezed in its clutches. In fact, it has so reversed the very taste
of human nature that the bitter has started tasting sweet. That which
is the cause of economic ruin for the entire humanity is being dished
out as the solution of economic ills. The situation is such that a
thinker who raises his voice in protest is brushed aside as crazy.
All this is what it is. But a physician of humanity must remain the
physician he is. Should he, after having closely observed that epidemic
has spread in an area and treatment has become ineffective, start
thinking of telling people that there is just no disease around and
everything is fine, he then becomes a killer of humanity robbing it of
its potential. It is the duty of a really expert physician of human
affairs, even at a time such as this, that he should continue telling
people about the disease and its harmful effects and keep suggesting
ways it could be cured.
The prophets WJI Ale come to reform human society. Whether or
not they will be heard is something they never worry about. If they
had waited for people to hear and obey them, kufr and shirk would
have certainly filled the whole world. Incidentally, who believed in the
kalimah JIMI JIY : "There is no God but Allah" when the Last of the
Prophets i was ordained by Allah for its preaching and teaching?
Although riba is taken to be the backbone of contemporary
economy, but the truth of the matter is, what some Western thinkers
have themselves admitted, that it is no backbone of economics, rather
on the contrary, it is a worm grown in and feeding on it.
But it is regrettable that even theoreticians and scientists of today
are unable to free themselves from the stranglehold of custom and
practice and do some serious thinking in this direction. How is it that
even the experience of hundreds of years fails to attract their attention
towards the ultimate outcome of riba or interest, which is nothing

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except that peoples and communities around the world suffer from
want and hunger, become victims of many an economic crisis and the
poor grow poorer. As compared to their fate, some capitalists take
advantage of the wealth of the whole community, become its leeches
sucking blood from the body of the community and helping themselves
to grow and prosper. The gall of these intellectuals is indeed
surprising. When this reality is presented before them, they would like
to refute us by taking us to the market places of U.S.A. and E.E.C. so
that we could observe the blessings of interest. They like us to be
impressed by the prosperity they have acquired through it. In fact,
this is like taking us to show the blessings of acts committed by some
nation of man-eaters and telling us how chubby and flushed with
'health' they are in their residences and work-places. Then to top that
assertion, effort is made to prove on this basis, that this act of theirs is
the best of acts.
However, in answer to that, any sane and just person would simply
suggest that the 'blessings' of the act of man-eaters cannot be observed
in the habitat of the man-eaters. One has to go to other habitats where
lie dead bodies in thousands and thousands on whose blood and flesh
these beasts have grown. Islam and the Shari'ah of Islam can never
accept such an act as correct and useful, as a result of which, the
humanity in general and the Muslim community in particular becomes
a target of destruction while some individuals, or their groups, go on
prospering.
Economic Drawbacks of Riba or Interest
If there was no other defect in riba except that it results in the gain
of some individuals and the loss of the whole humanity, that one and
very defect would have been enough to justify its prohibition and hate-
worthiness, although, it does have many other economic drawbacks
and spiritual disasters.
First of all, let us understand how riba is the gain of particular
individuals and the loss of a community in general. The hackneyed
method of riba practised by usurers was so crude that even a person of
ordinary commonsense could see how it benefitted a particular person
and harmed the community in general. But 'the new enlightenment' of
today, or shall we call it 'the new darkness', by producing 'purified'

