Arabian Tongue Institute Blog (What is Riba?)

What is Riba?

Riba is an Arabic word meaning ‘to increase’ or ‘to exceed’.

Riba is commonly translated to ‘interest’ or ‘usury’ in English and is a charge for the use of another’s money. It also includes unequal exchanges. Riba originated among the people of the Jahiliyyah and still existing in different ways.

In the Shari‘ah, or Divine Way of Islam, riba is the name Allah gave in the Quran to any increase of a debt or a loan until its repayment. It is equal to the financial terms ‘interest’ or ‘usury’ in English, with no distinction between these two words and riba.

Allah emphatically forbidden riba in all its forms and declared its practice equal to disbelief in Him. Prophet Muhammad, on him be peace, has also specified it and prohibited it in clear terms.

Islam also forbade another kind of riba, namely riba al-fadl, which means adding to the amount when exchanging one item for another of the same type. So if gold is sold for gold, that is not permissible except like for like, hand to hand. Islam stipulated that the exchange should be done hand to hand and that the items or goods should be of the same quality. Whoever gives more or asks for more has engaged in riba. If he sells a saa‘ of wheat for two saas (of the same commodity), even if it is hand to hand, he has engaged in riba. 

Islam outlaws riba in all its varieties because it is the principal mechanism that empowered human beings impose to perpetually institutionalize their wealth – as individuals and as groups – in the form of a direct dividend paid to the wealthy on their wealth from the wealth of the disempowered, permanently impoverishing them.

Many Muslims in Western societies are unaware that there are financial services and products that are compliant with Sharia law, and they therefore continue to accrue debts and interest on credit cards, mortgage loans, and bank loans.

Different verses of the Quran related to Riba are given in the following:

"Allah has allowed trade and has forbidden riba” [2:275]

“You who believe, do not consume riba, doubled and redoubled. Be mindful of God so that you may prosper.” [3:130]

"O believers, take not doubled and redoubled interest, and fear God so that you may prosper." [13--132]

"And whatever riba you give so that it may increase in the wealth of the people, it does not increase with Allah." [30:39]

In short, riba is an exploitative arrangement that keeps the poor in precarious financial circumstances as the poor are stuck with ever-growing debts whilst the rich increase their wealth without creating any extra value

May Allah keep all of us away from Haram and lead us closer to Halal