RIBA AND INTEREST * FAZLUR RAHMAN

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RIBA AND INTEREST *

FAZLUR RAHMAN



Source: Islamic Studies (Karachi) 3(1), Mar. 1964:1-43

Note: Riba is usually translated in Urdu by the word sud, which is of Persian origin and literally means “profit” is antonym being ziyan. Sud is not synonymous with the Qur anic term riba but is synonymous with the Arabic word riba. In fact, any attempt to translate the Qur anic term, “riba” in any language, is not only futile, but is also the source of much confused thinking on the subject. - (F. R.)


INTRODUCTION

The literal meaning of riba (Arabic Quote To Be Added) as illustrated by the Qur’anic usage is:

To grow e.g. (Arabic Quote TBA)

“And thou beholdest the earth barren, then when We send down water upon it, it quickens and grows…” (XXXII: 5)

To increase; to prosper; (Arabic Quote TBA)

“God destroys riba, but makes alms prosper” (II: 276); (Arabic Quote TBA)

“And whatever you invest in riba so that is may increase upon the people’s wealth, it increases not with God;” (XXX: 39);

to rise ( for example of a hill) as, (Arabic Quote TBA)

“ And we gave them refuge upon a height…..” (XXIII: 50);

• This is the translation by Mazheruddin Siddiqi of an Urdu article by the author entitled Tahaqiq-I Riba which was published in the monthly Urdu journal of this institute. Fikr-o Nazar i/5 (November 1963). – (Ed.). (Arabic Quote TBA

“As the likeness of a garden upon a hill…” (II:265)

to swell (for example, foam), as (Arabic Quote TBA)

“Then the torrent carried a swelling scum;” (XIII: 17)

to nurture; to raise ( a child); as (Arabic Quote TBA)

“My Lord, have mercy upon them (i.e my parents) as they raised me up when I was little!”(XVII:24) (Arabic Quote TBA)

“Did we not raise thee amongst us as a child?” (XXVI: 18);

augmentation increase in power, etc., as (Arabic Quote TBA)

“He seized them with a surpassing grip…” (LXIX: 10) (Arabic Quote TBA)

“That one Nation be more powerful than another nation.” (XVI : 92)

From the lexical meaning giving above, the technical meaning of the term “riba” is derived as discussed below.

We shall first take up the nature of riba prohibited by the Quran. In the second section we shall turn to the legal Hadith materials concerning the extension of the Quranic term riba to different forms of exchange and transaction. This is justified on the ground that all the fuqaha are agreed that the two fall into distinct categories; indeed, the one has been called “riba al-Qur’an (riba of the quran)” and the other “riba al-hadith (riba of the hadith ) or “riba al-fadl” (riba of excess). In the third section we shall underline the role of bank-interest in the present-day economy, and in the last section we shall record our conclusions based on these considerations and materials.

RIBA AND THE QURAN

The fist statement of Qur’an about riba is as follows:



“And whatever you invest by way of riba so that may increase upon peoples wealth, increases not with God; but what you give by way of zakah seeking the pleasure of god, those – they receive recompense manifold” (XXX: 39).

This was revealed in Mecca for it occurs in the Surah Al-Rum which is wholly a Meccan revelation. The inner evidence of the opening verses of the Surah indicates that it was reveled during the fourth or the fifth year of the Prophet’s Mission, or even earlier, for the Persians began defeating the Romans in “the neighboring lands” i.e. Syria and Palestine referred to in these verses, in 611 A.C. (i.e. the first year of the prophet’s mission) and with the fall of Constantinople in 614 A.C. reached its culmination (i.e. year 4 of the prophets mission). It is not all that surprising that riba is condemned in so early a revelation; rather the absence of such early condemnation could not have only been surprising but also contrary to the wisdom of the Qur’an .the Meccan verses of the Quran are replete with the denunciation of the economic injustice of contemporary Meccan society the profiteering and stinginess of the rich, and their unethical commercial practice such as cheating in the weight and measurements etc, how is it possible than that the Quran would have failed to condemn and economic evil such as riba? However, here it passes only a moral stricture on riba; it does not yet declare it legally which it could eradicate this evil.

When Islam became politically dominant after Prophet’s migration to Medina, riba was categorically prohibited in the following words of the Medinese surah Ale Imran:


“O you who believe, do not consume riba with continued redoubling and protect yourselves from God, perchance you may be blissful” (III: 130)

This prohibition later re-asserted in very emphatic terms accompanied by a threat in Surah al-Baqarah (II: 274-80).









“Those who consume riba shall not rise except like the one who has been struck by the Devil’s touch. This is because they say that selling and riba making are one and the same thing, whereas God has made selling lawful and has forbidden riba. Whosoever receives an admonition form his lord and desists, he shall have his past gains and his affair is committed to God; but whosoever reverts- those are the inhabitants of the Fire, therein dwelling forever. God destroys riba but makes alms prosper. God loves not any guilty ingrate but those who believe and do deeds of righteousness, and performs the prayer, and pay the alms—their reward awaits them with their lord and no fear shall be on them, neither shall they grieve, O ye who believe protect yourselves from God and remit what is left of riba if ye be faithful. If ye do not, desist, ye shall receive back your capital without doing injustice or suffering injustice. If, however anyone is in difficulties, let there be a delay till he is able to pay, although it is better for yet to remit if ye only knew” (II: 274-80)

These Qur‘anic verses and their context show that these are the lasts of the verses prohibiting riba. In some Traditions this fact was misstated and it was claimed that these were the lasts of all the Quranic verses revealed to the Prophet. This was still farther extended and in a tradition the statement was attributed to the Caliph Umar b, al- Khattab that as that Qur’anic injunction regarding the prohibition of riba came in the very end (of the revelation) and since the prophet did not live long enough after the revelation to spell out fully as to what were the constituent elements of riba we should, therefore, not only avoid riba but also ribah (doubtful transactions). We shall examine these traditions in the second section of this study. Here we shall endeavor to understand the riba of the Qur’an in the light of the established maxim (Arabic Quote TBA) (one part of the Qur’an explains another)”.

The verse of Surah Ale Imran categorically prohibiting riba occupies the central place in this series of Qur’anic verses; that of Surah al-Rum was its prologue, while those of Surah al-Baqarah were its epilogue. If we examine these verses in their chronological order, we may include that:

1) the riba of the pre-Islamic days was a system whereby the principle sum was doubled and redoubled (Arabic Quote TBA) through a usurious process;
2) because of this process of doubling and redoubling the principal, the Qur’an refused to admit that riba was a kind of fair business transaction; and
3) While permitting the commercial profit the Qur’an encouraged the spirit of co-operation are opposed to that of profiteering.

The historical evidence that we possess also corroborates the above conclusion.
The Muwatta of Imam Malik records on the authority of Zayd b. Aslam as follows:
(Arabic Quote TBA)

(In the pre-Islamic days riba operated in this manner; if the man owed another debt, at the time of its maturity the creditor would ask the debtor: will you pay up or will you increase? If the latter paid up the creditor received back the sum; otherwise the principle was increased on the stipulation of the further term.)

Abu’l A’la Mawdudi the chief of the Jamaat-i Islami assume that for the first term the credit was granted free for interest but one fails to understand how this is intelligible in a social set-up such as the commercial Meccan society or the Jewish Medinese society, where the riba system was quit normal. How could the usurers, who were keen on doubling and redoubling their capital, forgo the initial interest by way of charity so to say?

Mufti Muhammad Shafi expresses an opinion contrary to that of Mawdudi. He says, “The prevailing practice in Arabia was that a certain amount of money was advanced for a fixed period at a fixed rate of interest. If the debtor paid the loan within the prescribed time the matter was settled on the payments of interest otherwise he had to pay more interest.”5

However, the above-quoted statement of Zayd b Aslam, which is recorded not only by Malik but also by al-Bayhaqi, Razi and other Muhaddithun and fuqaha, shows that the initial interest itself was not usurious and was, therefore, not considered riba.

What made it riba was the increase in capital that raised the principle several-fold by continued redoubling. The situation therefore was that a part of wealth was loaned initially on increase for a definite period but on the expiry of that period, in case the debtor was unable to pay, the term of payment was extended with an enormous increase in the principle amount. It often happened that, were big sums were involved, the debtor went on paying interest alone in installments and yet could not pay off even the usurious interest, let alone being able to return the principle. Al-Tabari recorded reports where whole tribes, e.g. that of Banu Mughirah, were under the weight of usurious debts to one another and when they became Muslims their mutual relations became difficult. Indeed, the very words of the Qur’an (remit what remains of riba). Make the above situation abundantly clear.

