Islamic Banking and Interest: A Study of the Prohibition of Riba and Its Contemporary Interpretation

By Abdullah Saeed | Go to book overview

CHAPTER TWO

RIBA IN THE QUR'ĀN, SUNNA AND FIQH

Since the 1960s, the prohibition of riba (interest or usury) has been one of the most discussed issues amongst Muslims. This is a consequence of both the perception that bank interest is riba, and the prevailing nature of interest in the present world banking system. There are two predominant views concerning riba. Many Muslims would contend that the interpretation of riba as provided in fiqh (Islamic law) is the proper interpretation and so must be followed. This interpretation implies that any increase charged in a loan transaction over and above the principal is riba. For others, the prohibition of riba is understood as relating to the exploitation of the economically disadvantaged in the community by the relatively affluent. This element of exploitation may or may not actually exist in modern bank interest. These Muslims would argue that the interpretation of riba in the fiqh literature is inadequate and does not take into consideration the moral intent of the prohibition as expounded in, or inferred from, the Qur'ān and sunna. This chapter examines the overall context of the prohibition of riba in the Qur'ān, the sunna and in the fiqh literature.


Riba and the Qur'ān

Condemnation and the ultimate prohibition of riba in the Qur'ān was preceded by the proscription of several other morally objectionable modes of behaviour towards the socially and economically disadvantaged in the Meccan community. From the earliest time of the Prophet Muḥammad's mission, the Qur'ān encouraged Meccans to help the poor, the needy, and the orphans among others. According to the Qur'ān, those who do not perform prayer (ṣalāt) and do not feed the destitute will be punished in Hell.1 In some other early verses, the Qur'ān states, for instance, that beggars and the destitute have a right to a share of the wealth of the affluent.2 It castigated the Unbelievers saying that they did not encourage the provision of food and support to the destitute.3 On many occasions, the Qur'ān condemned the affluent in Meccan society4 using parables to demonstrate the

1 Qur'ān 74:43-4.

2 Qur'ān 70:24-5.

3 Qur'ān 69:34.

4 Qur'ān 89:17-20.

-17-

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