Riba, Usury, Interest and Qur’anic Ethics

The caption above is the title of a book that we have been asked by several people to review. But for this fact, we might not have reviewed it because browsing done a few months earlier, had not invited a full reading.

Published in Bangalore (India), the caption hides a message: the content will differentiate between Riba, usury, and interest to show that the three are not the same. But, Islamically, the three are, of course, the same, i.e. all three are prohibited. Further, true to the title, and despite the objective stated inside as ‘start of a debate,’ the true intent appears to be to remove any qualm in the Muslim heart and straightaway plunge into interest-bearing transactions. The last part of the title, ‘Qur’anic Ethics,’ has another message that slips through if the reader is unsuspecting: Qur’anic injunctions in this regard are not mandatory, but are merely ethical considerations, (towards which the Muslim attitude can safely be what it is towards other ethical values, namely, ignore them until a week before death).

At all events, one gets the feeling that the effort behind the seminar, which was held, ostensibly, to discuss the issue of bank-interest, appears to have been run in order to find a way to legalize Riba by giving it a new definition.

What it would be like to conduct a seminar on medical issues, without a single doctor present? That’s what this seminar on the declared objectives would have looked like when held in March 2013. There was not a single scholar’s shadow present there. What prevented the organizers from inviting, say Mawlana Ashraf Ali of the town – the head of the Imaarat-e-Shar`iah, and a Mufti proper? And, if there is a good distance between traditional scholars, who do not know English, and the modern-day Islamic activists, whose main qualification is that they know English, then at least the Ameer of the Jama`at-e-Islami could have been invited. But, perhaps, with their obnoxious presence, the debate would not have gone on lines drawn.

Two million activists, journalists, BBC correspondents, Mutawallis, retired expatriates, custom officers – you name as many professions as you wish – and increase their numbers from two million to twenty million, yet, they are not equal to one Mufti, just as 20 million university graduates are not equal to a single doctor.

What gave birth to the idea of a seminar on interest-bearing banking was a question sent to a Muslim news magazine. The seminar idea moved the hearts. The question was: “Is interest accruing from a savings bank account haraam if the rate of inflation exceeds the rate of interest?” (shortened).

In response to the simple and innocent question, (which could have been deflected to Deoband or Madinah), it appears that the seminar couldn’t produce but some verbiage. Maybe the participations were yawning too much. Boredom could be the reason why nobody asked:

“Fair enough. What happens if the rate of interest is say 7%, but the rate of inflation is 15%, which happens to be so often, in so many countries? Should the banks not increase the rate of interest owned to their depositors to 15%? In fact, during economic crisis, inflation shoots up to 50%. Should we not take a procession out in the streets tomorrow morning against the banks for mischievously fixing up the rate of interest on deposits as low as 7%? Surely, even non-Muslims would join us? Should the banks not link the rate of interest to the rate of inflation?”

Yawning could have been another reason why none of the English-speaking participants raised another question:

“What happens when interest rate is higher than the inflation rate? That is, if the interest rate is say 7%, and inflation only 3%, then shouldn’t the depositors receive the interest at 3%? That is, if the banks promptly paid 7% interest at the end of the year, shouldn’t the depositors as promptly return 4% of the interest amount received?”

Ennui can close the minds, otherwise someone could have also asked,

“What happens when there is deflation? That is, the economy is on a free fall, and so, in general, the prices are going down and down? Shouldn’t interest rates be brought down too? And, in particular, what happens when prices plunge to the bottom, such as of real estates, shares, gold, coffee, leather, spices, or the like, whose prices so often crash down because of local or foreign factors. Should then the banks allow no outflow of interest money to the depositors, but instead, charge them a certain percentage for enjoying an increase in the worth of their savings?”

To explain, let us assume the real estate price is 2000 per sq. foot. A man has his savings in the bank amounting to 100,000. With that amount, he purchases 50 sq. feet of land. Then, over some time, the land prices plunge to say 1000 per sq. foot. The man can now buy 100 sq. feet instead of 50. Should the bank now charge him interest, (instead of paying interest)? After all, what right has the man to multiply the worth of his money by 100% to be able to buy the 100 sq. feet of land, instead of 50 sq. feet? Is he not sucking the land-owner’s wealth?