As mentioned above, the verse of Surah Ale Imran occupies the central and fundamental positions in the series of verses relating to riba. In this verse the Shariah value, i.e. what the Muslims jurists call. “The illat al-hukm” underlying the banning of riba, is explicitly mentioned to be its becoming doubled and redoubled. This contention of ours is supported by the following two famous commentaries of the second generations of Islam:

(1) Mujahid—Al-Tabari has recorded the following from Mujahid.
(Arabic Quote TBA)
(Muhammad b. Amr reported to us, he said that Abu Asim related to him from Isa, he from Ibn Abu Najih, who said that concerning the Qur’anic verse O you who believe, do not devour riba with continued re-doubling, Mujahid said, this is the riba pre-Islamic days.)

(2) Zayd b. Aslam.—In the same authoritative commentary of the Qur’an, a long statement of the famous tabi’s (“successor”) commentator, Zayd b. Aslam, is recorded which shows detail who the process of “continued redoubling” went on in connection with the borrowing of cattle, as well as memory. This report summed up in these words:
(Arabic Quote TBA)

(The riba of pre-Islamic days consisted in its doubling and redoubling inn terms of cash [in case of borrowed money] and age [in case of borrowed cattle].)

In short, the riba of pre-Islamic days, which was categorically declared haram buy the Qur’an so that those who indulge in it were threatened with war from God and his Prophet, was of an atrocious kind and went on multiplying in a manner that the poor debtor, in spite of his regular payments, could not pay off the usurious interest let alone the capital.

A natural question arises here viz.., if riba is only that form of usurious transaction which has been described above and if only this form is banned, then why is it that, as an effect of the riba-ordinance of the Qur’an, all interests seem to have been abolished as in, indeed, testified by historical evidence? The answer to this is that we don’t hold that in each and every given case of loan, the capital was thus doubtful and redoubled- indeed, there must have been a great deal of variation in individual cases depending on circumstances, e.g. the nature of investment, the amount of risk. Etc. But what matters is that all these individual cases were part of one riba-system in whose nature it was to be so exorbitantly usurious. Therefore, what had to be banned was the system as a whole, and hence no exceptions could be made in individual cases. When the entire system was banned, the milder cases within that system were also naturally abolished since the system itself was tyrannical. It cannot, therefore, be argued that since the Qur’an abolished even the milder cases, it must be concluded that he bank-interests of today also stands condemned, this is because the bank-interests of today is separate kind of system (see Sections, III, IV, and V below.)

II
RIBA AND HADITH

Like alcohol, riba was deeply ingrained in the life-texture of the Arabs of pre-Islamic days. Indeed, commercially speaking, it was much more deeply laid than alcohol. It meant a lucrative business, which brought quick and plentiful return to the usurer. That is why, while its prohibition, like that of liquor, was introduced gradually, its denunciation was much more severe. As mentioned above, the verse of Surah al- rum embodying its first criticism was revealed during the early years of prophet’s mission. This mild admonition was followed by a categorical prohibition in the verse of Surah Al- Imran and by severe threats for the transgressors in the verses of Surah al – Baqarah. The last two series of verses must have been reveled during the early days of the prophets stay at Medina, but the hadith material is against this plausible surmise—and all misunderstanding and misconception s start from this point.

The most well known tradition on the subject in the hadith literature is the one attributed to the Caliph Umar and runs as follows.
(Arabic Quote TBA)

(The last verse to be sent downs was that on riba, but God’s messenger was taken away without having expounded it to us; so leave aside riba and ribah, i.e. whatever is doubtful.) This report is recorded in Musnad of Ahmad b Hanbal, the Sunan of Ibn Majah, Musannaf of Ibn Abi Shaybah, Dalail al-Nuwwah of al-Bayhaqi and similar other compilations of the Muhaddithun of the later period.

In the Sahih of al-Bukhari there is a report ascribe to Abd Allah. Abbas, which narrates the same story, but in somewhat restricted sense. Al-Bukhari in his chapter on the “last verse of Surah al-Baqarah” records as follows:
(Arabic Quote TBA)

(Ibn Abbas said: the last verse sent down to the prophet was the verse on riba). First, it is surprising that the singular number has been used twice for as many as seven verses. Secondly, in the Kitab al–Tafsir of his Sahih where he has narrated the above report, al – Bukhari has also cited the following Traditions attributed to A’ishah through four different chains of transmission. (Arabic Quote TBA)

(When the last verses of Surah al-Baqarah concerning riba were sent down, the messenger of God recited them to the people and prohibited the sale of liquor [as well]). Now, according to this tradition, not only is A’ishah silent on the verses in question being the last revelation but by connecting them with the buying and selling liquor, she has furnished some basis for the assumption that the verses might have been revealed around the year 4 A.H. because, according to the commonly accepted traditions, liquor was prohibited the same year. Further, in the same Kitab al-tafsir of the Sahih of al-bukhari, another companion of the prophets, Bara’ah‘Azib is reported to have said: (Arabic Quote TBA)

(The last verse to be revealed was; they ask you for a pronounced. Say: God has pronounced for you concerning the indirect heirs… (IV; 177) and the last Surah was Bara’ah) if we look beyond this most celebrated source-book of hadith we will find still more conflicting reports on this subject, the details of which are given by al- Suyuti in his al-Itqan fi’Ulum al-Qur’an. .

Apart from the fact that the report attributed to Umar has been contradicted by so many other reports (which in turn contradicts each other!) there are several other reasons why we must reject this report.

(1) As mentioned above, the gradual prohibition of riba started during the early days of Meccan period. That, in spite of these early revelations, the companions of the prophet continued to take riba until a few days before the death of prophet when Allah had threaten them with war from himself and his prophet, would be a serious reflection on their character. Most probably it was due to this apprehension that the word riba in the Meccan Surah al- Rum had been defined as hadiyah (gift) by all the classical commentators of the Qur’an such as al-Tabari al-Baydawi, al-Suyuti and others. A “ permissible riba has been invented by these commentaries and it has been asserted by them that this verse related to that riba. They are supported by al-Bukhari himself, who writes: (Arabic Quote TBA)

(In this verse (Arabic Quote TBA) means that if any person gives a present to someone and in turn expects a better present, he will not be rewarded by Allah.) We find it difficult to subscribe to ay such constrictions put on the basic terminology of the Qur’an or to the drawing of any distinction between a halal to a haram riba, with a view to reforming Mecca of the days of the Prophet.

(2) It simply cannot be accepted that the practices of the riba which was censured so early and was ultimately denounced in such unprecedented strong terms by the Qur’an could not be adequately explained by the Prophet due to shortage of time. Such assumption also goes against the claims of the Qur’an that –



“Today I have perfected your Faith for you I have completed my blessing upon you … (V: 3).

The Caliph “Umat himself is reported to have said that the above verse was revealed on the day of ‘Arafah during the Last Pilgrimage of the Prophet. Now if the verse on riba was the last revelation, the above verse must have preceded it, and, therefore, it could not be claimed at the time that “the Faith was perfected”. It is for this reason that al-Suddi and some other commentators have stated, “After the revelation of the verse ‘... (Arabic Quote TBA) no verse was sent down relating to permission (hillah) and prohibition (hurmah) (Arabic Quote TBA)

In order to explain away this contradiction, al-Tabari has put forward the plea that “the perfection of the Faith” mentioned in this verse means that “on the occasion of the Last Pilgrimage the Muslims had gained ascendancy in Mecca and the idolaters had been eliminated firm the Holy City. Any such construction put on the verse which evidently relates to the content of the Prophet’s Mission is not at all acceptable to this writer. It is clear from such commentaries that how detrimental certain well-known but un-authentic hadith can be to the fundamental principles of the Faith.

(3) Another serious objection against this report is that it conflicts with the following verses of the Qur’an: (Arabic Quote TBA)

“And for the evil-doing of the Jews, We did forbid them certain good things that were permitted to them and for their barring many people from God’s way, and for their taking riba, which was prohibited to them, and for consuming the wealth of the people with falsehood ; and, We have prepared for the disbelievers among them a dire chastisement” (IV: 160-61). Now the accusation of the Jews on the ground of taking riba was only possible and consistent after riba had been actually eliminated from the Muslim society itself; otherwise the Jews would have certainly pointed to the Muslims and said, “et tu quoque”. But the last remnants of the Jewish tribes, the Banu Qurayzah, were wiped out from the trench. Therefore the accusation of the Jews could only have taken place before the end of that year, and the riba prohibition for Muslims must have, therefore, ante-dated 5 A.H.

