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Fiqh of Financial Transactions 2011 Fall

Fiqh of Financial Transactions IV - 2011 Fall Session

Required Textbook: Understanding Islamic Finance by Muhammad Ayub
Grading: There will possibly be a take home final exam
When: Sundays 7:00 PST - 8:15 PST October 2, 2011 to December 4, 2011.
After October 16, the class time will be 6:45 PDT - 8:00 PDT

Basic Outline of the Course: Main topic of discussion will be Gharar and Ribaa
I. Definition of Ribaa and Ribaa terms
II. Analysis of Ribaa in the Shareeah Texts

a. Ribaa in the Quran

b. Ribaa in the Sunnah

III. Misconceptions Concerning Ribaa (Shubahaat or Arguments attempting to support it’s permissibility)
IV. Secular Discussion of Interest

a. History of economic thought on Ribaa in the West

b. Economic justification of Ribaa

c. The Harms of Ribaa

V. Ahkaam al-Dain (Laws related to lending money)

a. Loans

b. Contracts Containing Ribaa

c. What to do with Wealth Earned from Ribaa


Suggested Reading from required textbook:
Avoiding Ribaa (pp. 43-44; 74-75; 111-112; 142-143)

2011-10-02 Class Notes

Welcome to the fourth session of fiqh of financial transactions.


The textbook is a comprehensive book on this topic, however the material so far is not covered consistently by the book. We will follow the textbook when we discuss investment tools in the future.

This quarter we are going to study Ribaa, define Ribaa and discuss evidence related to Ribaa. We are going to discuss about arguments people give in favor of Ribaa to justify it. After that we will talk about the secular aspects of ribaa, history of ribaa from western society, and discuss ribaa’s claimed benefits and rebut them.

If we have time we will discuss Ahkaam Al-Dayn which are laws related to lending money.

Definition of riba

First we want to define  the Arabic term Riba and its root letters/word is Ra Ba Wau -- ربو. The meaning of it is zaada (زاد و نمى) It means something that increases or grows.

In Surah Baqarah verse 276, Allah swt says:
Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.

Allah swt uses the word ribaa for both interest and for increase of charity.


O People, if you should be in doubt about the Resurrection, then [consider that] indeed, We created you from dust, then from a sperm-drop, then from a clinging clot, and then from a lump of flesh, formed and unformed - that We may show you. And We settle in the wombs whom We will for a specified term, then We bring you out as a child, and then [We develop you] that you may reach your [time of] maturity. And among you is he who is taken in [early] death, and among you is he who is returned to the most decrepit [old] age so that he knows, after [once having] knowledge, nothing. And you see the earth barren, but when We send down upon it rain, it quivers and swells and grows [something] of every beautiful kind.
Surah Hajj: 5

Prophet (saw) “when Allah takes give charity it continues to increase in the hand of Ar-Rahman”
“wa tarbu fi kaffi ar-rahman”

Various definitions of the term Ribaa
1. Ribaa means any kind of increase or growth. As a technical term it means, excess or increase, over and above a principal sum.

2. Economists definition of Ribaa: It is an additional payment that is not covered by an increase in labor or any effort or risk.

Ribh versus Ribaa
There is a distinction made for ribh (ربح), ribh is profit and is distinct from ribaa. Profit is due to exchange of commodities, transaction involving halaal risks, expertise or labor. But Ribaa denotes something that does not require expertise, risk, or labor. Ribaa is payment made to money without real transaction (nominal domain).

3. Definition from Board: Riba is any increase over and above the principal amount in a contract, not covered by a corresponding increase in labor, commodity, risk or expertise.

What is not permissible is a payment for money. This is because money in itself is not a factor of production, so it is forbidden. Money has to be converted to entrepreneurial effort, labor or machinery etc. i.e. capital.

The Islamic economy is tied very much into real assets. Islamic bonds, sukook have to be tied to real assets in order for them to earn profit, which we will discuss later in the class.

What is the relationship between Usury, Riba and Interest?

