IN THE TRANSACTION OF
USURY, BOTH THE GIVERS AND THE TAKERS SUFFER.
الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ
إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ
بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ
الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَنْ جَاءَهُ مَوْعِظَةٌ مِنْ رَبِّهِ
فَانْتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ
فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ {2:275}
[Q2:275] Allazeena yaakuloonar ribaa laa yaqoomoona illaa
kamaa yaqoomul lazee yatakhabbatuhush shaitaanu minal mass; zaalika bi annahum
qaalooo innamal bai'u mishur ribaa; wa ahallal laahul bai'a wa harramar ribba;
faman jaaa'ahoo maw'izatum mir rabbihee fantahaa falahoo maa salafa wa amruhooo
ilal laahi wa man 'aada fa ulaaa 'ika Ashaabun naari hum feehaa khaalidoon.
[Q2:275]
Those who swallow down usury cannot arise except as one whom Shaitan has
prostrated by (his) touch does rise. That is because they say, trading is only
like usury; and ALLAH (SWT) has allowed trading and forbidden usury. To
whomsoever then the admonition has come from his Lord, then he desists, he
shall have what has already passed, and his affair is in the hands of ALLAH
(SWT); and whoever returns (to it)-- these are the inmates of the fire; they
shall abide in it.
[Q2:275] Orang-orang yang makan (mengambil) riba tidak
dapat berdiri melainkan seperti berdirinya orang yang kemasukan setan lantaran
(tekanan) penyakit gila. Keadaan mereka yang demikian itu, adalah disebabkan
mereka berkata (berpendapat), sesungguhnya jual beli itu sama dengan riba,
padahal ALLAH (SwT) telah menghalalkan jual beli dan mengharamkan riba.
Orang-orang yang telah sampai kepadanya larangan dari Tuhannya, lalu terus
berhenti (dari mengambil riba), maka baginya apa yang telah diambilnya dahulu
(sebelum datang larangan); dan urusannya (terserah) kepada ALLAH (SwT). Orang
yang mengulangi (mengambil riba), maka orang itu adalah penghuni-penghuni
neraka; mereka kekal di dalamnya
Riba literally
means a growth or an addition. The additional
amount, collected over and above the capital given as a loan, is interest or usury. IT IS AN ABUSE OR A MISUSE OF
THE POWER ONE HOLDS OVER THE WEAK OR THE NEEDY, AND
THEREFORE, STRICTLY FORBIDDEN.
Ü
Spending in the way of ALLAH
(SWT) for the welfare of the human society has been prescribed in the preceding
verses. With enough means at one's disposal, it is a sin
not to part with some of it in order to help the needy.
Ü
When giving in the way of ALLAH (SWT), as a
free gift, under such circumstances, has been prescribed, then those whom ALLAH (SWT) has given enough, must at least lend that
which is needed by the needy, without charging any additional payment, BECAUSE practising usury is akin to being confounded by
Shaytan, and is tantamount to digging one's own grave.
Inherent in a transaction of usury is the element
of enslavement and abuse, BECAUSE a person who is in need
of material help cannot pay back more than what he had originally taken; therefore Islam has prohibited usury.
IN THE TRANSACTION OF USURY, BOTH
THE GIVERS AND THE TAKERS SUFFER. *The
lender, in love of more and more material gains, BECOMES heartless and selfish.
*Those who take loans become extravagant and
ruin their families. This scenario
is diametrically opposed to the very purpose of the religion of Islam -
establishment of a fair, kind and welfare-oriented social order. IF THERE IS NO TEMPTATION OF USURY,
MATERIAL HELP WILL BE GIVEN TO ONLY THOSE WHO ARE REALLY IN NEED OF IT.
Trade, on the other hand, is a mutual transaction in which both parties feel
satisfied, in which both either hope to gain or run the risk of a loss. If
financial help is required for business or trading, a different relationship
can be structured between the two parties, such as a partnership or some form
of sharing profit and loss.
THOSE WHO SAY USURY IS ONLY LIKE TRADING WILL RISE ON THE
DAY OF RESURRECTION IN A STATE OF INSANITY, AS THOSE RISE WHOM SHAYTAN HAS
PROSTRATED BY HIS TOUCH.
The prohibition took effect from the day this
verse was revealed. The usury collected by the
lenders prior to the promulgation of this prohibition was allowed to be
retained by them.
ä In banking transactions,
the directions of the religious jurist {mujtahid-faqih) should
be followed to determine bank charges, commission and profit as fixed or as
agreed or as actual dividends.
