Main Conclusions Nature of Riba

The FSC has decreed that a “transaction which contains excess or addition over and above the principal amount of loan, which is predetermined in relation to time or period to be conditional to the payment of predetermined excess or addition, payable to the creditor (such a transaction containing the said elements) constitutes riba and any sale, transaction or credit facility, in money or in kind, has been considered to be a transaction of riba, which is unlawful (haram) in the territory of Islam and in Muslim society. There is a consensus (ijma) of the Muslim jurists on it.” (p.104)

It docs not make a difference whether the loan is for consumption purpose or for commercial purpose. Similarly, it does not matter if the rate of interest is low or high, simple or compound or for short or long term, between two Muslims or between a Muslim and a non-Muslim or between a citizen and a state or between two states. Any excess which is predetermined over the principal sum in a loan transaction will constitute riba in all circumastanccs.

The FSC has based its conclusions on various Qur’anic verses, Ahadith of the Prophet (peace be upon him), opinions of the jurists and various Arabic language dictionaries. It quotes from Lane’s Lexicon, Taj al-Arus, al-Nihaya by Ibn Athir, A Dictionary of Islam by Patrick Hughes. From tafasirs of the Qur’an, it quotes from Tabari, Ibn Arabi, al- Jassas, Sabuni, Syed Qutb, Mawdudi, Mufti Shaft and al- Muntakhab fi Tafsir al-Qur’an al-Karim by Committee of the Supreme Council of Islamic Affairs, Egypt. From the scholars of Hadith, the judgement quotes from Imam Malik, Muslim, al-Bayhaiqi, Ali al-Muttaqi, Abu Dawud and Ibn Hanbal. It cites from Hedaya, the famous book of Hanafite fiqh. Other fiqhi sources are the resolutions of Fiqh Academy of India and Islamic Fiqh Academy of OIC countries. From contemporary scholars, the judgement quotes Hamidullah, Fazlur Rahman Ansari, Maulvi Fazalur Rahman of Aligarh and Abraham Udovitch. The judgement brings ample evidence from historical sources that the loans in vogue in the days of the Prophet (pbuh) were of commercial nature. It examines and rejects the point of view of those who profess that the Qur’anic riba was mainly on consumption loans. Of economists, it refers to the report of Panel of Bankers and Economists issued by the Council of Islamic Ideology in 1980.

The judgement has examined the point of view of a counsel which tried to confuse the issue by saying that the question of riba falls into the category of mutashabahat. It referred to the legal methodology of Islam and proved beyond doubt that the matter falls in the classification of muhkamat. Similarly, those who tried to justify the bank interest on the basis of maslaha became the subject of examination of the court. The court took up the principles of Islamic legal methodology and showed that something which is prohibited by the text of the Qur’an cannot be made the basis of ijtehad and justified on the basis of maslaha.

Muhammad Akram Khan

Source: Elimination of Riba, Khurshid Ahmad, Khalid Rahman and Zahed A. Valie. Republished with permission.