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Saturday, December 19, 2009

Avoiding Riba/Interest/Usury

What exactly is Riba?

Riba (Usury) is of two major kinds: Riba An-Nasia - Interest on lent money and Riba Al-Fadl - Taking a superior thing of the same kind of goods by giving more of the same kind of goods of inferior quality, eg.,dates of superior quality for dates of inferior quality in great amounts.


The definition of Interest, the literal meaning of interest or Al-Riba as it is used in the arabic language means to excess or increase. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. Riba has been described as a loan with the condition that the borrower will return to the lender more than and better than the quantity borrowed.


As Muslims, our main concern when it comes to financial transactions is to avoid riba in any of its forms, despite the fact that the basic foundation of the world economics and finance today is that of riba and dealing in usury. The Prophet(saw) has foretold us of a time when the spread of riba would be so overwhelming that it would be extremely difficult for the Muslim to avoid it. This situation calls for Muslims to be extra cautious before deciding on what money payment of financial methods to use in any personal or business transaction.


Below are a few surahs from the Quran to show just how serious Riba is.

The Noble Qur'an - Al-Baqarah 275-281



275. Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has permitted trading and forbidden Ribâ (usury). So whosoever receives an admonition from his Lord and stops eating Ribâ (usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (usury)], such are the dwellers of the Fire - they will abide therein.
276. Allâh will destroy Ribâ (usury) and will give increase for Sadaqât (deeds of charity, alms, etc.) And Allâh likes not the disbelievers, sinners.
277. Truly those who believe, and do deeds of righteousness, and perform As-Salât (Iqâmat-as-Salât), and give Zakât, they will have their reward with their Lord. On them shall be no fear, nor shall they grieve.
278. O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers.
279. And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).
280. And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it by way of charity, that is better for you if you did but know.
281. And be afraid of the Day when you shall be brought back to Allâh. Then every person shall be paid what he earned, and they shall not be dealt with unjustly.


The Noble Qur'an - Al-Imran 3:130
O you who believe! Eat not Ribâ (usury) doubled and multiplied, but fear Allâh that you may be successful.

We as Muslimahs must do all that we can to avoid interest, this is a very serious issue that we are faced with everyday. As soon as you finish high school and start college most students are bombarded with credit cards offers providing them with fast and easy money. On top of that most students finance there collegiate careers with student loans that accrue interest. If you want to buy a home, a car or make any sort of large purchase it's most likely going to involve interest. Even if you pay a utility bill late, most companies add interest! This puts people into more and more debt. The difficult part is usually paying off the interest you end up owing not the principal. Avoid credit cards for purchases at all cost. A good rule of thumb is if you don't you have it, you just don't have it. Save your money until you have enough to buy the flat screen t.v., computer, new outfit or what ever it is you want.


For larger purchases it's not always that easy. If you saved up for a new home most people would be saving for a very, very, very long time. So what do we do to avoid this? I'm so glad that you asked. We do have a options available to us. Below are a few resources and options we have to help us avoid riba.









If you know of any other helpful sites please feel free to share and post them in a comment below.



***some information for the post provided from http://www.muttaqun.com/riba.html***


Asalaamu alaikum
Nadira & Najwa


7 comments:

  1. Salam sisters! Good post! We tend to forget about the gravity of Riba! Especially living in this country of consumption, its all over the place! May Allah guide us inchAllah! Thanks for the reminder Muslimahs!

    ReplyDelete
  2. Masha'Allah this was an important lesson.
    Our money is our sole (synthetic) provider therefore every individual and breadwinner ought to focus on where it's sourced.

    Shukran! (=

    www.muslimness.com

    ReplyDelete
  3. JZK Sisters for the Reminder. People tend to forgive that in fact, Allah(azza wal jalla) said that the Ar-Riba is one of the major sins. I believe that Ar-Riba is in fact the first of the seven major sins. Allahu Aliim

    ReplyDelete
  4. Does anyone know of a riba-free loan for (graduate) students?? I've been looking around for one, but I can't find anything! :(

    ReplyDelete
  5. Check out Muslimah$MoneyMatters. It's all about sisters taking a vested interest in their personal finance. Excellent reference by an excellent Muslimah.

    http://muslimahmoneymatters.wordpress.com/

    ReplyDelete
  6. Hi,

    As I see in your post there is lots of good information available on Islamic finance. Islamic finance has change a lot in the recent few years. Rest of the world specially American and European countries want to get advantage of these change in there own interest. Innovation of sukuk also one of the big reason that non Islamic countries look on the Islamic finance market.

    Sukuk is an alternate way of investment where the investor get the benefits of investment and its treated as rent on investment, to avoid the interest on investment which is strictly prohibited in Islam.I have write on same topic check my post : http://portfolioanalyst.blogspot.com/2010/09/islamic-debt-bond-market.html, http://portfolioanalyst.blogspot.com/2010/09/sukuk-bond.html,http://portfolioanalyst.blogspot.com/2010/10/how-big-is-sukuki-bond-market-and-what.html.

    I want to write one guest post for your site .If you agree than contact me at roseanderson26@gmail.com

    ReplyDelete
  7. shukran habibty for reminding me. verily, reminders benefit the believers. :)

    ReplyDelete

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