Prohibition against ‘interest’ ( Riba ) in the Quran and Hadeeth

1. Prohibition against ‘interest’ (Riba) in the Quran and Hadeeth Qu’ranic injunctions Al-BaqaraSura 275-281) - Samples 275: Those who eat Riba will not stand (on the day of Resurrection) except like the standing of a person beaten by Shaitan leading him to insanity…….So whoever receives an admonition from his Lord and stops eating Riba shall not be punished for his past………..but whoever returns [to Riba], such are the dwellers of fire…… 276: Allah will destroy Riba and will give increase for Sadaqah…… 278: O you who believe1 Be afraid of allah and give up what remains (due to you) from Riba (from now onward), if you are really believers 280: And if the debtor is in a hard time (has no money), grant him time until it is easy for him to repay… Al-ImranSura 3:130) - Samples O you who believe! Eat not Riba doubled and multiplied, but fear Allah that you may be successful Haadith (samples) Hazrat Jabir reported that the Messenger of Allah cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said they were equal (in sin) Hazrat Abu Huraira reported that the Prophet said “A time will certainly come over the people where none will remain who do not devour usury. If he does not devour it, its vapor will overtake him

2. Theoretical basis for the prohibition of interest by Islamic scholars • Interest is unjust • Surah 2:279 states that taking an amount in access of the principal would be unjust • A person taking a loan and using it in his business may make a profit or a loss. In the case of a loss, he has to repay the principal + interest to the lender. The lender makes a profit even though the business suffered a loss. Punishing the borrower for the default is deemed to be unjust • Interest corrupts society • Charging interest is part of an unlawful pattern of behavior that corrupts society • Interests implies unlawful appropriation of other people’s property • Interest is an unjustified creation of an instantaneous property right. It is created as soon as the contract is concluded without any investment having yet been made • Ultimate effect of interest earned societies is negative societal growth • Interest results in an inefficient allocation of society’s resources as loans are made based on the credit-worthiness of the borrower rather than the positive impact of investing in productive projects • Interest demeans and diminishes human personality • Charging interest on loans to people who require the basic necessities of life violates the nature of social life that requires cooperation, care and help for the poor, the elderly and the needy