This is big issue mostly among Muslims in America. We have three words here (actually two words since Riba is usury and interest). So what is the relationship between Riba and (Usury, interest).

Relationship between Riba, Usury and Interest:
Dictionaries usually say Usury (archaic), such as Merriam-Webster, interest which gives the impression that riba is usury. Interest is defined as charge taken for borrowed money, generally as a percentage of money borrowed. In the “old times”, the interest and usury were the exact same things. When came a time when interest became lawful in the West, they differentiated between interest and exorbitant amounts of interest. Hence overtime, meaning changed, and interest became legal amount of money paid for money and usury became illegal exorbitant amount of money paid above the principal.  The word Riba is any kind of increase (big or small), if you want choose one word between usury or interest, then it is going to be word interest.

Even the most popular translation of the Quran, a number of them translate Riba as Usury 2:275 , e.g. Yusuf Ali uses word Usury (“who devours usury”), so do Pickthall (“who swallows usury”), M. Asad (“who gorges the usury”), M. Ali, Shakir (“who swallows down usury”), Khan and Hilali (has Riba, then in parentheses says Usury), Malik from Houston (“who ….. usury”). These are the standard translations. So someone who reads in English, gets the understanding that what is Haram is Usury (excessive rate) and not interest.

Other translations, e.g. Saheeh International, Free Minds do use the word “interest”. Thus looking at this usage of word “usury” can give rise to lot of problems.

Q: When did definition of usury change?
A: Certainly before these translations.

There was a loan shark in Glasgow, Scotland who was charging 25% per week. There are still usury laws. The mortgage rate was controlled by the Federal Government in the US until the Bush Sr, and it was no longer controlled or managed after the savings & loan fiasco of early 1990s.

Q: What about the Biblical use of the word usury?
A: We would call it now interest. King James Bible, though goes back to the time when usury and interest were the same. Digging in to the Hebrew text in Deuteronomy, it does seem to refer to interest. The Hebrew word has the same root as Arabic which means increase.

Q: Why do the translations use usury for the word Ribaa, were they not aware of its ramifications?
A: Some are not surprising. Yusuf Ali and Mohammad Asad were of the view that bank interest was not Riba. In the case of Pickthall, it’s surprising compared to what is known about him. Khan & Hilali is the most surprising. Saheeh International is for a large part but not exactly a rewriting of Khan & Hilali. Yusuf Ali perhaps was trying to use Biblical language in his translation. All of these term was translated to usury when it was known that the term usury and interest are different.

Q: What about the revised Yusuf Ali?
A: The revisions mostly addressed the footnotes, not the main text, and would be surprised if they changed the texts. Sometimes he translates the word, at first it looks strange, but if you go and check the scholarly works, you can see why he translated it in such a way. Most of the problems with Yusuf Ali are with his footnotes.

Important Concept: Riba is interest (or any increase on the principal amount).
So for us Riba covers both interest and Usury. And from now onwards, whenever we come across the term Ribaa, we will translate it as interest.

In Western parlance, usury is something that is illegal or bad. And we share this understanding of riba. But if you translate Riba as usury, then you might be excluding interest. Footnote: There was a mosque in the US that dealt with interest, because they thought it is okay to deal with interest.

Q: What about sood ?
A: Sood is haraam too. Surprising to know that Shaikh is aware of this term from Indo Pak subcontinent.
Urdu word: Sood means interest
Arabic word: Fawa’id (فواىد). This is an interesting term that some people use to describe interest, to imply it is something which is beneficial and good.

Different types of Ribaa from Shariah perspective
Within the books of Fiqh and Tafseer, one may come across different terms (that describe Riba)  which have slightly different meanings.

1) Riba al Naseeah (ربا  النسيءة): Interest of waiting.
It has to do with delay and it is not a spot transaction.

2) Riba al Fadhl (ربا الفضل): Interest of Surplus
It is interest of surplus, and it is spot transaction of two commodities where one commodity is more of value compared to the other commodity. (Footnote: We discussed spot transaction in the previous class. Spot transactions are hand-hand transactions, such as exchanging gold for silver or foreign exchange, you are eliminating time or any kind of delay in these type of transactions.) In Shariah, there are certain commodities based on hadith, where the exchange has to be hand to hand on the spot and in equal amounts of these commodities.
 
