Is the Definition of Riba Ambiguous?
This is part 1 of 5 of our series highlighting key arguments and refutations from Mufti Taqi Usmani and others in the "Historic Judgment on Interest" delivered at the Supreme Court of Pakistan in 1999.
What is Riba?
Any excess charged in exchange for a due consideration.
"The riba known to and practiced by the Arabs was that they advanced a loan in dirhams (silver coins) or dinars (gold coins) for a certain term with an agreed increase on the principal." — Imam Abubakr Al-Jassas
"…Riba an-nasiah (riba al jahiliyya) was a transaction well-known and recognized in the days of Jahiliyya - they lent money on the condition that they would charge a particular monthly amount and the principal would remain due as it was at maturity. If the debtor couldn’t pay at maturity, they would increase the term and the payable amount." — Imam Fakhruddin al-Raazi
“The verses of the Quran prohibiting riba were revealed in the last days of the Prophet’s (Allah bless him and give him peace) life - he did not have an opportunity to interpret them properly. No hard and fast definition of the term riba is found in the Quran or in the Sunnah. The term remains ambiguous in nature and its correct meaning unknown. Based on this, the prohibition of riba should be restricted to the transactions expressly mentioned in the Hadith literature - its principle cannot be extended to the modern banking system which was not conceivable at the time of the revelation of the verses.”
This argument is based on two points:
(i) The statement of the Caliph Umar (Allah be pleased with him) that verses of riba were among the “…last verses of the Quran and the Prophet (Allah bless him and give him peace) passed away before he could explain them to us, therefore avoid riba and everything which is doubtful.”
(ii) The verses on riba are ambiguous and the Quran requires us to follow only that which is clear.
(i) It is important to note that the Quran prohibits riba of Jahiliyya in all its forms. All these forms relate to all transactions of loans or debts — however after the revelation of these verses, the Prophet (Allah bless him and give him peace) prohibited some other transactions as well which were not known previously as riba. The Arabs used certain commodities like wheat, barley and dates as mediums of exchange to purchase other things. The Prophet (Allah bless him and give him peace) felt that given the commercial atmosphere at the time, certain barter transactions would lead the people to deal in riba.
The Prophet (Allah bless him and give him peace) treated these commodities as mediums of exchange and issued the following injunction:
"Gold for gold, silver for silver, wheat for wheat, barley for barley, date for date, salt for salt, must be equal on both sides and hand to hand. Whoever pays more or demands more (on either side) indulges in riba."
It is in this background that the Caliph Umar (Allah be pleased with him) stated that the Prophet (Allah bless him and give him peace) passed away before giving any specific direction with regard to this particular form of riba. A deeper study of the statement of Sayyidina Umar (Allah be pleased with him), reveals that he was doubtful only about the riba al-fadal mentioned in the hadith cited above, and not about the original riba prohibited by the Quran and practiced by the Arabs of Jahiliyya in their transactions of loan and non-barter sales.
(ii) As for terming the verses on riba ambiguous — Allah declares war against those engaging in riba making it incumbent on them to avoid it — Allah would not declare war against a practice the true nature of which is unknown.
The verses of Surah al-Baqarah pronounce riba a grave sin — the enormity of which is incomparably emphasized by the fact that if the Muslims do not leave its practice they face a declaration of war from Allah and His Messenger.
In the upcoming part in this series we examine the next Argument:
“The word 'riba' refers only to usurious loans against which creditors charged excessive rates of interest entailing exploitation. Modern banking interest cannot be termed 'riba' if interest rates are not excessive or exploitative.”
Source: The Historic Judgment on Interest, Mufti Taqi Usmani, et al., Supreme Court of Pakistan