R I B 2 AND INTEREST*
FAZLUR R A H M A N
), as illustrated by the
(J
.."
11
&
- $i
Jlpl
ir.$TL,
j 13J
(v 9 :rJJl)
And whatever you invest in ribii so that it may
inmease upon the people's wealth, it increases not with
God ;" (XXX : 39);
I.
. :d.+9J ) a
bib
. ."
http://iri.iiu.edu.pk/
RIBW
AND INTEREST
."
:~ ~ 3Ll
1,) hj &JJ
3 j U
-
(1
(I
* :dp9I) iJJ
(ii,
'&j +I
I6
:&dl)
.."
@ -&I d,s3 dl
That one nation be more powerful than another
nation. . - -"(XVI : 92).
From the lexical meaning given above, the technical meaning
of the term 'ribii' is derived as discussed below.
W e shall first take up the nature of ribii prohibited by the
Qur'an. In the second section we shall turn to the legal Hadit&
materials concerning the extension of the Qur'anic term riba to
different forms of exchange and transactions. This is justified
on the ground that all the fuqahd' are agreed that these
two fall into distinct categories : indeed, the one has been called
"ribii al-Qur'iin (ribii of the Qur'an)" and the other "rib~ial-Hadit&
(rib5 of the Hadith)" or "ribii al-fad1 (ribii 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.
(qy
I1
-&I
&4
.
&,I
FAZLUR RAHMAN
6'
3 i i s b UAL+! 13Jl
RZBAAND INTEREST
IL
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 ribii-making are one and the same thing,
whereas God has made selling lawful and has forbidden ribii.
Whosoever receives an admonition from his Lord and desists,
he shall have his past gains, and his affair is committed t o God;
but whosoever reverts--those are the inhabitants of the
Fire, therein dwelling for ever. God destroys ribii but makes
alms prosper. God loves not any guilty ingrate. [Butl those
who believe and do deeds of righteousness, and perform the
prayer, and pay the alms--their reward awaits them with
their Lord, and no fear shall be on them, neither shall they
grieve. 0 ye who believe ! protect yourselves from God and
remit what is left of riba if ye be faithful. If ye do not. be
prepared for war from God and His Prophet : but if ye 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 t o pay, although it is better for
ye t o remit if ye only knew" (I1 : 27480).
These Qur'anic verses and their context show that these are
the last of the verses prohibiting ribii. In some Traditions
this fact was mis-stated and it was claimed that these were
the last of all the Qur'anic verses revealed to the Prophet. This
was still further extended and in a Tradition the statement was
attributed to the Caliph 'Umar b. a l - a a t t ~ bthat as the Qur'iinic
injunction regarding the prohibition of riba came in the very end
(of the revelation) and since the Prophet did not live long enough
FAZLUR RAHM A N
after that revelation to spell out fully as to what were the con~tituentelements of ribii we should, therefore. not only avoid ribii
but also rZbah (doubtful transactions). W e shall examine these
Traditions in the second section of this study. Here we shall
endeavourto understand the ribis of the Qur'iin in the light of the
3531 (one part of the Qur'an
established maxim : "ik..!
explains another)".
The verse bf Sarah Al-'lrnriin categorically prohibiting riba
occupies the central place in this series of Qur'anic verses ; that of
Sarah al-Rtim was its prologue, while those of Sarah akBaqarah
were its epilogue. If we examine these verses in their chronological
order, we may conclude that :
(i) the riba of the pre-Islamic days was a system whereby the
6
I
UGI)
principal sum was doubled and redoubled (-&L
through a usurious process ;
(ii) because of this process of doubling and redouhling the
principal, the Qur'zn refused to admit that riba' was a
kind of fair business transaction; and
(iii) while permitting the commercial profit, the Qur'gn
encouraged the spirit of co-operation as opposed to that
of profiteering.
The historical evidence that we possess also corroborates the
above conclusions.
The Muwa$$a'of Imam Malik records on the authority of Zayd
b. Aslam as follows :
creditor would ask the debtor : 'Will you pay up or will you
increase ?' ["am turbT*-from ribnl. If the latter paid up.
the creditor received back the sum ; otherwise the principal
was increased on the stipulation of a further term.)