______________________________________________________________________________________________
(2:275) But
those who devour interest *315 become
like the one whom Satan has bewitched and maddened by his touch. *316 They have
been condemned to this condition because they say, "Trade is just like
interest”, *317 whereas Allah has made trade lawful and
interest unlawfu1. *318 Henceforth, if one abstains from taking
interest after receiving this admonition from his Lord, no legal action will be
taken against him regarding the interest he had devoured before; his case shall
ultimately go to Allah. *319 But
if one repeats the same crime after this, . he shall go to Hell, where he shall
abide for ever.
*315. The term riba
in Arabic means 'to grow, to exceed, to increase'. Technically, it denotes the
amount that a lender receives from a borrower at a fixed rate of interest. At
the time of the revelation of the Qur'an several forms of interest transactions
were in vogue and were designated as riba by the Arabs. Of these one was that the vendor sold an article and fixed a
time limit for the payment of the price, stipulating that if the buyer failed
to pay within the specified period of time, he would extend the time limit but
increase the price of the article. Another was that a man loaned a sum of money to
another person and stipulated that the borrower should return a specified
amount in excess of the amount loaned within a given time limit. A third form of interest transaction was that the
borrower and vendor agreed that the former would repay the loan within a
certain limit at a fixed rate of interest, and that if he failed to do so
within the limit, the lender would extend the time limit, but at the same time
would increase the rate of interest. It is to transactions such as these that
the injunctions mentioned here apply.
*316. The Arabs used the word majnun (possessed by the jinn) to characterize the insane. The Qur'an uses the same expression about those who take interest. Just as an insane person, unconstrained by ordinary reason, resorts to all kinds of immoderate acts, so does one who takes interest. He pursues his craze for money as if he were insane. He is heedless of the fact that interest cuts the very roots of human love, brotherhood and fellow-feeling, and undermines the welfare and happiness of human society, and that his enrichment is at the expense of the well-being of many other human beings. This is the state of his 'insanity' in this world: since a man will rise in the Hereafter in the same state in which he dies in the present world, he will be resurrected as a lunatic.
*317. The unsoundness of this view lies in not differentiating between the profit one gains on investment in commercial enterprises on the one hand, and interest on the other. As a result of this confusion, the proponents of this view argue that if profit on money invested in a business enterprise is permissible, why should the profit accruing on loaned money be deemed unlawful? Similar areuments are advanced by those who thrive on interest in our own times. Their argument runs as follows: A person who could have profitably invested his money in a commercial enterprise loans it out to somebody who, in turn, makes a profit out of it. In such circumstances why should the borrower not pay the lender a part of the profit? Such people, however, disregard the fact that no enterprise in which a man participates, whether it is commercial, industrial or agricultural, and whether one participates in it with one's organizing skill or capital, or by both, is immune from risk. No enterprise carries absolutely guaranteed profit at a fixed rate. What is the justification, then, for the fact that out of all the people in the business world, the financier alone should be considered entitled to a profit at a fixed rate in all circumstances, and should be protected against all possibility of loss?
Let us set aside for a moment the questions of non-profitable loans and vacillations in the rate of profit. Let us consider only the question of loans for profitable enterprises, and confine our consideration to loans made at non-exorbitant rates of interest. The question, however, remains: Which rational principle, which logic, whch canon of justice and which sound economic principle can justify that those who spend their time, energy, capacity and resources, and whose effort and skill make a business thrive, are not guaranteed profit at any fixed rate, whereas those who merely lend out their funds are fully secured against all risks of loss and are guaranteed profit at a fixed rate? And which principle can justify the fact that a man lends out his funds to an industrial concern and fixes, say for the next twenty years, that he will be entitled to receive each year a given per cent interest on his capital, while the proprietors of the industrial concern have no means of foretelling the price changes affecting their commodity, and hence their profit? Let us consider another case, namely that of war loans. How can it be appropriate that all classes of people endure all kinds of losses and are exposed to all kinds of risks and dangers connected with war, whereas the financiers, simply by having made loans, continue to receive Interest on them for long periods of time, sometimes even for a whole century?
*318. The essential difference between non-interest business transactions and interest-bearing transactions rests on the following grounds:
(1) In ordinary business transactions there occurs a mutually equitable exchange of benefits between the buyer and the seller. The buyer derives benefit from the article which he purchases from the seller; the seller receives compensation for the effort, ingenuity and time spent on making the article available to the buyer. In interest-bearing transactions, on the other hand, the exchange of benefits does not take place equitably. The interest receiving party, receives a fixed amount as a payment for using the loan he advances and thus his gain is secured. The other party to the transaction has only one thing at his disposal - a period of time during which he can make use of the funds loaned, and which may not always yield a profit. If such a person spends the borrowed funds on consumption, there is obviously no question of profit. Even if the funds are invested in trade, agriculture or industry, one stands the chance both of making a profit and of incurring a loss during the period of time in question. Hence an interest-bearing transaction entails either a loss on one side and a profit on the other, or an assured and fixed profit on one side and an uncertain and unspecified profit on the other.