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liquor through mechanical processing and aging, by inventing new and
fancy forms for theft and robbery, and by innovating novel covers for
evil and immodesty, has made everybody so 'civilized' that watchers of
the surface are unable to see the evil hidden behind. Very similar to
this, in order to continue the practice of riba or interest, individual
money-lending counters have been replaced by joint stock companies
called banks. Now, to throw dust in everybody's eyes, consumers are
'educated' that this modern method of riba is good for the whole
community because common people do not know how to run a business
with their money, or cannot do so due to shortage of capital, so money
they all have goes as deposit in banks and everyone of them manages
to get, no matter how little, some profit in the name of interest. In
addition to that, big businessmen are given the opportunity to borrow
money on interest from banks, invest in big business and reap the
benefits. Thus interest has been made to appear as some sort of
'blessing' which is reaching all individuals of the community!
However, a little honesty will show that this is a grand deception
which, by transforming dirty distilleries into posh hotels and
hooker-dens into cinemas and night clubs, has been released to
present poison as antidote, and the harmful as beneficial. Intelligent
people have no problem in seeing through the deceptive covering
placed on anti-moral crimes. They know it has inevitably increased
crimes, spreading its poison more acutely than ever before. Similar is
the case of riba, the new form of which, by making the masses have a
sip of an insignificant percentage of interest, has made them
accomplices in their crime; while at the same time, they opened for
themselves limitless opportunities to keep committing this crime.
Who does not know that this insignificant percentage of interest
doled out by 'saving' banks and post offices to clients cannot, by any
means, take care of their living expenses. They are, therefore, forced to
go for manual labour or seek a job. Business is something they hardly
think of themselves, and if somebody does play with the idea for a
while, the problem is that the capital of the entire community sits in
the banks and the shape of things in business is such that a person
with a small capital can hardly make an entry there unless he wishes
to commit suicide. The reason is that banks can advance a major loan

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only to one who has sound credit and large business. One who has a
million can get a loan of ten millions. He can run a business valued ten
times more than his personal capital would allow. In contrast, the man
with a small capital has little or no credit rating; the banks do not
trust him enough to advance a loan ten times more than his worth.
One who owns a thousand can hardly get an even thousand, let alone
ten thousand. Take the case of a person who owns a hundred thousand
and runs a business worth a million by using nine hundred thousand
of bank money. Suppose he earns a profit of one per cent which means
he has earned a ten per cent profit on his hundred thousand. In
comparison, a person who uses his personal hundred thousand in
business, will earn a profit of no more than one per cent on his
hundred thousand, which would be hardly enough to cover even his
operating expenses. Then there is yet another factor; the man with a
large capital can buy raw material from the market at a price so low
and discounted which the small capitalist cannot get. As a result, the
man with a small capital is rendered helpless and needy. Should he,
secretly pursued by his misfortune, put his foot into some such
business already monopolized by big capitalists, they will then, taking
him to be an unwelcome partner in their godhood, make the market
collapse, even if it be at their cost, making the small capitalist lose all
his capital and profit. This is why business gets monoplized by some
individuals who happen to be big capitalists.
Let us consider some other injuries caused by this interest-oriented
economic system:
1. First comes the great injustice inflicted on the community when
a whole set of people are deprived of the opportunity to engage in real
business, and are reduced to economic slavery of big capitalists, who
elect to give them a 'profit' of their choice as some tip.
2. Another loss that affects the whole country comes through the
monopolization of market rates of commodities made possible by this
system. They sell high and fill their coffers by emptying the pockets of
the whole community. Worse still, they have the evil choice of stopping
the sale of their holdings in order to further increase prices by design.
If these selfish people were not allowed to feed on the combined capital
of the community through the agency of banks, and if they were left

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with no other alternative but to run their business with their personal
capital, things would be different. The small capitalist would have
been saved from distress and these self-serving people would not be
sitting as demi-gods on all trading options. The investors with a small
capital, by showing profits in business ventures, would have given
impetus to others. More and more businesses would come up managed
by separate staffers giving livelihood to thousands of needy individuals
besides making business profits fairly widespread, and of course, the
general availability of merchandise in the market would be favourably
affected. The reason is competition which motivates a businessman to
reduce his margin of profit.
In short, this Machiavellian method has infected nations and
communities with a fatal disease, apart from the brain-washing it has
done which makes the patient take disease as the cure.
3. Now let us look at the third economic disaster engineered
through bank interests. Here is a person with a capital of ten
thousand and he goes in business worth a hundred thousand, the
additional capital advanced by a bank as interest-bearing loan. If by
chance, he is hit by loss, his capital sinks and he goes insolvent then
the outcome is interesting. Just imagine that he bears only ten per
cent of the loss, while the rest of the loss, that is ninety per cent, is
absorbed by the whole community, whose money he had borrowed
from the bank to invest in his business. Even if the bank writes off the
loss as an interim measure, it is clear that the bank is the pocket of a
nation, and the loss will ultimately hit the nation. The outcome is that
the borrowing capitalist was the sole owner of the profit as far as the
profit kept coming, leaving nothing or very little for the community.
When came the loss, it was passed on to the whole community.
4. Yet another economic drawback of riba lies in the predicament of
the borrower on interest when he is hit by a major loss. Once this hap-
pens he is unable to survive anymore. To begin with, he never had
enough capital the loss of which he could cushion. The loss throws him
into a double distress. Not only does he lose his profit and capital but
also, at the same time, gets buried under the bank loan for the liquida-
tion of which he has no means. As compared to this, should he lose his
entire capital in an interest-free business, he would, at the most be-
come penniless but, burdened with debt he definitely will not be.