Abu'l A'la Mawdndi, the chief of the Jama'at-i Isl~mi,assumes
that for the first term the credit was granted free of interests4 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 quite normal. How could the
usurers, who were keen on d o u b h g and redoubling their capital,
"
WI IXL-Y
I+T&II&I~
&,j.rl&j.~.te~
7-
'4Wl bj J U
e-
&L;r4 liGl
FAZLUR RAHMAN
I1
R l B a AND HADiTH
-
--%A13J 19s
1 4 2 4 (SJ
*-+--
(The last verse t o be sent down was that on ribii. but God's
Messenger was taken away without having expounded it t o us ; so
leave aside ribii and ribah, i.e. whatever is doubtful.) This report is
recorded in the Musnad of Ahmad b. Hanbal, the Sunan of Ibn
Majah, Mu~annaf of Ibn Abi S a y b a h , Dalii'il al-Nubuwwah of
al-Bayhaqi and similar other compilations of the Mubaddi@iin
of the later p e r i ~ d . ~
In the JahSh of al-Bu!&ri there is a report ascribed to 'Abd
Allah b. 'Abbss, which narrates the same story, but in a somewhat
restricted sense. Al-BuBZri in his chapter on the "Last verses of
Siirah al-Baqarah" records as follows :
GI & &I& d$-+T +i JG b212)& al
FAZLUR RAHMAN
(Ibn 'Abbss said : the last verse sent down t o the Prophet was
the verse on ribs.) First. it is surprising that the singular number
(ki) has been used twice for as many as seven verses. Secondly, in
the Kitiib al-Tafsir of his Sahih. where he has narrated the above
report, al-Bukhsri has also cited the following Tradition attributed
t o 'A'i&ah through four different chains of transmission :
A ,J, ~ . n f > l + J lj sp?l .s, ;
i G~ d + Y 1 d'jU
Il-pd I
j SJ l+
r
p f &Jl&
,&=)
I&
A1 &
(The last verse t o be revealed was : 'They ask you for a pronouncement. Say : God has pronounced for you concerning the
indirect heirs
.' (IV : 177) and the last Stirah was Barii'ah).
If we look beyond this most celebrated source-book of hadi&,
we will find still more conflicting reports on this subject, the details
of which are given by al-Suyati in his al-ltqiin f i 'Ulnm al-Qur'an.13
Apart from the fact that the report attributed t o 'Umar has
been contradicted by SO many other reports (which in turn
contradict each other !), there are several other reasons why we
must reject this report.
(1) As mentioned above, the gradual prohibition of ribii started
during the early days of the Meccan period. That, in spite of these
early revelations. the Companions of the Prophet continued t o take
ribii until a few days before the death of the Prophet when Allah
had to threaten them with war from Himself and His Prophet,
would be a serious reflection on their character. Most probably it
was dge t o this apprehension that the word 'ribii' in the Meccan
..
10
-+
. ."
FAZLUR RAHMAN
11
would transgress this prohibition (Sarah al-Baqarah)-before 5 A.H., before the exile of the last Jewish tribe of
Banti Quray?;ah.
Among the recent writers on the subject, Mawdadi 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 Siid ("Interest") he has a chapter entitled
"b.ls- c%l 91d
(QurlHnic Wisdom and Social Reform)",lS
in which he tells us in detail that riba was condemned in a Meccan
revelation and was prohibited in the verses revealed "immediately
after the Prophet's return t o Medina from U h ~ d " . ? 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 t o Caliph 'Umar in support of
his contention." But it appears that after the lapse of several years
t h e logician in (Mawlsna) Mawdadi realised the glaring contradiction in the two positions and we presume that i t was this realization
that led him t o expunge the above-mentioned chapter. in its
entirety, from the latest (1961) edition of the t r e a t i ~ e . ' ~
However,
we are of the opinion, and we hope Mawdadi will also agree with
us, that t h e question of the chronological order of the Qur'anic
verses and of the historical context of their revelation (especially,
when a fundamental problem like that of ribii is involved) is not
so unimportant that a stand taken in this respect against the
current and accepted viewpoint can be quietly and unceremoniously withdrawn without taking the reader into confidence.
* * *
W e have dwelt a t length on refuting the report attributed t o
Caliph 'Umar, because this as well as other such reports in the
had?&-literature prevent a correct appreciation of the nature of the
ribii prohibited by the Qur'iin. It seems that a t some stage it was
assumed that the Qur'anic account of riba was not adequate. Need
was, therefore, felt of elaborating i t through hadS&material
in order t o extend the coverage of the ribii-ban. The report under
discussion was the starting-point of a vast and ever-expanding
had?&-literature that was accumulated on the subject in the course
of time.