(4) As we have already explained the verse of Surah Ale Imran; “Do not consume riba with continued redoubling” occupies the central place in the series of revelations on the subject. Now this fundamental verse must have been revealed just after the Battle of Uhud, because this verse is immediately preceded as well as the followed by the verses that describe the Muslim’s defeat at Uhud, analyze the cause and consequences of this reverse and suggest ways and means so that the tragedy might not be repeated.

Now we can conclude from the above discussion that the contrary to the report attributed to Caliph ‘Umar, the chronology of the revelations concerning riba is as follows:
i. The first revelation condemning riba early years of the prophet’s Meccan life; after the roman’s defeat at the hands of the Persians
ii. The second revelation prohibiting riba 3 A.H. after the Muslims’ defeat at Uhud;
iii. The third and last revelation threatening those who would transgress this prohibition (Sarah al- Baqarah) before 5 A.H. before the exile of the last Jewish tribe of Banu Qurayzah.

Among the recent writers on the subject, Mawdudi appears to be of the same view as we are, as far as the above chronology is concerned. In the first volume of the third edition (1954) of his Urdu treatise on Sud (“Interest”) he has a chapter entitled (Arabic Quote TBA) in which he tells us in detail that Riba was condemned in a Meccan revelation ands was prohibited in the verses revealed “immediately after the prophets return to the Medina from Uhud.” But it is surprising that after waxing eloquent on the wisdom of the above chronological order of these revelations, he cites, in the same breath, the report attributed to Caliph Umar in support of his contention. But it appears that after the lapse of several years the logician in (Mawlana) Mawdudi realized and glaring contradiction in the two positions and we presume that it was this realization that led him to expunge the above- mentioned chapter, in its entirety, from the latest (1961) edition of the treatise. However, we are of the opinion, and we hope Mawdudi will also agree with us, that the question of the chronological order of the Quranic verses and of the historical context of their revelation (especially when a fundamental problem like that of riba is involved) is not so unimportant that a stand taken in this respect against the current and accepted viewpoint can be quietly and unceremoniously withdrawal without taking the reader into confidence.

We have dwelt at length of refuting the report attributed to caliph Umar, because this as well as other such reports in the hadith- literature prevent a correct apprehension of the nature of the riba prohibited by the Qur’an. It seems that at some stage it was assumed that the Quranic account of riba was not adequate. Need was, therefore, felt of elaborating it through hadith- material in order to extend the coverage of the riba-ban. The report under discussion was the starting point of a vast and ever-expanding hadith-literature that was accumulated on the subject in the course of time. Like the report on the chronological order of the Quranic revelations on riba, the hadiths on the nature of riba itself, too, are contradictory and conflicting. We shall give a few instances of these contradictions in the following lines

(1) Al- Bukhari, Muslims, al- Nasa al-Darimi, Ibn Majah and Ahmad b Hanbal have recorded hadiths reported through various chains of transmission whose purport is (Arabic Quote TBA) (“riba on loans”) or in the more emphatic expressions of al- Bukhari (Arabic Quote TBA) (there is no riba except on loans) or in the words recorded by Muslims (Arabic Quote TBA) (there is no riba when payment is made on the spot).

But at the same time the Sahih of al- Bukhari, that of Muslim and other canonical collections of hadith contain the following Tradition with slight verbal variations: (Arabic Quote TBA)

(Abu Sa’id al-Khudri reported God’s Messenger as saying, “God is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt like for like, payment being made “hand to hand”. If anyone gives more or asks for more he has death in Riba. The receiver and the giver are equally guilty”).

The contradiction between the above two sets of hadith does not rest here. There are varied conflicting opinions of the fuqaha on this subject and each one of the schools has its own supporting hadith

It appears that the riba describes in the above-quoted hadith, which is known by the technical name of Riba al-Fadl (Riba of success) is a later innovation. Eminent Companions of the prophet, like Mu’awiyah, us amah b. Zayd, Zayd b Arqam, “Abd Allah b. Abbas and Abd Allah b Umar were unaware of it. Some Traditions claim that the two Abd Allahs mentioned above had accepted the fiqhi repugnance of the “riba of excess” in their later life, however, the form in which the contrary opinion is expressed in the hadith as reported by al Bukhari, viz. (Arabic Quote TBA) (there is no Riba when payment is made hand in hand, i.e. in the spot) clearly shows that it is protest against its opposite and seeks to re-assert the original state of affairs produced by the Qur’an and that some Companions of the Prophets at least had refused to except this change in which seemed to gain increasing popularity among their contemporaries.

This glaring contradiction between hadith related to the riba of excess and our early experts on hadith did not overlook those related to the riba of credit and fiqh and they have tried to explain it. The most famous and popular attempt to resolve this contradiction is that of al Shafi who says: (Arabic Quote TBA)

(It is possible that Usamah found that the people had questioned the prophet regarding the hand to hand exchanged of gold with silver, of dates with wheat and likewise other articles with those of different kind. The prophet replied, according to Usamah’s report, that Riba concerns exchange of commodities on credit. It is also possible that the questioner may have explained this at the time when he put the question and he received this reply from the prophets. Then Usamah reported the reply of the prophets only but forgot to report the question as well. It is also possible that he may have some doubts in regard to this matter, because the hadith reported by him does not contain anything repugnant to these surmises. The inconsistency and contradiction between this hadith and the others on the same subject can, therefore, be resolved. How far these surmises of al- Shafi succeed in removing the contradictions we leave to the judgment of the reader. But one of the examples of the modern ijtihad carried out to resolve the contradictions between these hadith is astonishing. Mawdudi does not discuss the Riba of excess in his chapter on sud interest but devotes another chapter to it significantly titled; (Arabic Quote TBA) “the adjuncts of sud (interest).”

He writes: (Arabic Quote TBA)

(The initial injunction concerning sud (interest) was that sud (interest) relating to loans was categorically forbidden. The hadith narrated by us amah b. Zayd says that the prophets remarked (Arabic Quote TBA) (“Riba is only in transaction involving credit”).
In some reports the prophet’s words are (Arabic Quote TBA) (“there is no Riba except transactions involving credit”.) Afterwards, however, the prophet deemed it necessary to put hedges around this divine preserve, so that people cannot even approach it. In this category falls the prophet’s order, which forbids not merely the taking or giving of sud. (Interest) but also the writing of a document involving such transactions and acting like a witness in such transactions. In this category also falls those hadiths in which the prohibition of riba of excess has been laid down.)

The words used by Mawdudi show that the “riba of excess” universally covers all things in the same manner as riba involving credit in relation to all commodities, weather riba is taken or given, or a document involving riba is written or some evidence is given in a case pertaining to riba.

A little further, under the title (Arabic Quote TBA) (“What Riba of excess means”) he says: (Arabic Quote TBA)

(‘Riba of excess if the excess in which accrued when two articles of the same kind are exchanged from hand to hand. The prophet has forbidden it, because it opens the door to acquiring more and more money, and it breeds in man a metal attitude which ultimately ends in living on sud (interest). Indeed Mawdudi is stressing the fact that the riba of excess refers to the general excess, which accrues in transactions involving the hand-to-hand exchange of all articles of the same kind. One feels that the manner in which Mawdudi has extended the meaning of riba of excess itself smacks of intellectual usury! In the hadith there is mentioned only of six articles with reference to which the riba of excess has been mentioned. Mawdudi has extended the meaning of manifold thus shutting out all dealings in which something is acquired in excess of that which is disposed of)

(2) Another example of the contradiction found in the hadith material concerning riba is that which relates to the purchase and sales of animals. The contradiction assumes significances in view of importance of camels and horses in the economic life of Arabia. In al-Muwatta Malik reports from Ali that he sold one of his camels on credit and obtained in exchanged twenty camels.” Al-Bukhari has devoted a whole chapter to establishing the permissibility of such transactions. This chapter is entitled (Arabic Quote TBA) (“chapter on the sale of slaves and of animals for animals on credit”) In this chapter a number of companions of the prophet and their successors, all of whom were eminent fuqaha, e.g. abd allah b. Umar, abd allah b. Abbas, rafi b. Khadij, said b. al-Musayyab and ibn Sirin accord sanction to such transactions. The sum total of all such hadith reports is that (Arabic Quote TBA) (“there is nothing wrong with exchanging one camel for two on credit”). The Sunan of Abu Dawud and the musnad of Ahmad b. Hanbal also record a hadith from the prophet which runs as follows: (Arabic Quote TBA)

(Abd Allah b. Amr b. al-Aas reports that the prophet of God asked me to make arrangements for fitting out an expeditionary force. When the supply of camels fell short, he said that [Abd Allah] should borrow camels against the young she-camels, which would be given to the fiscus in alms. Therefore, he effected a transaction at the rate of one camel for every two to be received in alms by the fiscus [at the time of the collection of zakar.] This hadith has been recorded also in the Sunan of al-Bayhaqi and is supported by a strong chain of authorities.

