The Prohibition of Riba (Interest)

• Quran

 

That which you give as interest to increase the people’s wealth increases not with God, but that which you give in charity, seeking the goodwill of God, multiplies manifold (30:39)

• Quran

 

And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other people’s property. We have prepared for those among them who reject faith a grievous punishment. (4:161)

• Quran

 

O believers, take not doubled and redoubled interest, and fear God so that you may prosper. Fear the fire which has been prepare for those who reject faith, and obey God and the Prophet so that you may receive mercy. (3:130)

• Quran

 

Those who swallow usury (riba’) cannot rise up save as he arise whom the devil has prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah has permitted trading and forbidden usury. He unto whom an admonition from his Lord cometh, and (he) refrained (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returned (to usury) such as rightful owners of the fire. They will abide therein. (2:275)

• Quran

 

Give up what remains (due to you) from usury, if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger (2:278-279)

• Sunnah

 

Abdullah ibn Mas’ud (r.a.h.) reported that the Prophet (p.b.u.h.) said, “There are seventy-three types of riba, the least of which is as abhorrent as a man having intercourse with his own mother and worst of which is (violating) a Muslim’s honor and sanctity”. (al-Hakim in al-Mustadrak 2:37 ; Sahih al-Jaami’ 3533)

• Sunnah

 

Jaabir (r.a.h.) reported that the Messenger of Allah (p.b.u.h.) cursed “the one who consumes riba, the ones who gives it to others, the one who writes it down and the one who witnesses it.” He said, “They are all the same”. (Reported by Muslim 3:1219)

• Sunnah

Muslim narrated on the authority of Abu Sa’id Al-Khudri : Bilal visited the Prophet (p.b.u.h.) with some high quality dates, and the Prophet (p.b.u.h.) inquired about their source. Bilal explained that he traded two volumes of lower quality dates for one volume of higher quality dates. The Prophet (p.b.u.h.) said “This is precisely the forbidden riba! Do not do this. Instead, sell the first type of dates, and use the proceeds to buy the other”.

• Sunnah

 

Uthman bin Affan reported Allah’s Messenger (p.b.u.h.) as saying, “Do not sell a dinar for two dinars and one dirham for two dirhams”. (Sahih Muslim, Book 10:3849)

• Sunnah

 

The Prophet (p.b.u.h.), during his last sermon addressed his revered companions, “Every form of riba’ (interest) is cancelled; capital indeed is yours which you shall have; wrong not and you shall not be wronged. Allah has given His Commandments totally prohibiting riba’. I start with the amount of interest, which people owe to Abbas and declare it all cancelled. He then, on behalf of his uncle, Abbas, cancelled the total amount of interest due on his loan capital from his debtor” (Tafsir Al-Khazin, vol 1, p.301)

• Sunnah

 

Ubaida bin al-Simit (r.a.h.) reported Allah’s Messenger (p.b.u.h.) as saying, “Gold 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 and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand”. (Sahih Muslim, Book 10:3853) 

 Prohibition of Gharar

• Sunnah.

 

The Prophet (pbuh) said :”Do not retain milk in the udders of a camel or goat so as to exaggerate its yield. Anyone who buys (it) has the choice, after having milked it, to return it with a measure of dates”. (Sahih Muslim, book 10:3634)

 Prohibition of Maisir & Qimar

• Quran

 

O ye who believes! Strong drink and games of chance and idols and divining arrows are only an infamy of Satan’s handiwork. Leave it aside in order that ye may succeed.(5:90)

 Discouragement of Debts

• Sunnah

 

Narrated by Aisha, Allah’s Apostle used to invoke Allah in the prayer saying “O Allah, I seek refuge with You from sins and from debt”. Somebody said to him, “Why do you so frequently seek refuge with Allah from being in debt?” The Prophet relied, “A person in debt tells lies whenever he speaks, and breaks promises whenever he makes (them)…” (Sahih Bukhari 1.795)

 The Bai Salam Transaction

• Sunnah

 

Narrated by Abbas. The Prophet came to Medina and the people used to pay in advance the price of dates to be delivered within two or three years. He said (to them), “Whoever pays in advance the price of a thing to be delivered later should pay it for a specific measure at specified weight for a specific period”. (Sahih Bukhari 3.443)

 The Mudharabah Transaction

• Sunnah

Al-Abbas ibn Abd Al-Muthalib used to stipulate a condition whenevr he gave his money in mudharabah that the entrepreneur will not take his money across any sea, into any valley, or buy any animal sith a soft belly (unfresh meat), and if the entrepreneur were to do any of those, then he must guarantee the capital. The Prophet p.b.u.h. heard of the practice and permitted it.