(2) In business enterprises the profit that a person makes, however large it may be, is made only once. The person who lends out money on interest receives, on the contrary, an on-going profit which multiplies with the passage of time. Moreover, however large the extent of the profit made by the borrower from the loaned money it will still be within certain limits, while the claims of the lender in return for this profit are unlimited. It is even possible that the lender may seize the entire turnover of the borrower if he defaults on payment, thus depriving him of all the resources from which he makes his living. It is also possible that even after the lender has seized all the property of the borrower, his claims will still remain unsatisfied.
(3) In a business deal, the transaction ends with the exchange between a commodity and its price. After this exchange has taken place, no obligation remains on either party towards the other. If the transaction is that of rent, the thing rented (e.g. land or building) is not consumed but is rather used and remains intact, and is returned to the owner after a stipulated period of time. In a transaction involving interest, however, what actually happens is that the borrower first spends the loaned funds, then reclaims them with his efforts, returning them to the lender together with a surplus.
(4) In agriculture and industry, and in trade and commerce, one makes a profit after having expended one's effort, intelligence and time. In an interest-bearing transaction, on the contrary, one becomes entitled to a sizeable share in the earnings of others without any toil and effort, by merely allowing someone to make use of one's surplus money. The lender is neither a 'partner' in the technical sense of the term, for he does not share both the profit and the loss, nor is his share in proportion to the actual profit.
There is thus a tremendous difference from an economic point of view between business transactions as such and interest- bearing transactions. Whereas the former plays a highly constructive role in human society, the latter leads to its corrosion. This is in addition to its moral implications. By its very nature interest breeds meanness, selfishness, apathy and cruelty towards others. It leads to the worship of money and destroys fellow-feeling and a spirit of altruistic co-operation between man and man. Thus it is ruinous for mankind from both an economic and a moral viewpoint.
*319. What is said here is not that man will be pardoned by God for the interest taken in the past, but that it is for God to judge him. The expression: 'may keep his previous gains' does not signify absolute pardon from God for the interest one has taken, rather it points to the legal concession that has been made. It only means that no legal claim will be made for the interest taken in the past. For were such claims to be entertained, an endless succession of litigation would ensue. From a moral point of view, however, the earnings made by way of interest would continue to be impure. If a person is really God-fearing and if his economic and moral viewpoint has really undergone a change under the influence of Islam, he will try to abstain from spending on himself the income which he has obtained by illegitimate means. He will also try to seek out those from whom he has derived illegitimate earnings and will try to return those earnings to such people; if he is unable to locate them, he will try to spend them on collective welfare rather than on himself. It is this conduct alone which can save him from the punishment of God. As for one who continues to enjoy his illegitimate earnings, it is not unlikely that he will be subjected to God's punishment.
*316. The Arabs used the word majnun (possessed by the jinn) to characterize the insane. The Qur'an uses the same expression about those who take interest. Just as an insane person, unconstrained by ordinary reason, resorts to all kinds of immoderate acts, so does one who takes interest. He pursues his craze for money as if he were insane. He is heedless of the fact that interest cuts the very roots of human love, brotherhood and fellow-feeling, and undermines the welfare and happiness of human society, and that his enrichment is at the expense of the well-being of many other human beings. This is the state of his 'insanity' in this world: since a man will rise in the Hereafter in the same state in which he dies in the present world, he will be resurrected as a lunatic.
*317. The unsoundness of this view lies in not differentiating between the profit one gains on investment in commercial enterprises on the one hand, and interest on the other. As a result of this confusion, the proponents of this view argue that if profit on money invested in a business enterprise is permissible, why should the profit accruing on loaned money be deemed unlawful? Similar areuments are advanced by those who thrive on interest in our own times. Their argument runs as follows: A person who could have profitably invested his money in a commercial enterprise loans it out to somebody who, in turn, makes a profit out of it. In such circumstances why should the borrower not pay the lender a part of the profit? Such people, however, disregard the fact that no enterprise in which a man participates, whether it is commercial, industrial or agricultural, and whether one participates in it with one's organizing skill or capital, or by both, is immune from risk. No enterprise carries absolutely guaranteed profit at a fixed rate. What is the justification, then, for the fact that out of all the people in the business world, the financier alone should be considered entitled to a profit at a fixed rate in all circumstances, and should be protected against all possibility of loss?