Like the reports on the chronological order of the Qur'anic
FAZLUR RAHMAN
13
revelations on ribii. the had& on the nature of ribii itself, too, are
contradictory and conflicting. W e shall give a few instances of
these contradictions in the following lines :
(1) Al-Bukh~ri,Muslim. al-Nas2'i, al-Ditrimi, Ibn Majah and
Ahmad b. HanbaI have recorded hadZ& reported through various
j I?SI ("rib@
chains of transmission whose purport is 'Ql
is on loans") or in the more emphatic expression of al-Buaari
"
a
1
d 91 b1 Y ("there is no ribii except on loans") or in the
words recorded by Muslim -k ij! d g L & 6) 51 ("there is no ribii
a
when payment is made on the pot").'^
But at the same time the Sahib of a l - B u b ~ r i ,that of Muslim
and other canonical collections of $adz+ contain the following
Tradition with slight verbal variations :
-dl
'cUk
plw
&A
AI&
+!,+ J b,.A!>
A1 JSYJ
Jii
Jb' csJLJI &-LU ~ j 3
l
*tJIj
dii _I?!>
- 4 b
*4I3
24-s19
#I>
L Y l dJl A% ~I+l>l ~ !@
j 4:
f
r.+
JX.
3~
"'+I
+ -)+
14
(It is possible that UsImah found that: the people had questioned the Prophet regarding the hand-to-hand exchange with
excess of different commodities, for example, the exchange of gold
with silver, of dates with wheat and likewise other articles with
those of a different kind. The Prophet replied, according t o
Us'imah's report, that ribii concerns exchange of commodities on
credit. It is also possible that the questioner may have explained
this a t the time when he put the question and he received this
reply from the Prophet. Then Usamah reported the reply of the
Prophet only but forgot t o report the question as well. It is also
possible that he may have some doubts in regard to this matter.
because the hadf& reported by him does not contain anything
repugnant to these surmises.) The inconsistency and contradiction
between this ha.&& and the others on the same subject can,
therefore, be resolved. How far these surmises of al-S&fi'i succeed in removing the contradictions we leave to the judgment
of the reader. But one of the examples of the modern ijtih&
carried out to resolve the contradictions between these hadi& is
astonishing.
Mawdndi does not discuss the "ribii of excess" in his
chapter on siid (interest) but devotes another chapter to i t
significantly titled :f i U ~ 3 9 "The adjuncts of siid (interest)".
H e writes :
FAZLUR RAHMAN
2 2 9 dH
&
'
- - 4 1 j y l bJY b m Y f &
rU!,;l,L,dlLjscl>T~
-t
&J>$
~a&*J$
J+
JJ!
i r L 9 u r'@v1-&%
33LJ
5 Jr
+
& -e ' a %
b*vl Suu 21
* j
p ? ; i ~YI JJI
vl
~'y
2J L Q a
LkfJyw & C &&
A&!
k%fj3!
-rLf W r f r,*!
,& r f-J S J s J l l y
15
* u?
L2Jt-l 63 e
27-"
&
'@
,&f4
*tlL.3r~&.3r~JyJ-,'b~*J~&~&J2~*3~
r JL d l i j e #I
j l j r!p Jfll
&
e 26
$JJA
63 o?-. S L ~ ~ Je
- ~W.~~JJA
I
2 8 - " ~
&
, I+
~y
r,("
&ST
16
-+
FAZLUR RAHMAN
17
+.,
32-44
+Y ;*I,
i4
A+
& Y, i
;
;
(Jiibir b. '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 a hand-to-hand transaction, such a thing
would not matter.)
The compilers of the Sunan-works, later on collected hadit&
which totally prohibited the exchange of animals on credit,
whether or not there was an excess. For example. a tradition o n
the subject says :
--
3 1 ~ l ~ ~ ~ ~ , J - ~ ~ & A l +
& ,p
, ~ I 3 1
33'
dl,&
(It is narrated from Samrah that the Prophet of God prohibited the exchange of one animal for another on credit.) T h e
same had;& also occurs in the Musnad of Ahmad b. Hanbal. But
the significant point is that the hadi& is found not in the main text
of the Musnad but in the supplement, added t o it by a son of
Ahmad b. Hanbal. Moreover, it is one of those had;& which
have not been narrated by him directly from his father.34 In t h e
Sunan collections of the later period and other collections made
by later writers, we find bad;& contradicting this hadi&. 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 bad;&-material
on this particular subject, too, there is a marked tendency of
making the & a d ah progressively more rigid.