If the participants were not bored enough to be awake they could have asked many more questions of the class about which an Arabic proverb says, “Laadarar, walaadirar,” meaning, in common parlance, “no harm done, no harm received.” In English they say, “back-to-back liability” although, of course, in connection with the subject in discussion, the financial market accepts neither the Arabic proverb nor the English equivalent. If asked concerning linkage of interest rates with inflation, they could respond, with scrutinizing eyes, “Say that again.”

Since such questions do not seem to have been asked, it seems proper to assume that it was right on target that those concerned should be given a book consisting of the ‘not so interesting’ proceedings of the seminar, but ‘very interesting’ two articles, giving the answer that was, perhaps, determined before the seminar began.Why tax the people’s minds, when the answer is ready?

With the linkage idea so unceremoniously dismissed by the financial market, we can now look into the long article by Fazlur Rahman (1919-1988): a scholar produced by the West, employed by the West, and designated ‘an Islamic scholar’ by the West. His dissertation at Oxford was on Ibn Sina, taught Persian language, Islamic philosophy (the version rejected by Imam Ghazali), Near Eastern Studies, (concerning everything except invasion by the West and theft of its resources), and then chose to write (perhaps what converted him from ‘unknown’ to ‘well-known’) on economy. But, possibly, he found the discipline vast, so chose a single topic: Riba and Interest – redefining the earlier, recommending the latter.

The wisdom in giving place to this article occupying one-third of the book is detectable. It has nothing to do with the issue for which the debate was called, i.e., Riba vs. inflation. There is not a word about this issue in this article. In fact, the term ‘inflation’ does not occur once in the book.

Technically, the article is a poor product. It follows Western style of research adopted by their social scientists, but which is abhorred by their physical scientists. Science would have never progressed had they adopted the research methods of the social scientists. (Freud’s well-researched works were rejected by his own students after his death). Islamically, the article is unworthy of serious consideration. So why was the 50-year old article pulled out from the grave and reproduced in this book? The reason that can be assumed is that first, it crusades for Riba, and second, it fights hard to show that the Riba that the Qur’an declared unlawful is the “doubled, redoubled” type – not simple interest. The basis of the argument is a single Qur’anic verse which says (3: 130): “Muslims! Do not devour usury doubled and redoubled (ad`aafan mudaa`afa). Fear Allah, haply you may prosper.”

The author has no other verse supporting his personal view, no hadith, no statement of a Companion, none of the Tabi`iyyun, nor any of the Mujtahideen who appeared during the last 1400 years. Writes the Kuwaiti Encyclopedia:

“Riba (of all kinds) is prohibited by the Qur’an, by the Sunnah, and by consensus of the Ummah. It is one of the major sins. Anyone who declared it lawful may be allowed to repent. If he refused, he should be killed.”

Indeed, there has been such consensus over the issue that of the dozens of deviated sects that appeared during the last 1400 years, who differed over many issues and parted ways with the mainstream Ummah, none ever differed over usury, to declare any kind of it lawful. Thus, anyone who says that the understanding of the Ummah-scholars stands rejected, is at war with Allah and with the Ummah, as are those who agree with him.

Fazlur Rahman quotes two Tabi`iyyun – Zayd b. Aslam and Mujahid – by which non-Arabic speaking readers are led to a wrong meaning. He explains that the two were defining Riba. But that was not their intention. The two explained what Riba of the pre-Islamic times was, namely, compound interest. They do not explain what the prohibited Riba of Islam is.

That is, there is a sea of difference between saying what the Riba of the Jahiliyyah was, and, in contrast, what the Riba of Islam is, or should be. Zayd b. Aslam and Mujahid explained what the Riba of the Jahiliyy days used to be. As for what the Riba of Islam is, they did not have to explain it because the Qur’an had explained it in unequivocal terms. It was interest of every kind: simple, compound or any other. Hadith clarifies Riba as that extra amount that the lender charges on loans, no matter how little.