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In 1954, the cotton business of Pakistan suffered, to use a word of
the Qur'an, with the calamity of muhaq ( ;. : destruction by loss). The
Government rescued the businessmen at the cost of millions of rupees
but nobody bothered to realize that all this was a curse of riba or
interest, for the simple reason that cotton dealers had invested mostly
bank-borrowed capital in this business. Their own capital was
insignificant. As Divine decree would have it, the cotton market fell so
sharply that its price zoomed down from rupees one hundred and
twenty-five to just ten rupees. The cotton traders were rendered
incapable of returning money to cover bank margins. Left with no
choice, the market was closed down and an SOS was sent to the
Government. The Government stepped in and bought off the stocks,
not at rupees ten, but at the raised price of ninety rupees. Thus it took
upon itself the loss of millions and saved these traders from going
insolvent. Whose money did the Government have? Naturally, it
belonged to the same helpless poor nation, the Muslim ummah!
In short, the naked result of banking business is that some
individuals reap benefits out of the capital of the entire community
and the loss, when it comes, is made to fall on the whole nation.
The design for deception
You have already seen how riba and interest prey on communities
and nations and how some individuals are promoted instead. Along
with it, you would do well to discover yet another demonstration of evil
genius. When the consumers of riba realized, out of their own
experience as well, what the Qur'an has said: 491101 -2 - that is,
earnings of interest have to suffer from the calamity of muhaq, from
loss and destruction, as a result of which one has to go insolvent - they
established two permanent institutions: The Insurance and the Stock
Exchange. They saw that losses in business occur for two reasons. One
of these takes the form of natural calamity like the drowning or
burning of a ship or some such mishap of some other nature. The other
could be that market rates of stock in hand go lower than its purchase
price. The capital invested in both these situations is the jointly owned
capital of the community, not that of the individual capitalist,
therefore, the loss of the community is higher, and that of the
individual capitalist, minimal. But they did not stop at that. In order

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Surah Al-Baqarah 2 : 275 - 281
to shift even this minimal loss factor on to the shoulders of the
community, they floated insurance companies which hold the capital of
the community, just as banks do. When some natural calamity inflicts
losses on these consumers of riba, they use the medium of insurance to
shift, not just partial, but the entire loss to the jointly held capital of
the community.
People think that insurance companies are God's mercy as they
rescue the sinking. But should they observe and think honestly, they
would start seeing the same deception here too. Isn't it that their
capital was formed by contributions from the community enticed by
the promise of help in the event of unforeseen accidents. The truth is
that the advantage of receiving large sums of money is derived by
capitalists of higher rating, who would, on occasions, burn or bang
their own car or get it stolen in order to buy a new one out of the
insurance claim. At the probability rate of one or two percent there
would be a couple of lucky fellows who might get some money because
of accidental death.
Then there is the second kind of institution, the stock exchange
which served as a defensive shield against price slumps. This
speculative contraption was used to spread out the ill-effects of deals
over every individual of the community, transferring thereby the loss
coming to them onto the community once again.
This brief account, it is hoped, may have given you at least the idea
that bank interest and the business it helps to flourish is the cause of
want, hunger and economic incapacity of the entire humanity. Of
course, some wealthy individuals have their wealth further increased
through this method which results in the unmaking of the community
and the making of some individuals who hold the key to the
accumulated capital of the country or nation in their hands. Generally
governments did notice this enormously disturbing phenomena but the
cure they came up with was to increase the income tax rate for big
capitalists, so much so that the maximum rate was set almost close to
hundred per cent, which was all designed to funnel capital from them
back into the national treasury.
But, as a result of such laws and as everyone knows, factories and
businesses started maintaining fictional or doctored accounts. In order
:
:
:
:

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Surah Al-Baqarah 2 : 275 - 281
to hide a lot of capital from the Government, money once again started
going into private treasuries.
To sum up, it is universally clear that concentration of wealth in
the captivating hands of few individuals of a nation is highly injurious
to the economic health of the country. This is why income tax rates are
pushed so high, but experience bears out that this was no cure to the
disease. Maybe the reason is that the disease was not correctly
diagnosed, and the real cause remained undiscovered. This sort of
treatment reminds one of the Persian line saying: 'you closed the door
for safety without finding out that the enemy was sitting inside the
house'.
The reason why wealth concentrates in the hands of big capitalists
is nothing but interest-oriented business and the unjust profiteering
from national wealth by particular individuals. Unless we put an end
to this in accordance with the teachings of Islam and unless we
promote the practice that everyone goes in business with 'his' capital
only, this disease cannot be cured.
A doubt and its answer
The question arises here when public money is deposited in banks
some benefit does trickle on to people, no matter how little it may be.
Maybe, the big capitalists did manage to extract more benefits out of
it. But what would happen if this system of depositing money in the
banks was not there? The whole thing will end up being what it was in
old days when money used to stay in underground chests, which was
of no immediate use to the owner, or to anybody else.
The answer to this is that Islam has, on one hand, by declaring in-
terest or riba to be haram (unlawful), closed the door on the concentra-
tion of national wealth in the hands of a known few capitalists, while
at the same time, it has, by imposing the obligation of the levy of za-
kah, compelled every owner of the above-threshold capital not to keep
his capital frozen but invest it in business. Should a person hoard up
his money or gold, and since zakah is a recurring obligation to pay, he
will still be giving out the fortieth part of his holdings as zakah every
year, as a result of which whatever he has will not be there anymore.
Therefore, every sane person will have to put his capital in some use-
ful enterprise, enjoy its benefits and allow others to share it with him

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Surah Al-Baqarah 2 : 275 - 281
and then, from the profit that he makes, he pays his zakah 'properly'
as required.
The obligation of zakah ensures progress in business
We know that paying zakah properly has a great utility of its own.
It aims to help the poor and the needy in the community. Similarly,
this obligation is a wonderful method of persuading people to go in
business, so that the economic status of Muslims is upgraded. It is
clear when everybody realizes that frozen capital gets no profit, on the
contrary, the fortieth part is invariably chiselled away at the end of
each year, he will have to think of investing his money in some
business. But his business will not follow the model of one man
running a business on the strength of capital supplied by millions of
people. That model works on interest. Since marketing money is
haram, every wealthy person will seek to go in business on his own.
And when it so happens that big capitalists are left with no choice but
to engage in business supported by their personal capital, those with a
small capital will not face the sort of difficulties in business take-offs
that confronted them in the event they sought bank loans on interest
to run a larger business. Thus the whole country will benefit by the
universalization of business and its profits. When this happens, the
poor and the needy in the country would certainly become
beneficiaries of the system.
Interest: The spiritual ills:
Upto this point we were talking about the economic destructivity of
interest. Now let us see how interest-oriented business so adversely
affects the morals, and the spiritual potential of man:
1. Sacrifice and generosity are great qualities in human morals.
Giving comfort to others at the cost of personal discomfort is
wonderful. Interest-loaded business invariably leads to the extinction
of this emotional refinement. A compulsive consumer of interest would
hardly bear to see somebody else rising up to his level with the help of
personal effort and capital. That he would think of passing some
benefit to somebody from his resources is a far cry.
2. Rather than be merciful to the distressed, he is on the look out
for an opportunity to take undue advantage of his distress.
3. The constant devouring of interest results in increasing greed for

