03/08/2016
Types of Riba:
The first and primary type is called Riba Au Nasiyah or Riba Al Jahiliya.
The second type is called Riba Al Fadl, Riba An Naqd or Riba Al Bai.
The first type was specified in the Quranic verses before the sayings of the Holy Prophet this type was termed as Riba al Quran. However the second type was not understood by the Quranic verses alone but also had to be explained by the Holy Prophet it is also called Riba al Hadees.
Riba An Nasiyah
This is the real and primary form of Riba Islamic Finance. Since the verses of Quran have directly rendered this type of Riba as Karam, it is called Riba Al Quran. Similarly since only this type was considered Riba in the dark ages, it has earned the name of Riba Al Jahiliya. Imam Abu Bakr Hassan Razi has outlined a complete and prohibiting legal definition of Riba An Nasiyah in the following words:
"That kind of loan where specified repayment period and an amount in excess of capital is pre determined.".
One of the hadith quoted by Ali Ibn Talib (RAA) has defined Riba An Nasiyah in similar words. The Holy Prophet said:"Every loan that draws excess is Riba.".
The famous Sahabi Fazala Bin Obaid has also defined Riba in similar words: "Every loan that draws profit is one of the forms of Riba.".
The famous Arab scholar Abu lshaq az Zajjaj also defines Riba in the following words: "Every loan that draws more than its actual amount.".
One of the hadith quoted by Ali Ibn Talib (RAA) has defined Riba An Nasiyah in similar words. The Holy Prophet said:"Every loan that draws excess is Riba.".
The famous Sahabi Fazala Bin Obaid has also defined Riba in similar words: "Every loan that draws profit is one of the forms of Riba.".
The famous Arab scholar Abu lshaq az Zajjaj also defines Riba in the following words: "Every loan that draws more than its actual amount.".
Riba An Nasiyah refers to the addition of the premium which is paid to the lender in return for his waiting as a condition for the loan and is technically the same as interest. The prohibition of Riba An Nasiyah is one of those issues which have been confirmed in the revealed laws of all Prophets (AS). Some of the old testaments has rendered Riba as haram (See Exodus 22:25, Leviticds 25:35-36, Deutronomy 23:20, Psalms 15:5, Proverbs 23:8, Nehemiah 5:7, and Ezakhiel 18:8,13,17 & 22:12). The Quran has also stated the prohibition of Riba in various verses has warned those who persist in practicing it of a war which is certain to be declared on them by Allah Himself and His messenger and has seriously threatened those engaged as writer, witness and dealer in Riba transactions.
According to the above definition of Riba An Nasiyah, the giving and taking of any excess amount in exchange of a loan at an agreed rate is included in interest irrespective whether at a high or low rate. It has been proven through ahadith that the Holy Prophet paid excess at the loan repayment time but since this excess was not paid through an agreed rate, it cannot be called interest. This clarifies that the word "Draws" in the hadith definition "The loan that draws interest is Riba” has been used to highlight the giving and taking of excess amount through an agreed rate in the loan contract. Due to this, Imam Abu Bakr Hasas has added the word "condition" to the definition.
The fact that Riba An Nasiyah is categorically haram has never been disputed in the Muslim-community. In short, the Riba Islamic Finance of today which is supposed to be the pivot of human economy and features in discussions on the problem of interest is nothing but this Riba, the unlawfulness of which stands proved on the authority of the seven verses of the Quran, of more than forty ahadith and of the consensus of the Muslim community.
Wisdom behind the prohibition of Riba An Nasiyah First of all, we should realize that there is nothing in the entire creation of the world, which has no goodness or utility at all. But it is commonly recognized in every religion and community that things which have more benefits and less harms are called beneficial and useful. Conversely, things that cause more harm and less benefit are taken to be harmful and useless. Even the noble Quran, while declaring liquor and gambling to be haram, proclaimed that they do hold some benefits for people but the curse of sins they generate is far greater than the benefits they yield. Therefore, these cannot be called good or useful on the contrary, taking these to be acutely harmful and destructive, it is necessary that they be avoided.