In contrast of the opinions held by the Traditionists of the earlier period, like Malik and others, on this subject, their successors exhibit a gradual strictness. The Jami of al-Trimidhi contains the following hadith: (Arabic Quote TBA)

(Jabir. Abd Allah reports that the prophet said to him that in a credit transaction it is not permissible to take two animals for one. However, if it is hand to hand transaction, such a thing would not matter.)

The compilers of the Sunan- workers, later on collected hadith which totally prohibited the exchange of animals on credit, whether or not there was an excess. For example, a tradition on the subject says: (Arabic Quote TBA)

(It is narrated from Samrah that the prophet of God prohibited the exchange of one animal for another on credit.) the same hadith also occurs in the Musnad of Ahmad b. Hanbal. But the significant point is that the hadith is found not in the main text of the Musnad but in the supplement, added to it by a son of Ahmad b Hanbal. Moreover, it is one of those hadiths contradicting this hadith. This is not surprising since the former are doubtless prior in time, i.e. go back to an earlier period. It is evident that in the hadith material on this particular subject, too, there is marked tendency of making the shari’ah progressively more rigid.

(3) One of the forms in which this contradiction appears in a most palpable manner is connected with the question of the leasing of the land. The way in which landlordism and feudalism have sapped the strength of Muslim society requires the such hadiths should be carefully studied. In the Sahih of Muslim and in other Sihah works.

The renting of land on the basis of a proportion of the produce or on cash payment has been explicitly prohibited in all these Sihah-works, the terms used for such prohibition are (Arabic Quote TBA) and the whole chapters containing hadiths have been devoted to these matters. These hadith have been narrated by six different Companions of the prophet, viz rafi b. Khadij, Jabir b. Abd Allah, Abu Hurayrah, Zayd b. Thabit, Abu Sa’id Khudri and Thabit b. al-Duhhak and, indeed, have been narrated by each one of these companions not through any one chain of isnad, but many chains. Among the hadiths, which concern human dealings, there are very few which reach such a degree of “currency”, (Arabic Quote TBA) because of their being so well supported. Whether this type of hadith actually does go back to the prophet or not, its undoubtedly represents the original state of affairs because in Meccan there was neither land or landlordism while in medina, because of small holdings, everybody tiled his own land and thus there was hardly any landlordism. With some verbal changes or change of expression, the gist of all these hadiths is contained in the hadith of the Sahih of Muslims which says:
(Arabic Quote TBA)

(It is reported by Jabir that the prophet said, whoever is in possession of land, must cultivate to himself but if he cannot do so, and is unable to cultivate the whole of it, then he should bestow it [or part of it] on his brother Muslim as a free gift or lend it to him but he should not seek wages [profit it from any form] .)

As far as the early collectors of hadith are concerned, the hadith contained in their collections simply forbid the leasing of land or levying a tax thereon, but it has not been termed riba. The important thing with reference to the subject under discussion, however, is that later on in the Sunan of Abu Dawud there is a hadith narrated by Jabir b. Abd Allah which puts this cruel agricultural system in the category of riba. The hadith says:
(Arabic Quote TBA)

(Jabir reported that the prophets said: ‘The person who does not desist from leasing his land [on condition that he will receive a certain agreed proportion of its produce] should be ready to face a war from God and His Prophets.”)

It is worth nothing that this hadith condemns landlordism with exactly the same threat which was used by the Qur’an against riba. It seems that the Muslims reported to ijihad when, after the conquest of Persia, they had to deal with the firmly-rooted feudal system of the country. A justification was sought for landlordism in the example of the prophet at the time of the conquest of Khaybar, because the prophets had allowed the conquered land in Khaybar to remain in possession of the Jews in condition that they would retain half the produce of the land and give the other half to Muslims. As a result, we find that there is a hadith in all the six canonical books of hadith that Abd Allah b. Umar continued leasing his land for a long time, although the hadith says, at the same time, that he gave up the habit in later life.

Abu Hanifah appears to have explained the Khaybar incident as being a case of khardi. The prophets, he argues, levied khardi on the Jews as an act of kindness and as a mark of his peaceful intentions. Otherwise, he had got procession of Khaybar as the result of a conquest and as such the whole territory had fallen booty to the Muslims. It was quit permissible for him, therefore, to have taken possession of the entire land. But he did not do so. Instead, he allowed the lands of Khaybar to remain in the possessions of the Jews on condition that they made over half of the produce of the land to the Muslims. A prominent Hanafi expert on hadith Ayni has remarked in support of Abu Hanifah.”No traditions exist in the corpus of hadith to show that the prophet levied the jizyah on the Jews of Khaybar during his lifetime, nor is Abu Bakr or Umar reported to have done this. Finally, Umar exiled the Jews from Khaybar. If the Prophet had not already made the settlements, which he had made with the Jews of Khaybar, it is certain that the jizyah would have been levied on them, after the verse regarding jizyah had been revealed. It must be said here by way of explanation that this argument of Ayni in reality contradicts the argument put forward by Abu Hanifah because if the land of Khaybar fell within the category of booty, there was no question of jizyah being levied on them.

As mentioned above, there is a Sahih hadith in the Sunan of Abu Dawud narrated by Jabir b. Abd Allah which says that any person who leases land on the basis of a division of the produce is liable too get the same extreme punishment that is prescribed for a person who takes riba. Ignoring this hadith and other supporting shih hadith, a number of which verge on towards, i.e. near unanimity, Mawdudi has sought to find reasons for the permissibility of riba in the form of landlordism in his monograph on landed property entitled Mas-alah-i Milkiyyat-I Zamin. He is supported by Mirza basher al-Din Mahmud head of the Ahmadiyah] who upholds similar views on the question of landlordism in his Urdu tract Islam awr Milkiyyat-i Zamin (“Islam and the Ownership of Land”)

The contradiction found in the hadith in respect of riba is difficult to resolve. On the basis of isnad alone, there is not much scope either for the rejection or the acceptance of these traditions, because, as is cleat from the above discussion, the Sihah works contain good number of hadiths on each aspect of these topics. Every one of these hadiths is either sahih i.e. supported by a strong chain of authorities or is supported by other hadiths of the level of Sahih hadith. The surmises made on the basis made on the basis of qiyas (analogy) are not so important in our opinion as the historical order of these certainty, and its not a mere matter of probability. If these hadith are viewed in this way, it becomes apparent that there is a clear process of devolvement-involved therein. All three cases mentioned illustrate a progressive rigidity of opinion, as we pass from the early traditions to those of the middle period and then from the later from the later traditions. As we go further we shall find the same process of development is at the bottom of the contradictions found in the hadith material.

Besides the above-mentioned contradictions, most of these hadith are full of other complexities, which we find impossible to resolve, for example:

(1) As we have mentioned above, if there is hand-to-hand exchange of articles like gold, silver, wheat, dates or salt. In excess or in deficiency that would become Riba in accordance with the most widely current traditions. This is what has been called Riba al fail (Riba of excess”, according to which if a bushel of wheat of better quality is exchanged for a bushel of and a quarter of an inferior variety, the transaction would fall into a category of riba similarly, rock salt if exchanged for sea water salt, even from hand to hand, would become riba, if any excess in weight is involved. Now the question is whether quranic declaration that if people do not give up riba they should be prepared for a war from God and his prophet refers to such transaction and whether it is with reference of these dealings that such hadith have been narrated in which is said that the taking of riba is as revolting as incest.