3) Riba al qurudh (ربا القروض): Interest on loans
Obviously, Riba al qurudh will have aspects of the above two discussed forms of Riba as well, as there is waiting and surplus factors of interest on loans.

4) Riba al buyu (ربا البيوع): Interest in sales
It is basically the same as Riba al Fadhl.

5) Riba al-Qur’an (ربا القران):
These are the forms of Riba discussed in the Qur’an. These are strange terms but they are meant to identify the source point of the Riba. i.e, where one can find this kind of Riba discussed in the text. This mainly refers to riba al naseeah and riba al qurudh

6) Riba al-Sunnah (ربا السنّه)
These are the forms of Riba discussed in the Sunnah. These are strange terms but they are meant to identify the source point of the Riba. i.e, where one can find this kind of Riba discussed in the text. This mainly refers to riba al fadl.

7) Riba Al-Jaahiliyyah (ربا الجاهليّة)
When it comes time to settle the debt, then you increase the amount of interest for providing more time to settle the debt. This was a common practice during the time of jahiliyyah. So it is basically rescheduling the loan during the time of settlement.


Q; Does buying Gold for US dollars have to be  a spot transaction as well. I have purchased gold and silver online and want to know if this halal?
A: It has to be on the spot as you don’t know what they are doing if it is online. There was an event at the time of Umar al Khattab, where a person said let me go and get the amount from my house, and Umar al Khattab responded that it is not allowed, it has to be instantaneous.
Then we have to go back to Contract theory and discuss, when transfer of ownership occurs. There will be some delay and there are issues related to this delay.

Q:Then it means there is no place for international commerce in Islam? as there is always going to be shipping delays.
A: If I buy gold from you, then it has to be a spot transaction. For trades involving non-ribawee items this restriction does not apply. See notes from the 2011 Summer session of this class, you can buy commodities without spot transactions, such as barley for dollars, etc but you have to do spot transactions for exchanges of gold and silver.


Chronological order of the revelation of the verses in the Qur’an

Surah Rum verse 39:
And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah, desiring the countenance of Allah - those are the multipliers.

Many contemporary scholars, such as Maududi et al think that the prohibition for riba may have come over a period in stages -- This verse does not say that Riba is Haraam, but this verse is saying that Allah is not going to bless it, but what is given in charity, Allah SWT will increase.

Like Khamr this is a polite sign that Riba isn't that good this is a common opinion among some of the contemporary mufassireen

According to Al-Qurtubi and ibn al- Qayyam, Riba referred to in this verse is the prohibited Riba practiced by the Thaqeef tribe at the time of Jahiliyyah.

To majority of musafiroon, this verse has nothing to do with Riba. There was practice in jahiliiyah that you give someone a present and the goal behind that it is kind of obligatory on him to reciprocate with something better. So you are not really giving him gift and Allah will not bless that gift. as your intention is to get an increase . During the time of Sahabah and early scholars this was the most common tafseer of this verse in Surah Rum.

In Surah al Mudhatir this point is also discussed

And do not confer favor to acquire more


2011-10-09 Class Notes



Chronological order of the revelation of the verses in the Qur’an
We are discussing various surahs from the Quran that discuss ribaa in chronological order.


Chronological Order #1: Surah Rum verse 39
InshaAllah, we continue to discuss the verse Surah Rum verse 39 that we started discussing last time.

And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah, desiring the countenance of Allah - those are the multipliers.

In essence what this ayah is stating is that what you give in charity will be multiplied. This is from Meccan surah and there are two interpretations of this verse.
1. it has nothing to do with riba, rather it is referring to a practice in the time of Jahiliyyah, there was a practice of giving a gift to somebody and expecting to receive a larger gift in return.In some of the tafsir books they call this type of Riba as Riba-al-Halaal as there is no sin in wishing to get better gift in return. This is the view of the majority of the mufassirin dating back to sahaba.