• Sunnah

 

On the authority of Suhayb that the Prophet (p.b.u.h.) said, “There is a blessing in three transactions; al-bai ila ajal (credit sale), Mudharabah (profit sharing) and mixing wheat and barley for home, not for trading”. (Ibn Majah)

 The Musyarakah Transaction

• Quran

 

If more than two, then they share in a third (4:12)

• Quran

 

…Truly many are the partners (in business) who wrong each other, except for those who believe (in Allah) and work deeds of righteousness… (38:24)

• Hadith Qudsi

 

Narrated by Abu Hurairah. “I (Allah) am a third party in a partnership of two so long as one of the partners does not betray the other. If however he does betray the other partner, I (Allah) will come out of the partnership”.

 The Qardhul Hassan Transaction

• Quran

 

Who is he that will loan Allah a beautiful loan (qardhan hasanan)? For (Allah) will increase it manifold to his credit, and he will have (besides) a liberal reward (57:11)

• Sunnah

 

Authority of Anas that Rasulullah (p.b.u.h) said, On the day I ascended to heaven, I saw a writing on the door of paradise that read: Every charity is rewarded ten-fold, and every loan is rewarded eighteen times. I said “O Jibril, why is the loan rewarded more than charity?”, He said “Because a person may ask charity when he does not need it, but the borrower only borrow in cases of dire need”.

 The Ijarah Transaction

• Quran

 

And if they suckle your offspring, give them their recompense in kindness. (65:6)

• Quran

 

Said one of them, “O Father, hire him on wages, for truly the best to employ is a strong and trustworthy man”. He said “I intend to wed one of my daughters to you, on condition that you work for me for eight years, and if you complete ten years, that will be grace from you” (28:26-27)

• Sunnah

 

Prophet Muhammad (p.b.u.h.) said, “Pay the hired worker his wages before his sweat dries”. (Ibnu Majah, al-Tarmizi and al-Tabrani)

• Sunnah

Narrated by Ahmad, Abu Dawud, and al-Nasa’i on the authority of Sa’ad (r.a.) : The farmers during the time of the Prophet (p.b.u.h.) used to pay rent for the land in water and seeds. He (p.b.u.h.) forbade them from doing that, and ordered them to use gold and silver (money) to pay the rent.

• Sunnah

 

Prophet Muhammad (p.b.u.h.) said, “Whoever hires a worker, he should inform him of his wage” (Al-Baihaqi)

 The Profit Determination

• Sunnah

 

Abdullah b Amr b al-As reported, I heard Allah’s Messenger (p.b.u.h) as saying, “Allah ordained the measures (of quality) of the creation fifty thousand years before He created the heavens and the earth, as His Throne was upon water”. (Sahih Muslim, 33.6416)

 The Takaful transaction

• Quran

 

Never should a believer kill another believer; except by mistake, and whoever kills a believer by mistake it is ordained that he should free a believing slave, and pay blood-money to the deceased’s family, unless they remit it freely. If the deceased belonged to a people at war with you, and he was a believer, the freeing of a believing slave (is enough). If he belonged to a people with whom ye shall have treaty of mutual alliance, blood-money should be paid to his family, and a believing slave be freed. For those who find this beyond their means, (is prescribed) a fast for two months running; by way of repentance to Allah; for Allah hath all knowledge and all wisdom (4:92)

 Liability of a Guarantor

• Sunnah

 

… then a third dead man was brought and the people said (to the Prophet), “Please lead his funeral prayer.” He said, “Has he left any wealth?” They said, “No”. He asked, “Is he in debt?” They said, “(Yes, he has to pay) three dinars”. He (refused to pray and) said, “Then pray for your (dead) companion”. Abu Qatada said, “O Allah’s Apostle! Lead his funeral prayer, and I will pay his debt.” So, he led the prayer. (Sahih Bukhari 3.488.1)