(2) According to Muwatta of Malik and the Sahih of al-Bukhari excess is permissible in a transaction involving cattle even on credit, and such excess cannot be characterized as riba. The question, therefore, arises as to why such excess in respect of other forms of wealth should be considered riba

(3) The Sahih of Muslims and other sahih works contain hadiths showing that the credit transaction, not only of cattle but even of slaves and coins of copper, is permissible even when such transactions involve excess. Reference to most of these hadiths may be seen in relevant chapters of hadith collections cited in this paper. It was in view of such hadiths that al-Bayhaqi devotes a whole chapter in his al-Sunan al-Kubra entitled - (Arabic Quote TBA)

(There is not riba beyond that article which can be used for food or drink and article for silver and gold.) Therefore, the question of riba does not arise with regard to those commodities, which are the backbone of Pakistan’s economy, e.g. jute and cotton. However, it is possible that out fuqaha may reply that jute is “ the golden fibre” and cotton is the” silver crop” therefore they also fall within the category of gold and silver. The same principle will apply to the oil found in Arabia, Persia and elsewhere because oil is called “liquid gold”, but what judgment will our legists pass on hides and skins, which are an important source of wealth of our country?

In view of the sharp contradictions and insoluble complexities found in a large number of Traditions concerning riba it would be a courageous act to attempt an inclusive and exclusive definition which would cover all cases of riba and exclude transactions which do not fall within this category. But the lexicographers, at least, cannot do without some definition of the term. Therefore, we find that the third century lexicographers and grammarian, al-Zajjaj has defined the term as follows:
(Arabic Quote TBA)

(Riba is of two kinds, one of which is forbidden. This is the riba which a person earns by taking from the debtor more than the principle sum which he has given him on credit or any debt from which any profits might be obtained. The other riba, which is permissible, is a gift of exchange of which the giver demands a more valuable gift in exchange of which he expects to receive a bigger gift) it would have surprising if a definition of this kind have not found its way in the collections of hadith. The manner in which is secured its place among the hadith-works is worthy of consideration. There is no trace of hadith during the second third or even the fourth century. Neither the Sihah nor the Sunan nor even the Musnad of Ahmad b Hanbal collected by his son and his disciple, which is the most exhaustive of early hadith collections, contains any trace of such hadith suddenly, in the fifth century A.H. al- Bayhaqi in his Sunan has a chapter headed.
(Arabic Quote TBA)

(Every loan from which some profit accrues is riba) in this chapter there occurs the following hadith: (Arabic Quote TBA)

(A Companion of the Prophet, Fudalah b Ubayd said that every loan form which some profit accrues to the creditor is the one of riba). Two facts should be noted in this connection. First till now. i.e. the fifth century, the hadith in question is mawquf i.e. it does not go back to the Prophets, and the chain of transmission comes to an end with one of the Companions secondly, it has still not reached the degree of comprehensiveness required of a definition. The words used are very nearly the same which found their way in the Lisan al-‘Arab 150 years hence, i.e. (Arabic Quote TBA) (every loan which a profit accrues) but the mode of expression still lacks precision, because al-Bayhaqi says (Arabic Quote TBA) (it is one of the forms of riba). Once this lack of precision has been removed in the centuries that followed, we find this hadith in the ninth tenth century of the Hijrah in the work of al-Suyuti (d. 911 A.H.) entitled al-Jami al-Saghir., where it takes the form.
(Arabic Quote TBA)

(Every loan from which a profit accrues is riba). But this is not all. During this intervening period, the hadith had gone through a process of evolution and was projected back to the Prophet from whom Ali is said to have heard and narrated it. Thus, now it becomes the injunction of the Prophet. Al-Suyuti refers to an obscure Musnad said to have been compiled by one hadith b. Muhammad b Abi Salmah, which is not known even to al-Zirikli the author of al-A’lam. He says about Harith, (Arabic Quote TBA) (there is a Musnad by Harith b. Muhammad, which he did not arrange). However, al-Suyuti takes care to remark that the hadith in question is da’if (weak). At the end of the same century, i.e. tenth century of Hijrah, the Indian Muhaddith (Traditionist) ‘Ali al-Muttaqi of Burhanpur (d.975 A.H.) quoted this very hadith in Kanz al-‘Ummal in the chapter entitled “The words and supported by the same authority. However, he omits to mention the fact that the hadith belongs to the category of da’if Traditions. This is a further step in the evolutions of this hadith within these few years the hadith ceased to be weak. The Egyptian, Shaykh ‘Ali b. Ahmad as-‘Azizi (d. 1070 A.H.), in his commentary al-Siraj al-Munir on Al-Suyuti’s al-Jami’ al-Saghir, characterizes this hadith as falling within the category of ‘hasan li-ghayrihi’, i.e. it is hasan (good) on the basis of other supporting evidence. Now in the present century Mufti Muhammad Shafi’ a Pakistani scholar, in his Urdu treatise entitled “The Problem of Interest”, to which we have referred several times in this paper, has given his judgment after quoting Fayd as-Qadir and al-Siraj as-Munir in respect of this hadith, that it is salih li ‘l-ama; (valid basis for legal decision), and therefore, it can be cited to buttress an argument. In the appendix to this treatise, Mufti Shafi has laid renewed stress on this hadith, and has based all his premises and conclusions thereon.

Mufti Muhammad Shafi is in fact, so insistent on this supposed definition of riba that he wants to remove any suspicions about this hadith falling within the category of da’if (weak) traditions indeed of its being without any foundation at all. He says when experts on lexicography and prominent commentators of the Qur’an are all agreed on the definition, there remains no need of any further hadith or traditions. In the beginning of his treaties he justifies this stand in the following words in short, this sense of riba viz that it consist of acquiring some profit from a loan given to a person, was well know form the beginning and all the Arabs knew it very well. Even if this hadith did not exist, Arabic lexicons would have quite sufficient to make the meaning clear. References in connections with this will be given presently. A little further on page 12, the author gives the reference of the Arabic lexicons, which he had promised earlier. This reference is to the above- mentioned definition of riba made by al-Zajjaj and quoted by Lisan al-Arab. It is obvious, however, that by the mere fact that a particular definition has been entered into a lexicon however authoritative the latter may be, it does not thereby become an absolute definition on language. It is also well known that the dictionary meaning of riba is excess growth and elevation as has been accepted by mufti Muhammad Shafi himself. In the introductory section of this paper we have tried to explain this very meaning of riba with illustrations drown from the Qur’anic verses.

The excerpts given by the author in support of his definition of riba make the above facts very clear and they also prove that eminent lexicographers and prominent commentators of the Qur’an quoted by him, if they do agree on anything at all, it is that they shall all differ and that each one of them shall give a definition of his own.

Ibn al-Athir in his dictionary of hadith entitled Kitab al-Nihayah says:
(Arabic Quote TBA)

(The original meaning of riba is excess and in the terminology of the Shari’ah it means increase in the principle without any contract having taken place.)

Ibn al-Arabi in his commentary of the Qur’an entitled ahkam al Qur’an which deals with the legal injunctions of the Qur’an gives the following definitions of riba: (Arabic Quote TBA)

(The lexical meaning of riba is excess. In the quranic verse it refers to that excess which does not carry with it a corresponding consideration.)

In the famous legal commentary Ahkam al-Qur’an of Abu Bakr al-Jassas the fact has been emphasized that .. (Arabic Quote TBA)

(Literally riba means excess but in the shariah this word has been used in a sense other than the one for which it (the word) was originally made.)
A little further, al-Jassas defines the term riba as follows : (Arabic Quote TBA)

(Riba is the loan given for a specified period on condition that [on the expiry of the period] the borrower will repay it with some excess.)

Mawdudi has paraphrased this definition of riba as follows: (Arabic Quote TBA)


(Therefore sud, [interest] is that excess money which is obtained or determinate conditions at a fixed rate for the principle loaned out in consideration of the period for which the money has been lent.)
In this connection al-Jassas says: (Arabic Quote TBA)

(Words which have been passed into terminology of the Shari’ah from the language [of the Arabs] so that they have lost the meaning for which they had been originally coined, e.g. salat [prayer] swam [fasting] zakah [welfare- tax] require re-statement and precise definition. If not proper to argue in general from that word or term [in its original linguistic sense] in order to establish the illegality of a particular business dealing, except when it is established that that particular deal falls within the definition of the shariah term. It is clear that the manner in which al-Jassas solves this problem is very difficult from that of Mufti Muhammad Shafi according to whom- (Arabic Quote TBA)

(The meaning of riba was already known in Arabia and even if this hadith were not there Arabic language itself was sufficient to make the meaning of riba clear.) Mawdudi goes a step further and says; (Arabic Quote TBA)

(Because al-riba was a particular type of excess which was well known, therefore, the Qur’an did not care to explain it and it was deemed quite sufficient to say that God had declared riba to be unlawful and that people should give it up.) al- Jassas is a jurist and a commenter of the fourth century A.H. (he died in 370 A.H.): according to him, one needs the help of Qur’an and the hadith to understand the definition of riba, but these jurists of the fourteenth century of the Hijrah seem to have dispensed with that assistance. Shall we call it progress?