2. The second interpretation is that Ribaa was prohibited in stages like Khamr and this verse talks about the first stage. This view is held by contemporary mufassirin from last two centuries. They say this is Meccan surah it talks about of Aqeedah and the fact this verse is been revealed in Meccan period shows the seriousness of this issue that Allah swt touched on this subject early in the course of revelations.

When you read the translation of this verse, depending on the interpretation that the translator follows, one gets different views. For example, Khan and Hilali interpret this as gift to others, while Pickhtall explicitly says it is usury.

Khan and Hilali “And that which you give in gift (to others), in order that it may increase”
Pickthall “That which ye give in usury in order that it may increase on (other) people's property”

Whether this verse is related to riba or not the other set of verses are very clear about its prohibition.

Chronological Order #2: Surah Nisa verses 160 and 161
Second set of verses that was revealed concerning riba is from Surah An-Nisa verses 160 and 161.



Sahih International
For wrongdoing on the part of the Jews, We made unlawful for them [certain] good foods which had been lawful to them, and for their averting from the way of Allah many [people],

Sahih International
And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.

Allah swt is speaking about the Jews that he made unlawful for them things that were lawful to them. Here Allah swt makes clear that the Jews used to take ribaa even though it was made unlawful for them. Even to these days, they have verses in Torah that made ribaa unlawful for them, however they had an opening to play some kind of tricks to getting around the law, they tried to find some excuse or some argument to get rid of the law.  They tried to interpret the law in such a way that they could take interest. We will discuss this later on.

Here Allah swt is referring to the fact that Riba was forbidden to Jews. However there is no clear prohibition based upon this verse to us.

Is there any way you could say from the above two verses that ribaa is unlawful for Muslims?
Yes, If we follow the principle that is followed by some legal theorist that the shariah or the law of prophet and prophet’s people before us is applicable to us, unless there is evidence to show otherwise. Then this verse can be taken as evidence to say that this verse refers that Ribaa is forbidden for us as well.

We do not have any evidence that the Muslims of the time of Prophet understood this specific verse when it was revealed  that it is forbidden for them to take or deal with ribaa.

Q:
A: There is some difference of opinion among scholars whether the ribaa of Jews is similar or different than the ribaa of Jahiliyaah. This would be hard to prove. And the burden of proof will be upon the one who says that the practice of ribaa among the Jahiliyaah was different than the ribaa of the Jews.

So the question if this verse implies for Muslim that Riba is forbidden, there was no clear sign that this was haram. For those who say that Riba was forbidden in stages, it fits nicely with their thesis, as here it is showing the sign that Jews were forbidden to do it and this can be taken as the sign that it is going to be forbidden for Muslims as well, since it was forbidden for previous nations as well.

Q:
A: Jews and Christians have different bida’ah and we do not want to fall into them either. And this is the reason for requiring evidence otherwise when following the shariah of the previous nations.

If there is any report that the Muslims were still practicing ribaa at the time after these verses of surah Nisaa were revealed then it would have been suffice to say that it was only talking about Jews. Since prophet would have stoped them from dealing in ribaa if these verses were to be applied to Muslims.

In any case, what we can get of these verses is that ribaa is so bad that it was forbidden for all other prophet’s nations before us.

Chronological Order #3: Surah Aali Imran verse 130
Sahih International
O you who have believed, do not consume usury (edit: it should be interest, as discussed earlier in the class), doubled and multiplied, but fear Allah that you may be successful.

Allah swt says do not consume interest in order that you may be successful. This verse was revealed in a passage that was revealed after the battle of Uhud. Ar-Razi quotes Al-Qafaal in his tafseer, he says “it is possible that some of the Muslims after the defeat of Uhud were arguing that one of reason they were defeated was that they were weaker compared to non-Muslims (in material sense), so they argued that if they could use Ribaa to increase the wealth then this would be beneficial for them. And then Allah revealed this verse.