The Qur’an said (2: 35), “Those who deal in usury (Riba) shall not rise (on Judgment Day) except as he rises whom the Devil has driven to madness by (his) touch.” (A point of note is that all the verses in the Qur’an concerning Riba were revealed after the verse containing the words “doubled and redoubled.”). This particular verse did not say, “Those who deal in doubled, redoubled usury.” It said, “Those who deal in usury.”

The Qur’an also did not specify doubled and redoubled usury in another statement of the same verse. It said, “Allah has made trading lawful and usury forbidden.”

Similarly, Allah said in the next verse, “Allah destroys usury (Riba) and cultivates charity.” He did not say He destroys usury of the “ad`aafan mud`aafa” kind alone. He followed up the topic by saying in the next verse (278), “Believers! Fear Allah and give up any outstanding interest – if you have submitted.”  There are several other verses where Riba was not qualified with any adjective.

As a final measure, Allah firmly shut the door of every effort to play with His words by saying, “Believers! Fear Allah and give up any outstanding interest if you are believers. But if you do not, then take notice of war from Allah and His Messenger. However, if you repent, then you may have your principal.” (2: 278-79). In these verses, He did not specify “doubled and re-doubled interest,” but rather, He used the words “any outstanding interest.” “Any” is, of course, “any” – nothing specific. Another possible window for a man trying to squeeze himself out of a religious obligation was closed by the words, “However, if you repent, then you may have your principal.” Now, the money lenders of the pre-Islamic times possessed two kinds of wealth: (a) principal investment money, and (b) the interests that were earned on that principal. The money earned through interest was itself of two kinds: (i) earned as ‘simple interest’ and (ii) earned as ‘compound interest.’

If the interest earned through ‘compound interest’ (or the doubled and redoubled kind) was alone prohibited by the Qur’an and not the simple type, then, why did Allah not say, “You may have your principal and the money earned as simple interest?” Why did He allow them keep back only the principal, and not the simple interest money also, if it was halal?

Thus, the Qur’an, as it always does, defeated the efforts of the deviants.

When dealing with Halal and Haram, Islam takes care to leave no excuse for those studying the texts in particular depth to find a pretext to escape from its obligations. Accordingly, the Prophet clarified the issue. He said, “Whoever took extra, indulged in interest.” At the fall of Makkah, he announced that he was quashing every Riba of the past. Naming his own uncle, he announced publicly, “I write off hereby the interests due to my uncle `Abbas.” He did not say, “I am writing off ‘the compound interest’ due to `Abbas but not ‘the simple interest that he had earned in the past.’” Similarly, when he wrote to the people of Najran that they will not be allowed to conduct any interest-bearing transactions, he did not specify that they could continue with simple interest banking.

So, how should one understand the words “ad`aafan mudaa`afa” of the verse 130 of Aal `Imraan? To repeat, “Muslims! Do not devour usury doubled and redoubled. Fear Allah, haply you may prosper.”

The answer is that there are two requirements to understand Qur’anic purposes: (i) know the Arabic language, (ii) know its idiomatic usage. The words ‘doubled and redoubled’ do not mean you can consume simple interest but not compound interest. But rather, it is the worst of its kind that has been mentioned for emphasis. For example you say, ‘Do not speak foul language inside a mosque.’ But it does not mean you can speak foul language outside the mosques. In a second example, Allah said (17: 31), “Do not kill your children fearing poverty,” which does not mean, “You can kill them if you do not fear poverty.” Or, Allah said speaking about the consecrated months (ash-harul hurum) in verse 36 of Surah Tawbah, “Do not wrong yourself therein,” which does not mean, “You can wrong yourself in other months, but not during the consecrated months.” Or, Allah said about the wealth of the orphans (4: 6), “Cconsume it not wastefully and hastily in fear that they will grow up,” which definitely does not give the license to consume the property if there is no fear that they will grow up and ask for accounts. Again, Allah said (24: 33), “Do not force your slave-girls to adultery, if they wish chastity.” It does not mean that if the slave-girls do not care for chastity, they can be used as prostitutes; but rather, it means forcing them to prostitution is all the more hateful a crime if the girls wish to remain chaste. The compeller will earn twofold sins: one, for using them for prostitution, and two, compelling those who love to be chaste. Similarly, when Allah said, “Do not devour usury doubled and redoubled,” He did not mean, “you could devour usury if it is not doubled and redoubled.” What is meant is that charging doubled and redoubled interest is a crime more revolting.