Let us set aside for a moment the questions of non-profitable loans and vacillations in the rate of profit. Let us consider only the question of loans for profitable enterprises, and confine our consideration to loans made at non-exorbitant rates of interest. The question, however, remains: Which rational principle, which logic, whch canon of justice and which sound economic principle can justify that those who spend their time, energy, capacity and resources, and whose effort and skill make a business thrive, are not guaranteed profit at any fixed rate, whereas those who merely lend out their funds are fully secured against all risks of loss and are guaranteed profit at a fixed rate? And which principle can justify the fact that a man lends out his funds to an industrial concern and fixes, say for the next twenty years, that he will be entitled to receive each year a given per cent interest on his capital, while the proprietors of the industrial concern have no means of foretelling the price changes affecting their commodity, and hence their profit? Let us consider another case, namely that of war loans. How can it be appropriate that all classes of people endure all kinds of losses and are exposed to all kinds of risks and dangers connected with war, whereas the financiers, simply by having made loans, continue to receive Interest on them for long periods of time, sometimes even for a whole century?
*318. The essential difference between non-interest business transactions and interest-bearing transactions rests on the following grounds:
(1) In ordinary business transactions there occurs a mutually equitable exchange of benefits between the buyer and the seller. The buyer derives benefit from the article which he purchases from the seller; the seller receives compensation for the effort, ingenuity and time spent on making the article available to the buyer. In interest-bearing transactions, on the other hand, the exchange of benefits does not take place equitably. The interest receiving party, receives a fixed amount as a payment for using the loan he advances and thus his gain is secured. The other party to the transaction has only one thing at his disposal - a period of time during which he can make use of the funds loaned, and which may not always yield a profit. If such a person spends the borrowed funds on consumption, there is obviously no question of profit. Even if the funds are invested in trade, agriculture or industry, one stands the chance both of making a profit and of incurring a loss during the period of time in question. Hence an interest-bearing transaction entails either a loss on one side and a profit on the other, or an assured and fixed profit on one side and an uncertain and unspecified profit on the other.
(2) In business enterprises the profit that a person makes, however large it may be, is made only once. The person who lends out money on interest receives, on the contrary, an on-going profit which multiplies with the passage of time. Moreover, however large the extent of the profit made by the borrower from the loaned money it will still be within certain limits, while the claims of the lender in return for this profit are unlimited. It is even possible that the lender may seize the entire turnover of the borrower if he defaults on payment, thus depriving him of all the resources from which he makes his living. It is also possible that even after the lender has seized all the property of the borrower, his claims will still remain unsatisfied.
(3) In a business deal, the transaction ends with the exchange between a commodity and its price. After this exchange has taken place, no obligation remains on either party towards the other. If the transaction is that of rent, the thing rented (e.g. land or building) is not consumed but is rather used and remains intact, and is returned to the owner after a stipulated period of time. In a transaction involving interest, however, what actually happens is that the borrower first spends the loaned funds, then reclaims them with his efforts, returning them to the lender together with a surplus.
(4) In agriculture and industry, and in trade and commerce, one makes a profit after having expended one's effort, intelligence and time. In an interest-bearing transaction, on the contrary, one becomes entitled to a sizeable share in the earnings of others without any toil and effort, by merely allowing someone to make use of one's surplus money. The lender is neither a 'partner' in the technical sense of the term, for he does not share both the profit and the loss, nor is his share in proportion to the actual profit.
There is thus a tremendous difference from an economic point of view between business transactions as such and interest- bearing transactions. Whereas the former plays a highly constructive role in human society, the latter leads to its corrosion. This is in addition to its moral implications. By its very nature interest breeds meanness, selfishness, apathy and cruelty towards others. It leads to the worship of money and destroys fellow-feeling and a spirit of altruistic co-operation between man and man. Thus it is ruinous for mankind from both an economic and a moral viewpoint.
*319. What is said here is not that man will be pardoned by God for the interest taken in the past, but that it is for God to judge him. The expression: 'may keep his previous gains' does not signify absolute pardon from God for the interest one has taken, rather it points to the legal concession that has been made. It only means that no legal claim will be made for the interest taken in the past. For were such claims to be entertained, an endless succession of litigation would ensue. From a moral point of view, however, the earnings made by way of interest would continue to be impure. If a person is really God-fearing and if his economic and moral viewpoint has really undergone a change under the influence of Islam, he will try to abstain from spending on himself the income which he has obtained by illegitimate means. He will also try to seek out those from whom he has derived illegitimate earnings and will try to return those earnings to such people; if he is unable to locate them, he will try to spend them on collective welfare rather than on himself. It is this conduct alone which can save him from the punishment of God. As for one who continues to enjoy his illegitimate earnings, it is not unlikely that he will be subjected to God's punishment.
يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ ۗ
وَاللَّهُ لَا يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ {2:276}
[Q2:276] Yamhaqul laahur ribaa wa yurbis sadaqaat; wallaahu
laa yuhibbu kulla kaffaarin aseem.