18
+-2
Jlj
~k
J9j 2 A 1 3
L;L(LU.
JWAl+adkp
d i u i A M l j & ,J
JA
FAZLUR RAHMAN
19
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 Prophet.')
It is worth noting that this hadi& condemns landlordism with
exactly the same threat which was used by the Qur'sn against ribii.
It seems that the Muslims resorted to ijlihiid when, after t h e
conquest of Persia, they had to deal with the firmly-rooted feudal.
system of that country. A justification was sought for landlordism
in the example of the Prophet at the time of the conquest of
n a y b a r , because the Prophet had allowed the conquered land i n
Uaybar to remain in possession of the Jews on 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 hadi& (Sihiih Sittah) that 'Abd Allah
b. 'Umar continued leasing his land for a long time, although t h e
hadi& says, at the same time. that he gave up the habit in
later life.
Abu Hanifah appears t o have explained the a a y b a r incident
as being a case of &ariij. The Prophet, he argues. levied Bariij on
the Jews as an act of kindness and as a mark of his peaceful
intentions. Otherwise, he had got possession of Qaybar as t h e
result of a conquest and as such the whole territory had fallen a
booty to the Muslims. It was quite permissible for him, therefore,
to have taken possession of the entire land. But he did not d o
so. Instead, he allowed the lands of a a y b a r to remain in t h e
possession of the Jews on condition that they made over half of the
produce of land to the mu slim^.^' A prominent Hanafi expert
on h a d i g , 'Ayni, has remarked in support of Aba Hanifah, "No
tradition exists in the corpus of hadit& to show that the Prophet
levied the jizyah on the Jews of U a y b a r during his life-time. Nor
is Abii Bakr or 'Umar reported to have done this. Finally, 'Umar
exiled the Jews from Baybar. If the Prophet had not already
made the settlement which he had made with the Jews of a a y b a r ,
it is certain that the jizyah would have been levied on them, after
the verse regarding jizyah had been re~ealed".~'It must be said here
by way of explanation that this argument of 'Ayni in reality
contradicts the argument put forward by Abii Hanifah, because
if the lands of &haybar fell within the category of booty, there was
no question of jizyah being levied on them.
As mentioned above, there is a sabih badi& in the Sunan of
20
Ria A N D INTEREST
Abo Diiwod narrated by Jxbir b. 'Abd Allah which says that any
person who leases land on the basis of a division of the produce is
liable t o get the same extreme punishment that is prescribed for a
person who takes r i b . Ignoring this hadZ& and other supporting
~ a b i hha&&, a number of which verge on tawiitur. i.e. near
unanimity, Mawdtidi 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 Zam-in." H e is supported by Mirzz Ba$r al-Din Mahmad [Head of the Ahmadiyah] who
upholds similar views on the question of landlordism in his Urdu
tract IslZim awr Milkiyyati Zamin ("Islam and the Ownership of
bnd").
The contradiction found in the badiths in respect of ribii is
difficult to resolve. On the basis of isniid alone, there is not much
scope either for the rejection or acceptance of these Traditions,
because, as is clear from the above discussion. the Sihiih works
contain a good number of hadigs on each aspect of these topica.
Everyone of these hadit& is either $ahih, i.e. supported by a strong
chain of authorities or is supported by other hadit& of the level of
jahZh hadi&. The surmises made on the basis of q i y a (analogy)
are not so important in our opinion as the historical order of these
fradi@s, because the historical order is something which is based on
certainty. and is not a mere matter of probability. If these bad;&
are viewed in this way. it becomes apparent that there is a clear
process of development involved therein. All three cases mentioned
illustrate a progressive rigidity of opinion. as we pass from the
early Traditionists t o those of the middle period and then from the
latter t o the later Traditionists. As we go further, we shaIl find the
same process of development taking place on the question of the
definition of ribZi. This process of development is at the bottom of
the contradictions found in the b&&-material.