Regretfully, there are other portions in the article, which, at one end of the extreme can be called intellectual gimmicks, while, at the other end, they can be labelled as “kalimatu al-haqqi, urida bihi al-batil,” meaning, true words quoted with the intent to prove the untrue as true. As an example of gimmicks, the author brings in a long passage of Ibn al-Qayyim to create the impression that Ibn al-Qayyim is also of the opinion that Riba is only that which is doubled and redoubled. In actual fact, Ibn al-Qayyim is speaking of an unrelated issue.

Either he was unaware, or deliberately ignored Ibn al-Qayyum’s statement in his commentary on Sunan Abi Da’ud, where he states that inability to identify the true intent of a sentence, leads a man to wrong meanings. He proceeds to cite examples from the Qur’an which can lead to wrong understanding if one does not understand the intents and purposes contained in a sentence. Interestingly, he cites the very verse 130 of Surah Aal `Imran on which the author based his contention, viz., “Muslims! Do not devour usury doubled and redoubled.” He cites another example from the Qur’an to show how the apparent meaning cannot be possibly taken. Allah said (24: 33), “As for those you own as slaves, if they seek a contract (for freedom), then contract with them, if you know any good in them.” This does not mean, says Ibn al-Qayyim, that the slaves may be freed only if some good is found in them, and not when not found; but rather, the intent is that it is a greater obligation to free them if you find goodness in them.

When a person’s belief is no more than declaration of faith in certain doctrines, then, his reasoning is reversed towards benefits of the earthly nature. He looks for a pretext to treat a haram as halal. But he whose belief is connected with the love of his Lord, his reasoning takes the higher sublime turn towards His Lord. He asks himself, “What could possibly distance me away from Allah?” He needs a pretext to treat halal as haram. Unsurprisingly, we have `Umar saying, “The Prophet died before he could elaborate on Riba…” Now, he whose belief in this world is greater than his faith in the Next, ignores the rest of `Umar’s words and jumps (and makes jump many) to the conclusion that the Riba as defined by the Fuqaha’ needs redefinition. “After all,” he says, “Even the Companions did not know what exactly Riba was.” The words of `Umar he ignores to read are, to quote in full, “The Prophet died before he could elaborate on Riba. Therefore, shun Riba, and what smacks of Riba.”

`Umar saw Riba in every advantageous dealing. Was it Riba to draw advantage of a brother Muslim through a commercial dealing? For example, as Muhammad Asad (the Jew-turned-Muslim) explained to (the Muslims-turned-Jews), that `Umar wondered whether drawing high profits, say more than a small percentage, was also Riba. `Umar in fact was so worried about the possibility of Riba creeping into ordinary commercial dealings that he used to announce, “Those who do not know the laws of commercial dealings may not enter our markets. It is feared that they would unknowingly indulge in Riba-transactions.”

When a man speaks a lie to others and repeats it over, he himself falls a victim to it. That is what happened to the Western educated class of this Ummah. They propagated – not on the basis of financial expertise, of which they knew not the ABC, but because they wished to promote interest-based economy – that the material development of the West was largely aided by the banks. The banks gave loans – on interest – to entrepreneurs to help them set up industries with big capital lay out. Without that, they assumed, the industrial development of the West would have been impaired. This piece of fiction was repeated so many times that the perpetrators began to believe in it.

At heart, this fiction seems to be the concern of those who have been knocking at the doors of Fiqh, seeking removal of Islamic embargo on interest-bearing transactions. They do not seem to know that interest-bearing loans by banks were not the main factor in the industrialization of the West, and not the main factor in its material development. There were many factors which helped the West achieve material progress during the last two centuries. This discussion, however, will occupy several pages, and so we shall postpone it for another occasion.

In sum, and said regretfully, the article of Fazlur Rahman – which is at the core of all other arguments contained in the book, Riba, Usury, Interest and Qur’anic Ethics – fails quite badly when examined from Islamic legal point of view. Several other arguments that are constructed in this article are beautiful balloons for the Islamically uneducated public, but ugly, disjointed, useless pieces of rubber when punctured by scholars.