[Q2:276]
ALLAH (SWT) does not bless usury, and He causes charitable deeds to prosper,
and ALLAH (SWT) does not love any ungrateful sinner.
[Q2:276] ALLAH (SwT) memusnahkan riba dan menyuburkan
sedekah. Dan ALLAH (SwT) tidak menyukai setiap orang yang tetap dalam
kekafiran, dan selalu berbuat dosa.
Mahaq means
*to blot out, *to render
unfortunate, *to withdraw one's blessings from
ALLAH (SWT). HE does not bless usury, and He causes charitable deeds to prosper. The act of usury itself lights the fuse of the
ultimate destruction of the system that builds, supports and perpetrates it.
r ACCORDING TO THE HOLY PROPHET (ALLAHUMA SALI ALA MUHAMMAD WA ALA ALI MUHAMMAD), HE WHO UPHOLDS USURY AS PERMISSIBLE IS
A KAFIR.
It is
generally known among the Muslims that to use the gains obtained from usury is
as wicked AND as satanic as marrying one's
own mother.
______________________________________________________________________________________________
(2:276) Allah
deprives interest of all blessing and develops charity; *320 and Allah
does not like an ungrateful, sinful person. *321
*320. The fact stated in this verse is a truism from
a moral and spiritual as well as from an economic and social viewpoint. For,
although wealth apparently multiplies through interest and shrinks as a result
of charity, in actual fact the opposite is the case. By God's decree, the law
of nature is such that interest not only serves as a strain on moral and
spiritual well-being, and social and economic growth, it also causes actual
regression and decline. Charity, however, (including such acts as lending money
to people with the stipulation that they should return it if they can. and at
their convenience) leads to the growth and expansion of man's moral and
spiritual qualities and to the growth of human society and economy.
Looked at from moral and spiritual standpoints, it is evident that interest is not only the outcome of selfishness, miserliness and callousness but also encourages their growth. Charity, on the other hand, is the outcome of generosity, compassion, large -heartedness and magnanimity, with the result that the more one practises charity the more these qualities develop. It is obvious that if there is a society whose individuals are selfish in their dealings with one another, in which none is prepared to assist the other without self-interest, in which every person considers the other's need an opportunity to capitalize and exploit, in which the interests of the rich are directly opposed to the interests of the common people, that society does not rest on stable foundations. In such a society, instead of love and compassion there is bound to grow mutual spite and bitterness, apathy, indifference and callousness. The elements which compose such a society are bound to remain inclined towards disintegration and chaos; acute internal conflict and strife are sure to occur.
Contrast this with the society which is based on mutual sympathy and co-operation, whose individuals deal with one another magnanimously, in which, when a person is in need, people willingly come forward to accord generous help, in which the 'haves' assist the 'have-nots' with compassion and at least engage in just and equitable co-operation. In such a society mutual cordiality, goodwill and fellow-feeling are bound to flourish. The various components of such a society will be closely knit together and prove a source of mutual support. In such a society internal conflict and strife will make few inroads. Also, owing to mutual co-operation and goodwill the pace of development should be faster than in the other kind of society.
Let us now look at the matter from an economic viewpoint, from which inte rest- bearing loans are seen to be of two kinds. The first category, consists of loans incurred by people in genuine need, who are compelled to borrow for their personal consumption requirements. The second consists of the loans incurred by businessmen for investment in trade and industry or agriculture.
The first category is generally acknowledged to lead to ruin. Nevertheless, there is not one country in the world where financiers and financial institutions are not sucking the blood of poor labourers, peasants and ordinary low-income people through interest on consumption loans. The burden of interest makes it extremely difficult, often impossible, for borrowers to pay off the original loan. They may even have to resort to fresh borrowing from elsewhere to pay if off. Because of the way interest works, the sum outstanding against them often remains even after they, have paid twice or three times its amount in interest. The bulk of the income of labourers is snatched away from them by lenders, leaving them without enough for the bare necessities of life for themselves and their families. This situation steadily erodes their interest in their jobs. For if someone else is to reap the benefit of a man's hard work, why should he work hard at all? Moreover, oppressed by the worries of debt, the health and strength of labourers is gradually destroyed by undernourishment and lack of medical treatment.
In short, a minority of people continually fatten themselves by sucking the blood of millions of ordinary people, but the total production level of the people remains much lower than its optimum potential. Ultimately, of course, these exploiters are seldom spared the evil consequences of their actions. Their callous selfishness causes such widespread misery among the masses that anger and resentment against the rich smoulder in their hearts ready to erupt in times of revolutionary unrest. The exploiters then have to pay very dearly: their ill-earned riches are not only wrested from them, they are either killed mercilessly or subjected to ignominy and humiliation.