This interpretation is mentioned by very few scholars and some who mentioned this say that it is not correct and there is something  close it in meaning. The victory comes from Allah through patience and obedience to Allah and it is not simply through wealth that you get support from Allah. The support comes from Allah only when the Muslim are patient in obeying Allah  and it is not through Ribaa and making you stronger in material sense and resorting to something which is not allowed by shariah.

In the battle of Uhud, Muslims were being victorious in the battle, but when the Muslims disobeyed Prophet (saaw), specifically when the archers left their position despite instructions by Prophet () not to leave their position no matter what is their situation of Muslims in the battle. When they were seeking duniya more than the hereafter and they let their desire for this duniya overtake desire of hereafter that is when Allah brought the defeat to Muslim.

The key for not being defeated is not resorting to Haram means but to obey Allah and if we do that Allah can bring victory over this financial crisis that we face today.

You hear these kind of arguments even till today that if Muslims are not allowed to make these kinds of investments, they will always be poor and unable to compete with the rest of the world which is engaged in ribaa related practices. These people forget the fact that the victory and strength of Muslims is not rooted in materialistic means rather it depends on the level of their obedience to Allah swt. Besides all these materialistic oriented systems are insignificant in giving the humans the protection they are looking for.
You can see something as insignificant as sub-prime mortgages can bring down the entire system of capitalism. In this system, the financial sector is much larger then the asset based economy. This makes the system inherently very weak in many ways.  What you think is strong, is really weak. You invest in something that you consider to be strong, when in reality it is very weak.

The wording used in the verse “La ta’kulu”, in the previous verse it uses “Akadha”, this kind of speech, the word Allah has used is a strong word to convey the message to someone who is pigging on it. So the balagha itself is very strong.

Another doubt raised through this verse is the use of “double and multiplied”, so they argue that only this kind of riba is prohibited where someone is charging a real high interest rate. However the use of “double and multiplied” is referring to one of the practises in Jahiliyyah which was that if I lend you money or you owe me money, when the time comes to pay for it, then individual who lent you the money will say “either you fulfill the contract or we will add Riba to it (double the amount)”

Which means the Riba aspect was not there in the beginning of the contract, but it was at the time of due that they add Riba to it. This is how some people understand this verse that the “double and multiplied” occurred when the amount of money was due.

Dangers of applying mafhoom al mukhalafa to the above verse
So can this verse be used to say not all kind of Riba is harm, only those kind of Riba of Jahiliyyah i.e. doubled and mulitplied is haram?

If you look at this verse, this is kind of argument in Usool-al-Fiqh which is known as mafhoom-al-mukhalafa, which means if not interest is not doubled or re-doubled then it is permissible. Some madhabs don’t accept this principle at all.

Conditions for invoking the principle of Mafhoom al Mukhalafa
There are some condition to invoke the principle, one of the conditions is that the condition in the verse is simply stated as a way of describing the normal practise and it is not restricting itself just to that practise.

An example of how a verse from Quran Surah Noor verse 33 to help us understand the normal condition and not just a restriction of the general understanding of the verse. (Edit: You cannot use a specific case explained in the verse to restrict the ruling only for that specific case.)


Sahih International
But let them who find not [the means for] marriage abstain [from sexual relations] until Allah enriches them from His bounty. And those who seek a contract [for eventual emancipation] from among whom your right hands possess - then make a contract with them if you know there is within them goodness and give them from the wealth of Allah which He has given you. And do not compel your slave girls to prostitution, if they desire chastity, to seek [thereby] the temporary interests of worldly life. And if someone should compel them, then indeed, Allah is [to them], after their compulsion, Forgiving and Merciful.

For example, Allah swt says in Surah An Noor verse 33 to not force your slave girls into prostitution if they want to be chaste. By the principle of Mafhoom al mukhalafah, it does not mean that if they do not like to be chaste, then you compell them to go into prostitution. What is stated in this verse is that the common case.

Similarly doubling and redoubling is describing a common case but not restricting it. In order to invoke mafhoom al mukhalafah, one of the important conditions is, the divergent meaning (meaning derived from applying mafhoom al mukhalafa) cannot contradict the mantooq text or the stated meaning of any other text from the Quran or Sunnah.

