The word Riba is often mentioned by many Asatizah in their speech so that we do not get involved in it. Sometimes it is mentioned in dua' so that we are kept away from doing it. But our society needs a clear understanding of Riba, especially the Muslims to avoid being misleading about Riba. Some people define Riba as taking too much profit in trading. Is this what is meant by Riba? What exactly is the meaning of Riba mentioned by Allah in the Quran?
What is Riba?
The word Riba is taken from the Arabic word which means grow, expand, or increase. While in terminology terms, Riba means surplus or increase of something that exceeds the original amount of something. According to the Shariah perspective, Riba means surplus that needs to be paid by the borrower to the lender as a condition for the contract that has been mutually agreed upon. Riba can occur in 2 conditions, first in trading (Al-Buyu') and second in loan contract (Ad-Duyun).
Riba Types
Riba generally occurs in two conditions as had been mentioned before, but both types have additional segments under them. There are 4 Riba types in total and one of them, "Riba Jahiliyyah" has been mentioned by our Prophet clearly in Hadith. However, in this article, we will only highlight 2 main types of Riba to ease your understanding.
Riba Al-Buyu'
Riba Al-Buyu' occurs in a trade transaction or exchange of Ribawi items. Riba Al-Buyu' can happen if there is an exchange of the same type of Ribawi item but different in quantity or any weight inequality in exchange. While the second situation can happen when there is a delay in the exchange of the same type of Ribawi item (installment). In short, the exchange of Ribawi item conditions must be the same in quantity (same type) and on the spot. For example, the exchange of gold with gold must be in the same quantity in weight, while the exchange of gold with silver must be made on the spot without the same quantity condition.
6 Ribawi items mentioned in Hadith:
- Gold
- Silver
- Wheat
- Barley
- Dates
- Salt
Riba Ad-Duyun
Riba Ad-Duyun occurs in the lending contract when the original debt incurs addition, extra charge, or benefit. For example, a conventional bank will charge interest to the debtor on the loan that has been given, the interest is Riba and still, Muslims are not aware of this. In the same loan contract, the bank usually includes a late payment charge in the contract, which means that any payment that exceeds the payment due date will be penalized.
Prohibition of Riba
As alcohol drink has been gradually prohibited by stages, the same goes for Riba. The prohibition of Riba goes through 4 stages, this is because, in the time of the Prophet, Riba has become a habit for the Arabs, and to eliminate this habit is not an easy task.
First Stage - Advice
The first verse in Quran about Riba was revealed in Surah Ar-Rum: 39 to rebuke the Arabs that take Riba as their profit. This verse aims to remind Muslims that it has no benefits and is harmful to society.
"And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in Zakat, desiring the countenance of Allah-those are multipliers."
Second Stage - Reminder
The second stage occurs as a reminder for Muslims that conduct any transaction with Jews to be aware of Riba. Jews are known for their bad ethic in trading. This verse gives a sign to Muslims that Riba will be prohibited next.
"We forbade the Jews certain foods that had been lawful to them for their wrongdoing, and for hindering many from the Way of Allah, taking interest despite its prohibition, and consuming people's wealth unjustly. We have prepared for the disbelievers among them a painful punishment."
Third Stage - Prohibition
In the third stage, Allah clearly stated in Surah Ali-Imran: 130 about the prohibition of Riba.
"Oh you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful."
Fourth Stage - Solution
In the last stage of Riba prohibition, Allah warns those who are still involved in Riba with greater punishment. In the same verse of Al-Baqarah: 275-281, Allah mentioned trading as a solution to Riba.
"Those who consume interest will stand on Judgment Day like those driven to madness by Satan's touch. That is because they say, Trade is no different than interest. But Allah has permitted trading and forbidden interest. Whoever refrains after having received a warning from their Lord may keep their previous gains, and their case is left to Allah. As for those who persist, it is they who will be the residents of the Fire. They will be there forever."
Why is Riba Prohibited?
Every single ruling from Allah surely has a benefit and wisdom behind that ruling. Riba for example can be a burden to borrowers, while they really need that money to survive. Money and time cannot grow by themselves, thus Riba is a very cruel tool to make the borrower suffer. People need money to survive in their life, while others make money from them.
What is the macro impact of Riba in our society? Clearly, Riba is the main pushing factor for the people with a surplus of money to lend their money out to the deficit units in the economy. However, it could render to the exploitation of the deficit units by the surplus units. Thus, Riba's prohibition came as a solution to prevent any form of injustice, exploitation, and manipulation among both parties. The rich getting richer, the poor getting poorer.
Conclusion
For whatever reason, Muslims are obligated to follow the Shariah ruling that has been set. Muslims should not involve with any activities or transactions with conventional banking anymore. Our Muftis and Scholars have tried their best to come out with Islamic bank solutions, thus we have a choice. The choice is in your hand. Leave Riba. Wallahua'lam.