The second category of loans, those invested in productive enterprises, also cause harm because of the infliction of a predetermined rate of interest on such borrowings. The most significant are the following:
(1) Projects which do not promise a higher rate of profit than the current rate of interest fail to attract sufficient funds, no matter how useful and necessary they may, be from the viewpoint of larger national interests. Loanable funds flow towards those business enterprises which are likely to yield at least the same, if not a higher rate of profit on investments than the current rate of interest, even though they may be of very little or no benefit to the nation at large.
(2) There can be no guarantee that a business investment, whether it is in trade, industry or agriculture, will always yield a rate of profit which is higher than the rate of interest. Not only can there be no such assurance, there can never be an assurance about any business that it will always remain profitable. What really happens, therefore, is that the financier is assured interest at a predetermined rate whereas the business in which the loan is invested is exposed to risk and possible losses.
(3) Since the lender does not share the profit and loss of the business but lends out funds on the assurance of a fixed rate of interest, he is in no way concerned with the fortunes of the business itself. He is solely concerned, and in a totally selfish spirit, with his own pecuniary benefit. Hence, whenever the lender senses the faintest sign of depression, he begins to withdraw money from the market. The result is that sometimes imaginary fears and anxieties spark off an actual depression in the economy. And if the economy is depressed owing to other factors, the excessive selfishness of the financiers tends to escalate the situation into a full-scale economic crisis. These three evils of interest are obvious to every student of economics. Can anyone then deny the truth of the Natural law, enunciated by Allah that interest decreases the national economic wealth?
Let us now look at the economic effects of charity. Suppose the general attitude of the prosperous members of a society, is that within the limits of their means they spend generously on the fulfilment of their own requirements and on the requirements of their family, and then devote the surplus to helping the poor. After that they, either use their funds to provide interest-free loans to businessmen, invest them in business with the stipulation that they shall be co-sharers in both the profit and loss of the business, or deposit them with the government so that it may use them on projects of public welfare. A little reflection will make it obvious that trade, industry, and agriculture in such a society, will attain maximum prosperity; the standard of living of its people will continually rise and production in it will be much higher than in societies where economic activity is fettered by interest.
*321. It is clear that only those who have a surplus of earnings over their basic requirements can lend out money at interest. This surplus, according to the Qur'an, constitutes God's bounty. And true thankfulness for this bounty requires that a person should be bountiful towards other creatures of God even as the Creator has been to him. If, instead of doing this, the person tries to become richer at the expense of those whose present earnings are insufficient to meet their needs, he is at once guilty of ungratefulness to God, and blatantly unjust, cruel and wicked.
Looked at from moral and spiritual standpoints, it is evident that interest is not only the outcome of selfishness, miserliness and callousness but also encourages their growth. Charity, on the other hand, is the outcome of generosity, compassion, large -heartedness and magnanimity, with the result that the more one practises charity the more these qualities develop. It is obvious that if there is a society whose individuals are selfish in their dealings with one another, in which none is prepared to assist the other without self-interest, in which every person considers the other's need an opportunity to capitalize and exploit, in which the interests of the rich are directly opposed to the interests of the common people, that society does not rest on stable foundations. In such a society, instead of love and compassion there is bound to grow mutual spite and bitterness, apathy, indifference and callousness. The elements which compose such a society are bound to remain inclined towards disintegration and chaos; acute internal conflict and strife are sure to occur.
Contrast this with the society which is based on mutual sympathy and co-operation, whose individuals deal with one another magnanimously, in which, when a person is in need, people willingly come forward to accord generous help, in which the 'haves' assist the 'have-nots' with compassion and at least engage in just and equitable co-operation. In such a society mutual cordiality, goodwill and fellow-feeling are bound to flourish. The various components of such a society will be closely knit together and prove a source of mutual support. In such a society internal conflict and strife will make few inroads. Also, owing to mutual co-operation and goodwill the pace of development should be faster than in the other kind of society.
Let us now look at the matter from an economic viewpoint, from which inte rest- bearing loans are seen to be of two kinds. The first category, consists of loans incurred by people in genuine need, who are compelled to borrow for their personal consumption requirements. The second consists of the loans incurred by businessmen for investment in trade and industry or agriculture.
The first category is generally acknowledged to lead to ruin. Nevertheless, there is not one country in the world where financiers and financial institutions are not sucking the blood of poor labourers, peasants and ordinary low-income people through interest on consumption loans. The burden of interest makes it extremely difficult, often impossible, for borrowers to pay off the original loan. They may even have to resort to fresh borrowing from elsewhere to pay if off. Because of the way interest works, the sum outstanding against them often remains even after they, have paid twice or three times its amount in interest. The bulk of the income of labourers is snatched away from them by lenders, leaving them without enough for the bare necessities of life for themselves and their families. This situation steadily erodes their interest in their jobs. For if someone else is to reap the benefit of a man's hard work, why should he work hard at all? Moreover, oppressed by the worries of debt, the health and strength of labourers is gradually destroyed by undernourishment and lack of medical treatment.
