In general, ribaa (usury) is all types of excess in the repayment of debt as compared to the original amount borrowed. Hence, the awareness upon the ruling of ribaa is a must so that the Muslim ummah will not become ensnared by such grave sin, whether realizing it or not.
Ribaa in any form or reason whatsoever is forbidden by Allah and its ruling is haram. Ribaa is mentioned no less than eight times in four different Surahs. Among them is where Allah mentions in Surah al Baqarah, verse 275:
Which means: “…But Allah has permitted trade and has forbidden interest…” [Al-Quran, Surah al-Baqarah, verse 275].
Similarly with verses 278-279 in Surah al-Baqarah:
Which means: “O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.” [Al-Quran, Surah al-Baqarah, verse 278-279].
There are those within our society that is confused with the types of transactions and mu‘amalah that are prohibited by Allah. They thought that ribaa is not haram for as long as there exists the element of acceptance between both parties in any particular transaction. They would indulge in ribaa in their everyday business transactions without feeling sinful while knowing that ribaa is forbidden in Islam.
In the hadith of Abdullah ibn Mas’ud, he narrated that:
Which means: “Rasulullah cursed the one who accepts ribaa (usury) and the one who pays it.” (Narrated by Muslim)
While the fuqaha’ (jurists) from the Shafi’i madhab (school of thought) and also other madhahib (pl. of madhab) had issued fatawa (pl. of fatwa) stating that the extra addition to being paid for the debt or loan remains haram in its ruling, based on the narration of Faddalah bin Ubayd, one of the Companions of the Prophet, who said:
Which means: “Every loan that derives a benefit is a kind of ribaa.” (Sunan al-Kubra of al-Bayhaqi)
In recent times, the conventional money lending system has been identified as practicing the most usury transactions such as the housing loan, hire purchase of a vehicle, personal loan, study loan, loan for business capital, loan for the purchase of company machinery and equipment, and many others. Know that the interest charged to the borrower is actually excess payment from the original loan amount approved, which is also ribaa that is severely prohibited. The amount of interest combined with the principal loan amount that is then divided according to the number of months is also ribaa that is forbidden by the Shara’.
Aside from that, it is generally known that extra payments from the original price or interest charged by the loan shark, whether paid on time or late, it is still ribaa and its ruling is haram. Moreover, borrowers are deceived into paying interests that are further multiplied.
Ribaa can also occur in various transactions, for example:
- The business of trading currencies such as Forex Online, because its transactions are not done immediately (hand-to-hand) at the same time when the trading is done.
- Conventional insurance such as life insurance is also haram for it was mentioned in fatawa issued that it contains elements of ribaa, gharar (uncertainty), and gambling.
- Gold trading with delayed (or postponed) exchange, which is not in accordance with the Shari‘ah’.
The prohibition of ribaa is to protect the welfare of mankind in terms of akhlaq, social, and economic. This is as such because the practice of usury will further widen the gap between the haves (wealthy) and the have-nots (poor or underprivileged). It is a form of oppression upon the poor for they will be burdened with debt or interest from a mu‘amalah, while the wealthy continues to profit from the burden of others
We would like to invite those that are involved with ribaa and mu‘amalah that are not Shari‘ah compliant to make earnest repentance and quit pursuing transactions that are related to ribaa. The wealth that we have accumulated from ribaa or unlawful means can be purified by disbursing or channeling them to the path of good, which is in two ways:
First, they are to be given to the poor, needy, orphans, and its like. Take heed, for the wealth accumulated from ribaa, cannot be owned. Rather, it belongs to the general public and its division is done for maslahah ‘amah (public interest).
Second, the “interest” money is to be given to Bayt al-Maal for public interest or benefit such as street repair, building public restrooms, building a bridge, providing aid for natural disaster relief mission such as an earthquake, flood, and its like.
The resolution regarding the distribution of non-Shari‘ah compliant funds or haram money was reached in the outcome of the meeting of the state of Selangor (Malaysia) Fatwa Committee No. 1/2009 held on the 18th of March, 2009, which stated:
- Non-Shari‘ah compliant funds accumulated can become a source for Bayt al-Mal, and it is permissible to transfer them into Bayt al-Mal’s account.
- The usage of non-Shari‘ah compliant funds is permissible for sustaining the working operations such as construction, maintenance of buildings, emolument, education, agriculture, research, medicine, and basic facilities such as building community halls, public restrooms, and others for public use.
Therefore, to conclude, let us altogether ponder and internalize upon a few important recommendations as follows:
- The Muslim Ummah must strictly abide by the command regarding the impermissibility and prohibition of ribaa.
- It is wajib upon the Muslim ummah to opt for transactions and products that are Shari‘ah compliant, so as to avoid any impermissible transactions.
- It is wajib upon those offering any form of financing and protection scheme to only offer ones that conform to the Shari‘ah.
- The Muslim Ummah must make sincere tawbah and purify all of the proceeds obtained from non-Shari‘ah compliant means, so that life becomes blissful and successful in this world and the Hereafter.
Which means: “O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.” [Al-Quran, Surah Ali-Imran, verse 130].