We do not agree with al-Jassas that the term riba is like swam, salat and zakah etc. And that its meaning is fixed by the shariah. In the first part of this study, we have made it clear that at the time when the Qur’an was revealed there was a particular type of tyrannical business prevalent in Arabia, which was called riba. So riba is a historical phenomenon, which is evaluated by the shariah. But let us, for the sake of the argument, accept the advice given by al- Jassas and find out whether the above definition are based on some evidence from the Qur’an and hadith and whether they are jami and mani, i.e. inclusive of all that comes within their scope and exclusive of anything which is not covered by them.

From the Quranic viewpoint, none of the above definitions seem to be correct, because as we have noticed in the first section of this study in the Qur’an’s clear words the historical arrangement of the revelations on the subject and in the light of the historical traditions handed down by the commenter who were in direct contact with the Prophets Companions, riba consists in doubling and redoubling the original sum loaned out.

However, from the view-point of hadith some important conclusions can be drawn, in spite of the contradictions found in them and the complexities involved threin. These conclusions are as follows:

(1) According to the tradition attributed to the Caliph Umar the correctness of which we have already disused in this section, no strict and obvious definition of riba is possible at all. It is surprising that our present religious scholars stress not merely the correctness but the importance of this tradition from Umar and in the same breath expresses the opinion that the definition of riba was commonly known in those days so that there could be no ambiguity left in the minds of men. As against out present scholars, seem to be aware of the difficulties involved. Thus, al-Jassas writes: (Arabic Quote TBA)

(Riba has now become a term of shariah. If it had retained its original literal meaning,” Umar would have remained in no doubt about its actual import, because Arabic was him mother tongue and he well knew it literal sense. An argument in favor of this position is that people of Arabic did not consider the deferred exchange gold for gold silver for silver as riba, while according to the shariah this to is riba. Riba thus becomes like one of those words which are mujmal [concise] and required explanation and elucidation.)

(2) The above definitions are not inclusive (jami) because none of these definitions can apply to the riba al-fadl (riba of excess.) (see the contradictions in the traditions on this subject discussed above). It is surprising that on the one hand the definitions given by mufti Muhammad Shafi and Abu’l A’la Mawdudi lay so much stress on the dictum that (Arabic Quote TBA) (every loan from which a profit accrues is riba)”. (His statements have been quoted above.) On the other, Mawdudi says-(Arabic Quote TBA)

(The jurists of Islam too from the first [sic] century onwards are agreed on the principle that every loan from which any profit accrues is riba.) But these very people accord riba al-fadl (riba of excess) the full status of riba, even though it involves no loan.

(3) In the same way the above definition are not exclusive [mani], because according to the following Traditions of the sahih of Muslim, any excess at the time of repayment of a loan is not merely not riba but in the words of hadith constitutes husn al-qada i.e. “ a good way of fulfilling a contract”. Muslim has a whole chapter entitled: (Arabic Quote TBA)

(Chapter relating to him who borrowed something, then he repaid it with something better and the best of you is he who repays another with something better.) in this chapter there is a hadith who says: (Arabic Quote TBA)

(Abu Rafi [a client of the Prophet] said: ‘the Prophet borrowed a young camel from some person, and when some camels from the camels of the sadaqah came to him, he ordered me to pay back the man his young camel. When I told him that I could find only an “ excellent “camel in its seventh year, he said, ‘give it to him, for the best person is he who discharges his debt with something better’.)

This same Tradition has been traced back to Abu Rafi with slight verbal changes through another chain of transmission and to Abu Hurayrah through three different chains.

The above quoted Tradition is found also in the Muwatta of Malik. Here it has been narrated on the authority of Yahya who .has narrated it from Malik through Zayd b Aslam who related it from Ata b Yasar through Abu Rafi. The same Tradition, narrated on the authority of Abu Hurayrah, is also found in the Sahih of al-Bukhari the above Traditions which fall within the category of Mashhur (famous) seem to have raised in the minds of some people the doubt that the conversion of riba into the virtue of “the goodness in the repayment of loan” relates only to the purchase and sale of cattle. This idea is quiet marked in most of the chapter headings of the Sihah works cited in our notes. If this surmise is correct, two points arise which require consideration. First, if at the time of the repayment of a loan, the excess paid over and above the principle some of money is not riba in the case of cattle, what is to happen to the universality of the dictum so very much insisted upon by our doctors that “every loan from which a profit accrues is riba”? Secondly, a matter which constitutes the virtue of “goodness in the repayment of loans” in the case of cattle, becomes, when applied to forms of wealth other then cattle, an evil of such enormity, that it is characterized as an act of war against God and his Prophet. How is this intelligible?

A hadith quoted in the Sunan of Abu Dawud and the Musnad of Ahmad b Hanbal shows that such an invidious and unjust distraction between cattle and other forms of wealth cannot be attributed to the Prophet. The words of hadith in the Sunan of Abu Dawud are as follows. (Arabic Quote TBA)

(Muharib reported that he heard Jabir b. Abd Allah saying that the prophets owned him [Jabir] some money and at the time of the repayment of the loan the Prophet added [some money] in excess of the principle borrowed).

Besides, as we have shown above in the detail, according to some hadiths in Muwatta of Malik and the Sahih of al-Bukhari there is no riba at all in the deferred exchange of cattle. A hadith to the same effect is also found in the defend exchange of cattle. A hadith to the same effect is also found in the Sunan of Abu Dawud as well as in the Musnad of Ahmad b Hanbal, which we have already quoted. The matter does not remain confined to the cattle but passing on to slaves and copper coins, it reaches through the Sunan of al-Bayhaqi to all those things which are not gold and silver and do not fall within the category or articles that can be eaten or drunk. In the face of all this, not only does the definition that “All loan from which a profit accrues is riba” break down but even other definitions become pointless.

Ibn al-Arabi’s definition of riba in his Ahkam al-Qur’an, viz. that is an excess which carries with it no compensation or consideration (Arabic Quote TBA) is very interesting, because it sounds very much like the Communist theory of “unearned income”. But if this definition is accepted, there is no room for permissibility of mudarabah (sleeping partnership). Mufti Muhammad Shafi quotes this definition in support of his argument but evidently overlooks its dangerous implications. Some people say that the risk involved in the form of profits. But in the “big business” world today, the danger of bankruptcy involved in the banking is almost as much or as little as the risk to which the partners in the “modern cartel” are exposed. Similarly the loans advanced by the banks to businessmen may never be repaid. This is the risk which the banks have to face perpetually.

In short, no attempt to define riba in the light of Hadith has been so far successful. The question, then, is whether all the Traditions relating to riba, having been found unauthentic, should be rejected in toto. We would reply most emphatically in the negative. It is true that the evolutionary process through which these hadith had passed and of which we have given a brief account above has shown them not to be authentic. But it would be a grave folly to ignore their moral import since they are sincere and performed attempts at interpreting and elaborating the Sunnah of the Prophets and the Qur’anic injunctions. The fact is that the spirit underlying these efforts was the Qur’anic spirit in respect of economic life and economic system that it wanted to promote. Therefore, we feel convinced that in order to understand riba as meant by the hadith, it is first necessary to understand what the Qur’an meant by riba.

We have already mentioned in the first section of this paper the kind of riba which the Qur’an prohibited. But this is the negative aspect of the problem. To understand the positive aspect we should take into account the important fact that, according to the Qur’an the opposite of riba is not bay (trade) but sadaqah (charity). The prevailing confusion about the problem, we submit, was due to riba and bay being considered opposed to each other. The result was that juristic hair-splitting was substituted for the moral importance attaching to the prohibition of riba. In the Qur’an the very first revelation condemning riba speaks of “what you give by way of zakah” in juxtaposition with and contrast to “whatever you invest by way of riba”. In the same way, the last revelation on this topic speaks of Allah as “destroying riba”, but this is immediately followed by the remark “but He makes alms (sadaqat) prosper”. How are these verses of Surah al-Baqarah concerning riba get a place immediately after the Qur’an had spoken at length in the same Surah on organization of sadaqat, the manner of their disposal, the various injunctions concerning them and finally of their important place in the social welfare structure.

