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  • Raya Shokatfard


Updated: Jun 26, 2020

By Raya Shokatfard

Muslims believe that paying or receiving riba (interest/usury) is forbidden in Islam, while gaining profit in lawful business transactions is fully permitted. What is the difference?

Many may think that lending money at a high interest is unjust, but in Islam, lending money on interest at any rate is unacceptable.

Allah frowns upon increase of a wealth which does not involve exertion of effort and labor as well as assumption of any risk. In many cases, riba (usury) also involves deception of masses.

Yet, if the increase involves using goods, labor or property, such commerce is lawful, as long as the commerce itself is not Islamically a prohibited one. Even then, Allah warns against unjust dealings (see 11:85, 26:183etc)

Allah the All Knowing, All wise decreed laws for human good and comfort. Yet, man constantly argues against these rules and tries to justify his own finite wisdom to topple Divine decrees. He has not yet succeeded and will never succeed.

A careful examination of the Quranic verses and the prophetic injunctions on this issue sheds some light for those possessing real inner wisdom.

History reveals that usury has been the means for gaining wealth throughout time. Arabs were not an exception.

So, when prohibition of usury was revealed to Prophet Muhammad (peace be upon him), those who were involved in it were given chance and warning to leave what was left of interest.

{O you who believed! Fear Allah and leave what remains of usury (from now on) if you are (really) believers} (Al-Baqarah 2: 278)

After that, Allah declared war on those who don’t take heed to His warning. This is very serious:

{And if you do not do it (if you do not give up your demand for the interest due to you) then take notice of (a declaration of) war from Allah and His Messenger, but if you repent, you shall have your capital sums. Deal not unjustly, and you shall not be dealt unjustly.} (Al-Baqarah 2:279)

Over time, Allah repeatedly sent more revelations and grave warning about usury and also promises of prosperity to those who feared Him and engaged in lawful dealings.

{O you who believe, do not devour riba, doubled and multiplied but fear Allah; that you may really prosper.} (Al-Imran 3: 130)

Same warnings were given to the children of Israel (the Jews) by their prophets as were given to Arabs, new to Islam. Many of the Jews rejected their prophets’ warnings throughout ages. Allah mentions them in the Quran:

{That they took riba although they were forbidden and that they devoured men’s property wrongfully. We have prepared for those among them who reject Faith a grievous punishment.} (An-Nisa’ 4: 161)

Allah warns that wealth does not increase but decreases in the long run by dealing with usury or unjust dealings:

{That which you lay out of increase through the property of (other) people, you will have no increase with Allah…} (Ar-Rum 30: 39)

Prophetic Statements on Usury

According to the Prophet of Islam, usury is among seven destructive sins:”Avoid the seven Great Destructive Sins.” (Al-Bukhari).

The Prophet further warned about the curse of Allah upon those involved in riba(usury) – meaning the giver, the receiver, the one who writes the contract as well as the one who witnesses it.

The Rich Gets Richer and the Poor Gets Poorer by Means of Interest

On a macro level, we see today, the cause of much of the world misery and hunger is due to unjust interest imposed upon countries that ended up as slaves of first world countries due to their borrowing -ending up with huge interest loaded loans and inability to fulfill their pledge. The end result has been full submission and obedience toward their so called great masters. The elites do not end up paying the price of poverty and starvation, but the very poor do.

Wars have been created to control the interest loaded commerce as well as sale of weaponry; millions killed, displaced and families separated—for no other major reason than profiteering and control—interest being the turning wheel.

Muslim scholars have given several reasons and suggestions as to why Allah may have enforced such laws. The following are some reasons proposed by Muslim scholars:

§ Usury is a sure gain without any possibility of loss, hence all the risk is taken by the borrower, rather than sharing the risk and the profits.

§ Usury retards economic growth and development.

§ Usury is one of the major contributors of inflation.

§ Usury negates the culture of brotherhood and sympathy.

§ From a moral and spiritual point, riba (usury) is clearly based on greed, selfishness, parsimony, narrow-mindedness and hard-heartedness. It nurtures the same evils in the money lender. (Islamic Network)

On the micro level as well, we notice much suffering and hardship. The current world economic crisis started with the United States offering very low interest loans to home buyers to bolster the buying power and thus the economy. The end result caused many losing their homes once the adjusted interest rate soared and the gullible buyers found themselves trapped, not being able to make their payments—thus losing their homes.