Besides the above-mentioned contradictions, most of these
4adiths are full of other complexities. which we find it almost
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
o r in deficiency, that would become riba, in accordance with the
most widely current Traditions. This is what has been called
"ribii al-fad1 (ribn of excess)", according to which if a bushel of
wheat of better quality is exchanged for a bushel and a quarter of
21
FAZLUR RAHMAN
&
riba which a person earns by taking from the debtor more than the
principal sum which he has given him on credit or any debt from
which any profit might be obtained. The other riba, which is
permissible, is a gift in exchange of which the giver demands a
more valuable gift or in exchange of which he expects t o receive a
bigger gift.) It would have been surprising if a definition of this
kind had not found its way in the collections of hadit& T h e
manner in which it secured its place among the hadith-works is
worthy of consideration. There is no trace of any such h a d t h
during the second, third or even the fourth century. Neither the
Jihiih 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 hadZ& collections. contains any trace of such badi&. Suddenly.
in the fifth century A.H., al-Bayhaqi (d. 458 A. H.) in his Sunan has
a chapter headed :
42-
6, >&i
-&
;4>Q
"421
6 4 - 3
'J i r ~
& (it is one of the forms of ribii)". Once this
FAZLUR RAHMAN
23
(Every loan from which a profit accrues is ribii.) But this is not
all. During this intervening period, the hadith had gone through a
process of evolution and was projected back t o the Prophet from
whom 'Ali is said t o have heard and narrated it. Thus, now i t
becomes the injunction of the Prophet. Al-Suyati refers t o an
obscure Musnud said t o have been compiled by one Harith b.
Muhammad b. Abi Salmah, which is not known even t o
I
al-Zirikli, the author of a2-A'liim. H e says about Hiirith, "z- 4
454~
24
LL
JUI &I
Jr ;>lijl
jJ ;>4;11
@ &?/I
5"-
13Jl
&&
&#
51-29
Uk
FAZLUR RAHMAN
25
..
5 4 i;UI
j l,J
L+p
,+Y I ;Sj I$
Lp 2
4 &+5+&
& L m ~ ~ + ~ l b + ~ d & Jl LI ~~ ~ ~. ~~ ~ J~ U I
3 ula
3;j 6
(Therefore, siid [interest] is that excess money which is obtained on determinate conditions and a t a fixed rate for the principal
loaned out in consideration of the period for which the money has
been lent.)
In this connection, al- J a s s ~ ssays :
b+ppYI
&+3W
@LJI
J1 U I &.
'LYI
26
i*;z,&J
r+
IC 1~
C?
'W
jlf2 L
56'b-
(The meaning of ribii was already well known in Arabia and even if
this ha&& were not there Arabic language itself was sufficient t o
make the meaning of ribii clear.) Mawdodi goes a step further and
says .o I, & r l i IC jJ&
5 yj dL iZ;l 19JI&iX''
L Z I A T ~ ~ ~ $ W I ~
"-
' ' 9 J f ~
e
&-,&J
I,
3 5U?;
l - A L( f l r f l
FAZLUR RAHMAN
27
-1
;)gd &Y
l+pUjb.Li1 4 1 6 1
4'Y t;ul s L
Ulr
~;)g A-iY +
Lfip~(-.&&IJi)t(Jl~~~I
&
U UJl
~LUp?2J'~j*&~-&.d&
58, c j U l 3 1 b'+l
- ' I S L Y I j L iJj;! jb
(Rib5 has now become a term of the sari'iih. If it had retained its original literal meaning, 'Umar would have remained in
no doubt about its actual import, because Arabic was his mothertongue and he well knew its literal sense. An argument in favour
of this position is that the people of Arabia did not consider t h e
deferred exchange gold for gold and silver for silver as ribii, while
according t o the SJaSah, this too is riba. Ribii thus becomes.
like one of those words which are mujmal [concise] and require
explanation and elucidation.)
(2) The above definitions are not inclusive (jiimi') because none
of these definitions can apply t o the ribii al-fad1 (riba of excess)
(see the contradictions in the Traditions on this subject discussed
above). I t is surprising that on the one hand the definitions given
RIBAAND INTEREST
28
(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 ribti.) But these very people accord ribii al-fadl (rib~i
of excess) the full status of ribii. even though it involves no loan. 'O
(3) In the same way the above definitions are not ex~lusive
(miini'), because according to the following Traditions of the
Sah2h of Muslim, any excess at the time of the repayment of a
loan is not merely not ribii but in the words of the hadig constitutes
husn al-qadii, i.e. "a good way of fulfilling a contract". Muslim has
a whole chapter entitled
+I
&&-2
d A
r&
#m
&
e
h l +&
(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
.which says :
FAZLUR RAHMAN
29
& 3 ;)tC J+
&ljg j
-
$J
+a9
9
d!&
30
quoted. The matter does not remain confined t o cattle but passing
on t o slaves and copper coins, it reaches through the Sunan of
al-Bayhaqi t o all those things which are not gold and silver and
d o not fall within the category of articles that can be eaten o r
drunk. In the face of all this, not only does the definition that
L
All loan from which a profit accrues is ribii" break down but
even other definitions become pointless.