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Surah Al-Baqarah 2 : 275 - 281
money to limits where he is all intoxicated, not knowing good from bad
- totally heedless of the sad end of what he is doing.
Is it impossible to run a business without interest?
A discussion of the nature of riba and the ills it plants and
promotes in this world and in the Hereafter has already appeared in
some details. Now remains the third part relating to the solution of
the problem. We have seen its economic and spiritual drawbacks and
we know clearly that it has been strictly forbidden in the Qur'an and
Sunnah. But the problem is that riba, of all the things, is sitting solid
as the sheet-anchor of business in contemporary society. This is the
wheel on which runs world business. How can we get free from its
hold? These are times when getting rid of the banking system would
mean closing down all business.
This can be answered by pointing out that a disease, once it
spreads out and becomes an epidemic, certainly poses problems.
Treatment does become difficult but useless it is not. Efforts made to
correct the system do succeed finally. However, what is needed in the
process is patience, steadfastness and courage. It is in the noble
Qur'an itself that Allah Almighty has also said:
وَمَا جَعَلَ عَلَيُكُمُ فِى الدِّيْنِ مِنْ حَرِجٍ
Allah has not burdened you with any hardship in religion. (22:78)
Therefore, there must be a way to avoid riba in which there is no
economic loss, doors of national and international business are not
closed, and salvation from riba is also achieved.
To begin with, it is generally thought that, given the governing
principles of banking as seen from the outside, banking system
depends on riba. Without it the banks just could not run. But, this
thinking is categorically incorrect. The banking system could still
survive as it is even without riba. It could rather come out in better
shape, beneficial and useful. However, in order to do so, it is necessary
that a group of experts in Shari'ah and banking should, by
consultation and cooperation, reconstruct its operating principles.
With their proposals and projections, success will not remain far.
When the day comes, the day when the banking system is run on the
principle of Shari'ah, the whole world will, Inshallah, witness the real
summum bonum, the great good of the nation and the community it

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Surah Al-Baqarah 2 : 275 - 281
brings in its wake. However, this is not the place to explain these
principles and rules based on which the banking system could be run
without riba. 59
Riba is presently 'needed' for two reasons. If needed in business,
that can be taken care of by amending the current banking rules. The
second compulsion, why the poor and the needy get involved with riba
or interest, is that of their inevitable accidental needs. The best
solution to this situation is already present in Islam in the form of
zakah and obligatory sadaqat. But, because of heedlessness towards
religion and the sources of its knowledge, even the system of zakah has
been left inoperative (or ineffective). There is a countless number of
Muslims who do not think of zakah, and for that matter, even salah.
Those who do pay zakah, specially the gentlemen with large capital
holdings, do not bother to calculate strictly and thus do not pay the
full zakah amount due. Then there are those who do pay the full
amount of zakah due, but their doing so is mechanical, sort of getting
rid of it by taking it out of their pockets and be done with. Although
the Divine injunction, does not simply call for the taking out of zakah,
it rather bids that zakah be paid properly and paying properly can be
accomplished correctly only when it is carried to those who deserve it
and who are given proprietory rights over it. Now let us imagine how
many Muslims there are who would take the trouble of finding the
deserving and then arrange to have their zakah reach them? No
matter how lacking in financial resources the Muslim ummah may be,
but should it be that every zakah-obligated Muslim pays his zakah
fully and properly, and adopts the correct method of so paying it by
identifying the deserving and making sure that they receive it in their
hands and as their possession, then no Muslim will ever need to get
involved with interest-bearing borrowing. Of course, when it so
happens that a just Islamic government comes into being and operates
in accordance with rules laid down by the Shari'ah, and an Islamic
59. This humble writer had, in consultation with some 'ulama', prepared a draft
proposal of interest-free banking way back, and this was approved by some
experts as practical in present day perspective. There were some who even put
this in practice but finally, it did not work due to apathy of businessmen, and of
فالى الله المشتكى .course, the non-availability of Government sanction