Interest Stings

In modern secular economic systems interest plays a very important role. In fact, in the Western world people cannot think of any economic system without interest. Interest is not a subject without trade and commerce, Islam recognises trade and commerce not only as a lawful profession but also as a moral duty. Islam has laid down a complete set of rules for trade; the reason for these rules is to specify what halal earning is.

Unfortunately dealing with Interest (Riba, Usury) has spread widely among many Muslims today. It has spread to the point that many Muslims do not see any problem with it, either because of lack of knowledge, forgetfulness or they assume it does not apply to them.

So what is Riba? Riba is an Arabic word which literally means an increase excess. In Islamic terminology it means an increase agreed upon over the loan with consideration for the time, whether this increase is small or large.

In the pre-Islamic Arabian society, interest or Riba was considered similar to trade. Holy Quran however has clearly stated that trade and interest are not the same.

A typical example for trade is that, in trade the seller agrees to sell an item to the buyer on a agreed price. Buyer pays the price and buys this item. The seller has either produced this item by doing labour, or he bought it from someone else by spending his money. In either case, he spent his money, time, and energy to produce this item; hence what he earns in return by selling it is his profit.

On the other hand, typical example of Interest (Riba) is when, one man gives loan to another person based on condition that he will return the money with extra or in exceed to the loaned amount after certain period. This “extra” money that is paid is called “Riba”.

Allah (S.W.T) mentioned in the Holy Quran; “O Believers! Fear Allah and write off whatever balance remains of usury if you are believers (true to the core of your hearts)”. (Surah Al-Baqarah, Verse 278)

Hazrat Imam Ahmad (R.A) reported in an authentic hadith that the beloved Prophet (S.A.W) said, "Dirham (the smallest coin like a penny) of interest eaten by a man with knowledge is more severe than thirty-six acts of fornication or adultery."

It is clear in the light of the Quran and AHadith that Riba (interest/usury) is very much prohibited. We should repent sincerely and stop dealing with Interest, small or large and not to deceive ourselves by changing the name to more appealing names. We should not try to come up with excuses to deal with interest, because nothing is hidden from Allah (S.W.T).