The case of Riba An Nasiyah is not different. Here the consumer of Riba in Islamic Banking does have some casual and transitory profits apparently coming to him, but its curse in this world and in the Hereafter is much too severe as compared to this benefit. The consumer of Riba in Islamic Banking suffers such a spiritual and moral loss that it-virtually takes away the great quality of being 'human' from him. An intelligent person who compares things in terms of their profit and loss, harm and benefit can hardly include things of casual benefit with an everlasting loss in the list of useful things. Similarly no sane and just person will say that personal and individual gain which causes loss to the whole community or group is useful. In theft and robbery for example, the gain of the gangster and the take of the thief is all too obvious but it is certainly harmful for the entire community since it ruins its peace and sense of security.
Hadith on Riba An Nasiyah:
From Usamah ibn Zayd: The Prophet said: "There is no riba except in Nasiyah [waiting]." (Bukhari, Kitab al Buyu, Bab Bay al- Dinari bi al-dinar nasa'an; also Muslim and Musnad Ahmad) "There is no riba in hand-to-hand [spot] transactions." (Muslim, Kitab al-Musaqat, Bah bay’i al-ta'ami mithlan bi niithlii also in Nas’an).
From Ibn Mas’ud: The Prophet said: "Even when interest is much, it is bound to end up into paltriness." (Ibn Majah, Kitab al-Tijarat, Bab al-taglilizi fi al-riba; also in Musnad Ahmad).
From Anas ibn Malik: The Prophet, said: "When one of you grants a loan and the borrower offers him a dish, he should not accept it; and if the borrower offers a ride on an animal, lie should not ride, unless the two of them have been previously accustomed to exchanging such favours mutually."(Sunan al-Bayluqi, Kitab al-Buyu', Bab kulli qardin jarra manfa'atan fa huwe riban).
From Anas Ibn Malik: The Prophet said: "If a man extends a loan to someone lie should not accept a gift." (Mislikat, on the authority of Bukhara's Tarikh and Ibn Taymiyyah’s al-Muntaqa).
From Abu Burdah Ibn Abi Musa:I came to Madinah and met 'Abdullah Ibn Salam who said, you live in a country where riba is rampant; hence if anyone owes you something and presents you with a load of hay, or a load of barley, or a rope of straw, do not accept it for it is riba. (Mislikat, reported on the authority of Bukhari).
Fadalah Ibn 'Ubayd said: "The benefit derived from any loan is one of the different aspects of riba." (Sunan al-Bayhaqi).
Riba Al Fadl
The second classification of Riba is Riba Al Fad. Since the prohibition of this Riba has been established on Sunnah, it is also called Riba Al Hadees.
Riba Al Fadl actually means that excess which is taken in exchange of specific homogenous commodities and encountered in their hand-to-hand purchase & sale as explained in the famous hadith: The Prophet said, "Sell gold in exchange of equivalent gold, sell silver in exchange of equivalent silver, sell dates in exchange of equivalent dates, sell wheat- in exchange of equivalent wheat, sell salt in exchange of equivalent salt, sell barley in exchange of equivalent barley, but if a person transacts in excess, it will be usury (Riba). However, sell gold for silver anyway you please on the condition it is hand-to-hand (spot) and sell barley for date anyway you please on the condition it is hand-to-hand (spot).".
This hadith enumerates 6 different commodities namely:
Gold.
Silver.
Dates.
Wheat.
Salt.
Barley.
Six commodities can only be bought and sold in equal quantities and on spot. An unequal sale or a deferred sale of these commodities will constitute Riba Islamic Finance. These six commodities in fiqh terminology are called "Amwal-e-Ribawiya". Does this hadith apply only to the items mentioned in it? Does it concern sales of barley or wheat but not rice? Of dates but not raisins? A complete legal definition differs in every fiqh. Scholars such as Taoos and Qatada hold that Riba Al Fadl includes these specified types only, however a majority of Islamic scholars believe that some other commodities should also be included. In order to answer the question, which other commodities should be included, some fiqhs hold that the characteristics which are common amongst these items can be used as basis (illat) for Riba Al Fadl. An illat is the attribute of an event that entails a particular divine ruling in all cases possessing that attribute; it is the basis for applying analogy. Ribawi goods are therefore goods that exhibit one of the efficient causes occasioning application of rules of Riba in Islamic Banking.
Various schools define these causes differently:
IMAM ABU HANIFA: Imam Abu Hanifa sees only two common characteristics namely:
Weight.
Volume.
Meaning all these six goods are sold by either weight or volume. Therefore all those commodities, which have weight or volume and are being exchanged, with the same commodity will fall under the rules of Riba Al Fadl.