We have repeatedly emphasized that from the clear words of the Qur’an, “Do not consume riba doubling and redoubling”, the chronological order of the revelation of the Qur’anic injunctions against riba, and the explanatory historical (as distinct from legal) Traditions received from the early commentators of the Qur’an, it is evident that the riba of pre-Islamic days which had been prohibited by the Qur’an was that which consisted in doubling and redoubling the original amount (tad’if fi’l-qard) and this fact of redoubling constitutes the ‘illat a-hukm, i.e. “the reason” underlying its prohibition. Keeping this in view we would do well to note that in the following verses of the Qur’an the sadaqah (charity) has been brought in direct contrast with riba:
(Arabic Quote TBA)

“Who is it that will offer to Allah a handsome loan, do that He multiplies it to him manifold” (II:245).
(Arabic Quote TBA)

“Who is he that will offer to Allah a good loan, so that he will double it for him, and such a one will have a generous reward:” (LVII : 11)
(Arabic Quote TBA)

“If you offer to Allah a goodly loan He will double it for you and forgive you,” (LXIV: 17)

All these verses seem to be the elaboration of the idea contained in the second part of the first verse condemning riba, which occurs in the Sgrah al-Rum and reads as follows:
(Arabic Quote TBA)

“And what you give by way of zakan seeking the pleasure of God, those-they shall receive recompense manifold.” (XXX :39)

According to the Qur’an then, the opposite of riba is sadaqah. But what is sadaqah? This question requires considerable elucidation for which this is not the proper place. We cannot, however, but stress the fact that sadaqah does not mean the begging and giving alms at the entire sweet will of an individual. Besides, applying the principle that things are known by their opposites, it is necessary to locate the opposition between riba and sadaqah, however brief our remarks in this connection may be, because as an Arabic maxim says (Arabic Quote TBA) (That which cannot be preserved fully must not be allowed to be given up completely that account.)

There is a tension between riba and sadaqah of which bay (trade) is a quasi-middle term. From this tension, it is abundantly clear that the Qur’an calls for co-operation and mutual consideration in place of pure competition and profiteering. This co-operation and mutual consideration constitute the essential spirit of sadaqah just as competitionism and profiteering lead to riba as their extreme form. It should be noted, however, that juristically the term “sadaqah” does not mean co-operation and mutual consideration, not does “riba’ juristically mean competition and profiteering. It is because these two senses of the terms have been intermixed that the contradiction remains unresolved. The truth of the matter, in our opinion, is that the desire to put into a legalistic mould the moral teachings of the Qur’an and the living Sunnah of the times has brought into being the evolutionary process in the hadith-material of which we have given in the foregoing some account. The following remarks of Qayyim which we quote here in detail point to some such conclusion:
(Arabic Quote TBA)

(There are two kinds of riba: (1) manifest or real [jaliy] and (2) concealed or implied [khafiy]. The manifest has been forbidden because of the grievous wrongs it inflicts on society. The concealed riba, however, has been forbidden because it may lead to the manifest riba. Therefore, the first category of riba has been directly prohibited while the second kind of riba has been indirectly prohibited. The manifest-riba is, in reality, the riba in which credit is involved. In pre-Islamic times it consisted in the payment of a debt being delayed which led to an increase in the amount loaned out. The results was that the original sum lent [the principal] was increased in proportion to the delay that took place in the payment of the debt. This went on until a sum of one hundred increased to thousands. In most cases the debtor was a destitute and needy person who had no alternative but to delay the payment of the debt and the creditor agreed to postpone his demand [for the clearance of the debt], and chose to wait so that he might obtain more profit on the principal invested by him. The debtor, on the other hand, was forced to pay the increased amount, so that he might ward off the pressing demands of the creditor and the dangers and hardships of the prison-house. Thus, time passed and the monetary loss of the debtor went on increasing, while his troubles multiplied and his debt accumulated, until all his possessions and belongings were lost to the creditor. In this way, the debt of the poor man increased without his earning any profit; on the other hand, the wealth of the creditor went on multiplying without this being shared by his brother [the debtor]. The creditor in this manner acquired by unlawful means the wealth of his brother [debtor] and his brother suffered loss upon loss. Therefore, God in His Mercy and Wisdom and out unbounded kindness to His creatures prohibited riba and condemned its consumer, its payer, he who drafted documents concerning it and those who acted as witnesses to dealing in such transactions, while those who were not ready to give up riba were asked to be prepared for a war from God and His Prophet. Such a threat has not been uttered in respect of any other major sin [al-kabirah] which fact leads to the conclusion that it is the most heinous among the major sins [akbaral-kaba’ir]. When Ahmad b. Hanbal was asked as to the riba about which there was no ambiguity or doubt, he replied, “The manifest riba about which there could be no ambiguity is this; that someone is indebted to another and the creditor asks the debtor whether he is ready to pay the debt or would alternatively agree to an increase in the principal loaned out to him. If the debtor is not able to pay, then the creditor increases his principal as well as the term of repayment.” God has mentioned riba as the opposite of sadaqah. Therefore, a person who takes riba will be just the opposite of one who gives a sadaqah. God says, ‘He destroys riba, but makes alms prosper’. And He further says, ‘Whatever you invest by way of riba, so that it may increase upon people’s wealth, increases not with God; but whatever you give by way of zakah seeking the pleasure of God, those-they receive their recompense manifold’. God has also said, ‘O you who believe, do not consume riba with continued redoubling and protect yourselves from God perchance you may be blissful. And guard yourself against the Fire which has been prepared for the disbelievers’ (III : 129-36). After this the Qur’an speaks of ‘Paradise which has been made for those who spend their wealth in ease as well as in adversity’ and thus, they are the very opposite of those who take riba. In short, God forbade riba on the one hand, because it is an injustice done to the people and, on the other, He commanded the spending of wealth as sadaqah, which is of benefit to the people.)

Muhammad Rashid Rida’s comment on the opinion expressed by Ibn Qayyim is also worth quoting. He says:
(Arabic Quote TBA)

(This riba which ‘Allamah Ibn Qayyim has termed manifest-riba and about which Imam Ahmad [b. Hanbal] says that it is the kind of riba of which the unlawfulness has been proved beyond any shadow of doubt by the clear text [nass] of the Qur’an, is the riba which relates to credit transactions such that if a poor man could not repay his debt even after the passage of a long time or of many years, the amount he owed was increased manifold. This riba ruined homes, emptied the human heart of fellow-feeling and created a gulf of enmity and hatred between the rich and the poor. When the Prophet limited riba to the riba which is involved in credit transactions, he really made clear the riba meant by the Divine injunction and on whose non-observance God threatened the Muslims with a dire punishment, which is even severer than the threatened punishment for disbelief. Would any person gifted with reason and intelligence maintain that this prohibition of riba is harmful to human beings and prevents them from adding to their wealth? If capital cannot accumulate without ruining the homes of the poor and satiating the avarice of the greedy, then not one man would view with approval this kind of addition to wealth.)

In short, the riba of the Qur’an which has been prohibited in clear words is the riba which Ibn Qayyim calls “the manifest riba and which is characterized by the continued redoubling of the original debt. Besides this, there are many forms of unfair commercial practices which are not riba, but are shot though by the spirit of riba, that is, profiteering and these have been called “the concealed riba” by Ibn Qayyim. It is of this latter kind of riba that the following comment of the great expert on Hadith, Ibn Hajar al-‘Asqalani, comes true:
(Arabic Quote TBA)

(The term riba can be applied to every forbidden commercial practice.)
In the collections of hadith and athar one would notice that an effort has been made to formulate this very concept of riba. However, we cannot apply the juristic term ‘riba’ to all the immoral forms of trade practices and we would do well to keep in view the sound principle enunciated by Rashid Rida in the words:
(Arabic Quote TBA)

(It is necessary to make a distinction between the injunctions that are based on the clear text [nass] of the Qur’an on the one hand and those which are based on Traditions narrated by a single chain of reporters [riwayat al-Ahad] and on the conclusions arrived at by the jurists by the process of analogy [qiyas] on the other.)