In short, a minority of people continually fatten themselves by sucking the blood of millions of ordinary people, but the total production level of the people remains much lower than its optimum potential. Ultimately, of course, these exploiters are seldom spared the evil consequences of their actions. Their callous selfishness causes such widespread misery among the masses that anger and resentment against the rich smoulder in their hearts ready to erupt in times of revolutionary unrest. The exploiters then have to pay very dearly: their ill-earned riches are not only wrested from them, they are either killed mercilessly or subjected to ignominy and humiliation.
The second category of loans, those invested in productive enterprises, also cause harm because of the infliction of a predetermined rate of interest on such borrowings. The most significant are the following:
(1) Projects which do not promise a higher rate of profit than the current rate of interest fail to attract sufficient funds, no matter how useful and necessary they may, be from the viewpoint of larger national interests. Loanable funds flow towards those business enterprises which are likely to yield at least the same, if not a higher rate of profit on investments than the current rate of interest, even though they may be of very little or no benefit to the nation at large.
(2) There can be no guarantee that a business investment, whether it is in trade, industry or agriculture, will always yield a rate of profit which is higher than the rate of interest. Not only can there be no such assurance, there can never be an assurance about any business that it will always remain profitable. What really happens, therefore, is that the financier is assured interest at a predetermined rate whereas the business in which the loan is invested is exposed to risk and possible losses.
(3) Since the lender does not share the profit and loss of the business but lends out funds on the assurance of a fixed rate of interest, he is in no way concerned with the fortunes of the business itself. He is solely concerned, and in a totally selfish spirit, with his own pecuniary benefit. Hence, whenever the lender senses the faintest sign of depression, he begins to withdraw money from the market. The result is that sometimes imaginary fears and anxieties spark off an actual depression in the economy. And if the economy is depressed owing to other factors, the excessive selfishness of the financiers tends to escalate the situation into a full-scale economic crisis. These three evils of interest are obvious to every student of economics. Can anyone then deny the truth of the Natural law, enunciated by Allah that interest decreases the national economic wealth?
Let us now look at the economic effects of charity. Suppose the general attitude of the prosperous members of a society, is that within the limits of their means they spend generously on the fulfilment of their own requirements and on the requirements of their family, and then devote the surplus to helping the poor. After that they, either use their funds to provide interest-free loans to businessmen, invest them in business with the stipulation that they shall be co-sharers in both the profit and loss of the business, or deposit them with the government so that it may use them on projects of public welfare. A little reflection will make it obvious that trade, industry, and agriculture in such a society, will attain maximum prosperity; the standard of living of its people will continually rise and production in it will be much higher than in societies where economic activity is fettered by interest.
*321. It is clear that only those who have a surplus of earnings over their basic requirements can lend out money at interest. This surplus, according to the Qur'an, constitutes God's bounty. And true thankfulness for this bounty requires that a person should be bountiful towards other creatures of God even as the Creator has been to him. If, instead of doing this, the person tries to become richer at the expense of those whose present earnings are insufficient to meet their needs, he is at once guilty of ungratefulness to God, and blatantly unjust, cruel and wicked.
يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا
الرِّبَا أَضْعَافًا مُضَاعَفَةً ۖ وَاتَّقُوا اللَّهَ لَعَلَّكُمْ
تُفْلِحُونَ {3:130}
[Q3:130] Yaaa ayyuhal lazeena aamanoo la taakuhur
ribaaa ad'aafam mudaa'afatanw wattaqul laaha la'allakum tuflihoon.
[Q3:130]
O’ you who believe! Do not devour usury, making it double and redouble, and
be careful of (your duty to) ALLAH (SWT), that you may be successful.
[Q3:130] Wahai orang-orang yang beriman! Janganlah kamu
makan atau mengambil riba dengan berlipat-lipat ganda dan hendaklah kamu
bertakwa kepada ALLAH (SwT) supaya kamu berjaya.
NEITHER LEND NOR BORROW MONEY ON INTEREST, SIMPLE
OR COMPOUND. Islam has forbidden usury for all ages and in all
circumstances, regardless of any "commercial" consideration. "Multiplied
manifold" implies an unjust economic system by making the rich
richer and the poor poorer.
µ
THE
BASIS OF PROSPERITY AND SUCCESS, BOTH IN THIS WORLD AND
THE HEREAFTER, IS LOVE OF ALLAH (SWT) AND AWARENESS
OF HIS LAWS, NOT GREED OF GOLD.