(4) Ibn aL'Arabi's definition of riba in his Ahkiim aLQur'iin,
viz. that it is an excess which carries with it no compensation or
6
s.
* * *
31
FAZLUR RAHMAN
(YVO
: W )
*I
(1 1
IJ
:+4
f-J-
R~BA
AND INTEREST
32
+>+
( I L :ij~L""
)
"If you offer t o A l l ~ ha 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 ribii, which
occurs in the Sorah al-Riim and reads as follows :
h + d l e U 9 I - i A1 +> h3&> i l g j a +I' L 3
( r 9 :y931)
"And what you give by way of zakah seeking the pleasure of
God, those-they shall receive recompense manifold." (XXX :39)
According to the Qur'sn, then, the opposite of riba is gadaqah.
But what is gadaqah ? This question requires considerable elucidation for which this is not the proper place. W e cannot, however,
but stress the fact that gadaqah does not mean the begging and
giving alms a t the entire sweet will of an individual. Besides.
applying the principle that things are known by their opposites, i t
is necessary to locate the opposition between ribii and gadaqah,
however brief our remarks in this connection may be, because a s
an Arabic maxim says &AS
Y 4 4 4 Y L. . (That which cannot
be preserved fully must not be allowed t o be given up completely
on that account.)
There is a tension between ribii and sadaqah of which bay'
(trade) is a quasi-middle term. From this tension, it is abundantly
clear that the Qur'sn 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 ~ a d a q a h
just as competitionism and profiteering lead t o ribti as their extreme
form. It should be noted, however, that juristically the term
'sadaqah' does not mean co-operation and mutual consideration.
nor does 'ribii' 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 t o put into a legalistic mould the
moral teachings of the Qur'gn and the living Sunnah of the times
has brought into being the evolutionary process in the hadithmaterial of which we have given in the foregoing some account.
The following remarks of Ibn Qayyim which we quote here in
detail point to some such conclusion :
FAZLUR RAHMAN
plh; 9 (sA!431 6s
66
U'
(There are two kinds of riba : (1) manifest or real [jaZiy] and
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 t o
the manifest ribii. Therefore, the first category of riba has been
prohibited
] while the second kind of ribii has been
directly [ i ~
indirectly [=~~LYJ]
prohibited. The manifest-ribii is, in reality, the
34
FAZLUR RAHMAN
36
(This riba which 'Alliimah Ibn Qaggim has termed manifestrtbii and about which I r n ~ mAhmad [b. Hanbal] sags that it is the
kind of tibii of which the unlawfulness has been proved beyond
any shadow of doubt by the clear text [na?;] of the Qur'8n. is the
ribii 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 rzba to the ribs which is involved in
36
(It is necessary t o make a distinction between the injunctions that are based on the clear text [nqgl of the Qur'iin on
the one hand and those which are based on Traditions narrated
by a single chain of reporters [riwiiyot a l - A h d l and on the
conclusions arrived a t by the jurists by the process of analogy
[qiyiisl on the other.)
Moreover, in accordance with well-recognised juristic principle
of masiilib mursalah (measures based on public weal) we should find
out which forms of human dealings in modern times are morally
more destructive, nearer t o the spirit of ribii and. therefore, worthy
of greater attention in so far as they fall within the category of
things which lead t o forbidden acts. Landlordism, feudalism,
FAZLUR RAHMAN
37
profiteering and hoarding are surely much nearer t o the manifestriba 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 t o which al-Jassiis has drawn
attention in the words cited above and which we would like to
repeat in view of their importance :
L j Y I J@I
3 ; s f1+-3 by! JYALYI pY
- 4 4 @I
jUI 41 4
iU
I11
ROLE OF THE INTEREST-RATE I N THE PRESENT-DAY ECONOMY
38
RIB^ ANDINTEREST
likely to be made by the businessman. Therefore. he says t o himself, 'I should receive so much interest on the money I loan out
t'o him'. The businessman too, on his part, makes a rough estimate
of the maximum profit he is likely t o earn from the amount of
credit he is going t o obtain. Therefore, he says t o himself. 'the
interest that I pay should not exceed beyond this point'. Thus both
the debtor and the creditor indulge in peculation."^^
I t seems that Mawdrjdi 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
baniyii,* but is not a t all true of the financial system of the 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 economists, the rate of interest can be
brought down t o 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
credit capital in the country multiplies t o such an extent that a
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. T o bring about such conditions in our country,
we shall have t o 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 very
different view of the rate of interest. According t o their theory,
it is labour only and not capital which produces "surplus value,"
i.e. the profit. On this theory, there is no basis a t all even for
the profits of private business not t o speak of the profits made by
the banks or the bank-interest. However, the present fixal system,
Hindu money-lender and grocer-(Ed.)