Moreover, in accordance with well-recognised juristic principle of masalih mursalah (measures based on public weal) we should find out which forms of human dealings in modern times are morally more destructive, nearer to the spirit of riba and, therefore, worthy of greater attention in so far as they fall within the category of things which lead to forbidden acts. Landlordism, feudalism, profiteering and hoarding are surely much nearer to the manifest-riba than the bank-interest. To pass any judgment contrary to the opinion we have expressed merely on grounds of verbal resemblance would involve the very same error to which al-Jassas has drawn attention in the words cited above and which we would like to repeat in view of their importance:
(Arabic Quote TBA)

(It is not right to argue in general form a term used in the Shari’ah with a view to declaring some business-dealing as coming within the category of forbidden acts, except when it is established that the particular term used in the Shari’ah is applicable to the business dealing in question.)


III
ROLE OF THE INTEREST-RATE IN THE PRESENT-DAY ECONOMY

In the modern science of Economics the rate of interest occupies the same place as price and performs the all-important function that any price-mechanism performs, viz., of regulating the supply and demand of credit and rationing it among the customers. If the rate of interest, i.e., the price of loaning money, is reduced to zero, then we are faced with a limited supply and an infinite demand. It would become impossible to control the rationing of credit available, so to say, and to assign priorities. Especially in a society like ours where there is a great danger of nepotism and corruption, it is well-nigh impossible to conceive that correct priorities and correct amounts will be the order of the day with the optimum use of the available funds for development. At present, however, the rate of interest functions as the objective standard of allocating the credit principle and the real need for a loan is expressed by readiness to pay the proper price, i.e. the interest-rate is arbitrary is absolutely groundless, simply because it is genuinely a price any other price. Mawdudi, explaining the theory which points to the law of supply and demand as the basis of bank-interest, says, “Just think what this comes to mean.” The capitalist does not straightforwardly and by fait means enter into partnership with the businessman, and obtain his rightful share in the profits earned by him (the businessman). On the other hand, he makes a rough estimate of the minimum profit likely to be made by the businessman. Therefore, he says to himself, ‘I should receive so much interest on the money I loan out to him’. The businessman too, on his part, makes a rough estimate of the maximum profit he is likely to earn from the amount of credit he is going to obtain. Therefore, he says to himself, ‘the interest that I pay should not exceed beyond this point’. Thus both the debtor and the creditor indulge in speculation.”

It seems that Mawdudi has not made a serious study of our present banking system. The kind of picture he has in mind of haggling and of mutual adjustment between the needs of the debtor and the creditor may be true of the usurious practices of the baniya, but is not all true of the financial system banks. The prices in petty business may rise or fall, and, in fact they usually do so, but the rate of interest does not rise or fall even by half or one-fourth per cent except under the stress of diverse and multiple economic factors, and such a rise or fall in the rate of interest itself becomes an important economic factor. The fixation and determination of the rate of bank-interest is not the result of any simple mutual understanding between the debtor and the creditor but the outcome of many complex economic factors.

In the opinion of some economist, the rate of interest can be brought down to zero. In fact the general trend of the economic system has been towards the lowering of the rate of interest. But this can come about only if the volume of the real wealth and state of equality or near-equality comes to exist between supply and demand of money and credit becomes very easy. But this has not been achieved yet even by highly developed countries like the United States. To bring about such conditions in our country, we shall have to make untiring efforts for the production of real wealth and for the formation of capital and unless we succeed in attaining this objective, we shall have to put up with the present rates of interest.

Economists of the Communist school of thought hold a different view of the rate of interest. According to their theory, it is labour only and not capital which produces “surplus value,” i.e. the profit. On this theory, there is no basis at all even for the profits of private business not to speak of the profits made by the banks or the banks-interest. However, the present fiscal system, as it is functioning in Soviet Russia, Yugoslavia and other Communist countries, has to accept bank interest as a necessity contrary to its basic economic theory. The Communist explains this anomaly by treating the present condition as a period of transition in which there can be no escape from bank-interest. They argue that when they have attained their highest ideal, that is of establishing the Communist society organized on the principle, “to every man according to his needs and from every man according to his capacity,” the present banking system with its rates of interest will be abolished. Apart from the question whether or not the system envisaged by Communist is practicable, the difficulty is that if we accept the Communist system, we shall have, also, to accept all it’s regimentations and the coercion employed by it, which, we think, would be resisted by the majority of our people.

As we have, however, explained in the preceding sections of this paper, the general Qur’an teaching wants to develop the maximum of co-operative spirit and socio-economic justice, which is called sadaqah by the Qur’an and which must not be confused with the begging and giving of alms. The co-operative spirit envisaged by the Qur’an was well illustrated by the mu’akhat established by the Prophet after his migration to Medina between the Muhajirun of Mecca and the local Ansar. In the Welfare Co-Operative Commonwealth of Islam, based on the true spirit of sadaqah, bank-interest will certainly be eliminated, because in his ideal Commonwealth, there will be competition among men, but only for virtue and mutual help. To strive to achieve this ideal is the noblest jihad of our times. But if we are to carry on this jihad for the setting up of the Islamic Welfare Co-Operative Commonwealth, it is equally necessary that we should not close our eyes to the present realities, howsoever unpalatable they may be. The abolition of interest presupposes the highest degree imaginable of co-operative spirit and, therefore, cannot be implemented today unless the country’s economy and production are to be left in the direst jeopardy. At present this type of Islamic spirit of co=operation is wanting in our society and, indeed, we are now at the opposite pole from the social order envisaged by the Qur’an. This being the case, it will become particularly impossible for the government to raise interest-free loans for it’s basic non-profit-making projects, such as roads, hospitals, schools, etc. No economy can be built today, nor was one built by our forefathers on qard hasan (qardah-yi hasanah), although private institutions should be encouraged in this direction for purely philanthropic purposes. We, therefore, conclude that the abolition of interest in the present state of our economic development would be a cardinal error.


IV
CONCLUSION

1. (a) The clear words of the Qur’an, “Consume not riba with continued
redoubling.
(b) The chronological order in which the verses prohibiting riba were
revealed.
(c) The historical traditions concerning the nature of riba going back to the eminent tabi’z commentators of the Qur’an.
(d) The hadith-material describing the historical context in which the verse
“remit what is left of riba” was revealed,-all this evidence establishes
the following definitions of riba:
“Riba is an exorbitant increment whereby the capital sum is doubled several-fold, against a fixed extension of the term of payment of the debt.”

2. The prohibition of this riba by means of law is a religious necessity.

3. The Qur’an has declared that the opposite of riba is sadaqah which is by no means a form of beggary. In view of this it is the moral duty of the Muslims to build up a system of economy based on sadaqah, i.e. co-operation and mutual consideration. Co-operative effort of the Government and the people is needed to achieve this goal.

4. The basic moral idea underlying the Qur’anic prohibition of riba has been given a wider extension and application in the hadith literature, but the contradictions and inconsistencies in the riba-hadith and the evolutionary trend in this literature leading to an ever-increasing rigidity vitiate its authenticity and authority.

5. The passion for sadaqah inculcated by the Qur’an and the way in which the hadith-material supports and elaborates this idea lead to the conclusion that all immoral forms of financial and economic transactions fall under the category of what Ibn Qayyim calls “concealed riba”. But it is necessary to maintain a distinction between the Qur’anic riba, and the term ‘riba’ as used in later times and by later writers.

6. The system of economy which the Qur’an requires us to establish, being based on the spirit of co-operation, the further nourishment and development of this spirit in the right manner and the reconstruction of society in accordance therewith would make bank-interest and the present banking system quite superfluous which is just what the spirit of the Qur’an and the Sunnah requires of us.

7. As long as our society has not been reconstructed on the Islamic pattern outlined above, it would be suicidal for the economic welfare of the society and the financial system of the country and would also be contrary to the spirit and intentions of the Qur’an and Sunnah to abolish bank-interest.

8. In accordance with the principle of (Arabic Quote TBA) or “graduation” and (Arabic Quote TBA) or “the easing of the way”, it would be necessary to enact legislation against such grave social inequities as feudalism and hoarding, etc. before proceeding to abolish bank-interest.

9. It would be necessary for every citizen of Pakistan to work arduously and with an untiring zeal to reach the desirable goal of reducing bank-interest to the zero point, in other words, to eliminate it completely. For this end, it would be necessary to increase the volume of real wealth and credit capital in the country to such a point that an equality or near-equality comes to exist between the supply and demand of money in credit, and credit becomes very easy. In such ideal circumstances the motive for bank-interest, and indeed, the profiteering motive may become extinct.

10. The Measures adopted by the Government and the collective efforts made by the Muslims in general, alone will bring into existence that Welfare Co-operative Commonwealth which is the only way to establish the economic system of Islam in the present modern conditions.

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