Please refer to the
commentary of al
Baqarah 2:275 to 280.
______________________________________________________________________________________________
(3:130) Believers!
Do not swallow interest, doubled and redoubled, and be mindful of Allah so that
you may attain true success. *98
*98. The major cause of the setback suffered at Uhud
was that precisely at the moment of their victory the Muslims succumbed to the
desire for worldly possessions, and turned to collecting booty rather than
completing their task of crushing the enemy. Hence God thought fit to raise a
barrier against this excessive adoration of money, and to urge them to give up
usury which keeps man constantly absorbed in considering ways and means of
amassing wealth and generally whets his appetite for money.
IF THE DEBTOR IS IN CRISIS, the demand for repayment should be
postponed till he is in a better situation.
وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ
مَيْسَرَةٍ ۚ وَأَنْ تَصَدَّقُوا خَيْرٌ لَكُمْ ۖ إِنْ كُنْتُمْ تَعْلَمُونَ {2:280}
[Q2:280] Wa in kaana zoo 'usratin fanaziratun ilaa maisarah;
wa an tasaddaqoo khairul lakum in kuntum ta'lamoon.
[Q2:280]
And if (the debtor) is in straitness, then let there be postponement until
(he is in) ease; and that you remit (it) as alms is better for you, if you
knew.
[Q2:280] Dan jika (orang berutang itu) dalam kesukaran,
maka berilah tangguh sampai dia berkelapangan. Dan menyedekahkan (sebagian atau
semua utang) itu, lebih baik bagimu, jika kamu mengetahui.
IF THE DEBTOR IS IN CRISIS, the demand for repayment should be
postponed till he is in a better situation. The helpless poor
must not be prosecuted and harassed. IT
IS BETTER, IN SUCH CASES, if one can, to postpone demanding payment forever, because one is only here for a short
while.
§ The
Holy Prophet (ALLAHuma sali ala Muhammad wa ala ali Muhammad)
said:
He who grants a *respite to his debtor, or *gives up a part or the whole of the principal (given to
him in cash or kind), will be allowed to take refuge with ALLAH (SWT) on the
day when there will be no shelter.
DURING THE PERIOD OF POSTPONEMENT, THE
REPAYABLE DEBT WILL BE TREATED AS CHARITY GIVEN BY THE LENDER TO THE DEBTOR,
TILL IT IS REPAID.
Ø Zarara
came to Imam Jafar bin Muhammad al Sadiq
and informed him that one of Zarara's debtors was selling his house to repay
his debt.
The
Imam said: "O Zarara! In the name of
merciful Lord I direct you not to render him shelterless."
ISLAM
INSTRUCTS THE CREDITORS TO GIVE RESPITE AND REMISSION TO THE DEBTORS AND WARNS THE DEBTORS NOT TO AVOID REPAYMENT IF THEY
OWN SUFFICIENT MEANS.
r It
is reported that once a corpse was brought into the masjid for the final rites.
Ì The
Holy Prophet (ALLAHuma sali ala Muhammad wa ala ali Muhammad)
refused to conduct the funeral prayer BECAUSE the
deceased had sufficient means at his disposal but did not repay his debt. Then and there Abu Qatadah paid the full amount on
behalf of the deceased, after which the Holy Prophet (ALLAHuma
sali ala Muhammad wa ala ali Muhammad) prayed his funeral
prayer.
The Holy Prophet (ALLAHuma
sali ala Muhammad wa ala ali Muhammad) made it known that ALLAH (SWT) dislikes
those who neither repay their debts before death overcome them nor leave behind
anything to meet their commitment of repayment on their behalf.
______________________________________________________________________________________________
(2:280) If
your debtor be in straitened circumstances, give him time till his monetary
condition becomes better. But if you remit the debt by way of charity, it would
be better for you, if you only knew it. *324
*324. This verse is the basis of the Islamic
regulation that if a person has become incapable of paying off his debt, the
court will force the creditors to grant him respite for payment. In fact, under
certain circumstances, the court is entitled to remit a part of his debt and,
at times, the whole of it. It is mentioned in the Hadith that once a person suffered
loss in his trade and became greatly burdened with debt and the case was
brought to the notice of the Prophet. The Prophet urged the people to help
their brother in his distress. They came to his assistance but the amount of
help was not enough to wipe out his debts. Then the Prophet approached the
lenders and asked them to accept whatever amount was available and to grant
remission to the borrower because of his inability to make further payments.
Muslim jurists have made it clear that a debtor's residential house, eating
utensils, clothes and the tools which he uses for earning his livelihood may
not be confiscated in any, circumstances whatsoever for non-payrment of loans.
(For relevant discussion and textual evidence see the commentaries on this verse
in Ibn Kathir, Jassas, and Qurtubi - Ed.)
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