FAZLUR RAHMAN
39
as it is functioning in Soviet Russia, Yugoslavia and other Communist countries. has to accept bank-interest as a necessity contrary
t o its basic economic theory. The Communists explain this anomaly by treating the present conditions 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 establisbing the Communist sbciety organised on the principle, "to
every man according t o his needs and from every man according
t o 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 Communism is practicable, the difficulty
is that if we accept the Communist system. we shall have, also, t o
accept all its 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'iinic teaching wants t o devetop the
maximum of co-operative spirit and socio-economic justice, which is
called gadaqah 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'fn was well illustrated by the muli&at
established b y , the Prophet after his migration t o
between the Muhajiriin of Mecca and the local A+r.
En the
Welfare Co-operative Commonwealth of Islam, based on the true
spirit of 3adaqah. bank-interest will certainly be eliminated, because
in this ideal Commonwealth, there will be competition among men,
but only for virtue and mutual help. To strive t o achieve this
ideal is the noblest jihiid of our times. But if we are t o 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 byes t o 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
t o be left in the direst jeopardy. A t present this type of Islamic
spirit of co-operation is wanting in our society and, indeed, we
are now a t 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 its basic
non-profit-making projects, such as roads, hospitals. schools, etc. No
economy can be built today, nor was one built by our forefathers
40
11
631
fi
FAZLUR RAHMAN
41
RIBAA N D INTEREST
42
7. Zbid.. V I I : 204.
8. Ibid.. V I I : 204-5.
9. 'Ali al-Muttaqi. Kanz af-'Ummdl. Hyderabad. 1312 A. H.. I1 : 231,
(No. 4954).
10. Al-Buaziri. SaGh, K. al-Tafsir. Siirah al-Baqarah : ibid.. K. al-buvii'.
B. Mu'kil al-ribii.
11. Ibid.. K. al-Tafsir. Siirah al-Baqarah.
12. Zbid K. al-Tafsir. Sfirah Barh'ah.
13. Al-Suytiti. al-Itqiin. op. cit.. I : 33-5.
14. Tabari, Tafsjr. Cairo. 1330 A. H.. XXI: 29-31 : al-S~~pEti.al-Durr alMant&r. Tehran. 1377 A. H.. V: 156 : Baydzwi, Tafsis, Istanbul. 1316
A. H..I1 : 247.
15. Al-Bu&~ti. Sahib. K. 01-Tafsir, Siirah al-Rlm.
16. Al-Suyit!i. al-ItqEn, op. cit.. I :23; Muslim, Sahib. K.al-Tafsir.
17. Al-Suyiip' ibid.. I :35.
18. AI-Tabari. Tafsjs. D l r al-Ma'itrif. Cairo. IX : 520.
19. Mawdii'di. Siid. Lahore. 1954. 1: 162-69.
20. Ibid.. 165-166.
21. Zbid.. I : 51,and latest ed. (January. 19611. 160.
22. The chapter referred t o was first published in the form of an article in
Mawdiidi's Urdu journal Tarjumiin al-Qur'iin, Lahore. August 1939.
35.
36.
37.
38.
Ahmad b. Hanbal. Musnad. op. cit.. V : 12, 19. 21. 22 and 99.
Muslim, SaBh, K . al-buy%, B. kirii' al-or&
Zbid.. 8. al-mu&iibarah.
'Ayni. 'Umdat aI-Qarr. I e t ~ m b o l 1310
.
A. H.. V: 724.
Ibid.
FAZLUR RAHMAN
39.
40.
41.
42.
43.
44.
45.