Home foreclosure in the US since this financial crash is at historical high and there is no light at the end of the tunnel.

Another micro level interest-based economical disaster is credit cards. Many of the US population live off of the credit card, buying without having proper ability to pay. Why? The luring western commerce would tempt even the smart ones. They often find themselves so loaded with credit card loans and unable to repay that many have to declare bankruptcy to relieve themselves of such burden—only to fall again into the same never-ending trap.

Also, late and finance charges are among the unspoken interest gimmicks.

So, what is interest-free commerce? Any business or transactions whether property or goods that do not involve interest, but involve profit or loss are considered lawful transactions. This is as long as the nature of such transactions is not among the prohibited ones, like sale of alcohol, harmful substances etc.

I remember my mother telling me that she saved money in a hat for a few years and surprised my father one day, by giving it to him. He was able to buy our first home nearly 60 years ago, at about, what would translate today into three dollars. That was the norm for an average home in Iran at the time. Others also bought homes this way. No loans, no worries, until the banks got smart and started offering loans with interest. That was the end of peace of mind and tranquility within families.

Today, the same home would sell for as much as half a million dollars. What caused such inflation? Many causes, but interest bearing loans would surely be at the top.

People used to save money to start their own business. When the economy was down, they bore the grunt, but survived and continued and prospered and their offspring ended up inheriting the business in many cases.

Today, the interest loaded loans that the business owners use to start up their business with, have swallowed much of their profits and have put them in a vulnerable position, with little security when an economic downfall strikes the country. This is the case for many US businesses today. Some bustling shopping malls and formerly busy commercial streets have now turned into ghost towns with many sings on the windows, “Out of Business.”

How Does Interest Affect One’s Faith Negatively?

The answer is simple. When a person is overburdened to meet his/her economic obligations, there is little time for spiritual concerns. One may pay a Mortgage for many years, only to find himself still nearly where he started with his balance. Had he persevered and saved money first, or gave up ownership altogether, he would most likely not be bound by so many financial constraints that would weigh him down. Many marriages have collapsed as a result of overdue stress to meet financial needs – not to mention neglected children.

A Personal Testimony

When I first came to understand the impermissibility of paying or receiving interest, I already owned several pieces of real estate in California. I was a real estate professional. Nearly all real estate transactions dealt with interest. Determined to follow Allah’s way of life, I first gave up my 20-year long profession. Then, I tried to put my properties on the market immediately. It took some time. Some, I sold for half the appraised price and some with no profit.

I paid off all loans, paid the US government the taxes and bought only a few income properties with cash or no interest private loans. I then bought a very humble home made of aluminum (called mobile home) for my kids, my mother and I to live in. I found myself at much more peace and tranquility than when I was in a lofty beach home driving a Rolls Royce while I had thousands of dollars of financial obligations to pay monthly. Such burden plus responsibility of raising two kids nearly caused me to have a nervous breakdown. Allah saved me at the last hour.

He blessed me abundantly after my decision to put Him above my own ego and hunger for wealth and ownership. The best blessing He gave me was the peace which a world full of gold could not buy. As for wealth, he gave me enough, andalhamdulliah, I am now satisfied with a very humble and comfortable life away from the West, and in the blessed land of Egypt. I evolved from being a former real estate mogul and the owner of numerous apartments and rental units, houses, farm and a large estate to simply a home to live in and one to rent in Cairo. No more stacks of bills to pay monthly. Everything comes to the door; I pay and sleep in peace at night. Best of all, I now have much more time to worship my Creator and be thankful for His abundance of blessings He has bestowed on me and saving me from the evil of my own greed.

My secret was that I totally trusted in the divine wisdom, rules and commandments and wished to follow them. I did not try replacing His ordinances with my own reasoning. I yearned for closeness to Him and was willing to give up everything if necessary. I lost much in properties, family and wealth, but I feel very rich in spirit and the peace I feel within– not to mention the exceptional friends I have gained and new families I can call my own. I chose the way and I achieved it with His grace.

The famous saying: “When there is will, there is a way.”


Published on Reading Islam on Sunday, 05 June 2011

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