Syed Qutub in his tafseer of this verse says “if you think about riba then it is in nature of Riba to double and redouble. Allah swt is describing something which is very clear to us now”.

If you take somebody who is simply paying the minimum payment for credit card debt, you will see their amount owed is being doubled and redoubled, even if the interest is low.

Conclusions derived from this verse of Al’i Imraan
1. It is prohibition of any kind of Ribaa - this is strongest opinion.
2. It is prohibition only a large extent of Riba which is doubled and redoubled - This has weakness to it

If you look at the verse right after that it has very interesting implication and tafseer by some scholars.

Chronological Order #4: Surah Ali Imraan verse 131

Sahih International
And fear the Fire, which has been prepared for the disbelievers.

Abu Hanifa said that this is the most intimidating verse from the Qur’an, since Allah swt promises the believers the fire which is prepared for disbelievers. Abu Hanifa was of the view that there were two parts of hell: the part for the Muslims, and one for the disbelievers.

Who does this verse applies to? Different Mufassiroon have said for this verse: it is the punishment for those who try to make ribaa halaal. Alternatively, it is an attribute of the disbelievers to get involved in Ribaa.


Chronological Order #5: Surah Baqarah verses 275 through 279

One of the last set of verses revealed in the Qur’an concerning Riba are also some of the last verses revealed in Qur’an.


Sahih International

Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.


Sahih International

Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.


Sahih International

Indeed, those who believe and do righteous deeds and establish prayer and give zakah will have their reward with their Lord, and there will be no fear concerning them, nor will they grieve.


Sahih International

O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.


Sahih International

And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.


These are very strong and moving verses. Allah again uses the verb “Ya’koloona”. Also the standing here refers to standing in the hereafter. But some say that this refers to standing in this world as well. “As one who stands like one whom Satan has touched” -- this is a very graphic interpretation, and Shaikh Jamaal Zarabozo says he has not seen a very good translation of this verse yet.

Allah swt then puts it in simple terms: “that is because they say buying and selling is the same thing as riba.” Allah swt is saying that they are touched by shaitan and they are open to shaitan just by saying that ribaa is same as buying and selling. There is a big difference. It has to do with real goods, has to do with real things. One is a real transaction and one is nominal. But Allah swt makes it very clear: Allah permits trade, but forbids Riba. There’s no way anyone can come along and say there’s no difference -- especially for a Muslim.

“His matter is to Allah” -- this is a vague term, that what is going to happen to that individual is unknown, this indicates that the Riba was prohibited for Muslims at the time the verses of surah Ale-Imran were revealed. Some commentators say this verse was revealed in particular with respect to the two tribes, One of the tribes had borrowed money from the other tribe, both tribes had accepted Islam, and when it came to repay the loan, the lending tribe asked for an increase in the amount. Allah swt revealed this verse saying that after this admonition has came do not ask for that riba.

Any one who insists in being involved in Riba after this, then they are the fuel for fire of Hell, and they will abide there in forever. Notice here, that we are not talking about Shirk, but we are talking about an act of financial transaction. Note the part of the verse “Harram Allahu Riba” means that both giving and taking of Riba are haram. Then the ayah continues that Allah swt grows Sadaqa but Ribaa will be destroyed.

“Wa A7llal”  this make it absolute clear with respect to Riba that if you are paying or taking both are haraaam. Previous verse says ya3kul. But here it makes it general.

Hadith: “Interest even if it is large amount in the end it will result in a small amount. Any goodness in it will be wiped away from Allah”

Billionaires nowadays, they are trying to shield their earnings from taxes, In reality, they feel like they have something small. They are afraid that they or their progeny do not have enough to live on. And in reality a lot of their earnings is from interest or transactions that result from interest. Shaikh was trying to make a point that no matter how large their financial wealth, for them it still seems small and insignificant.

Then Allah swt uses strong words to describe that he does not love disbelieving sinners.

And then he says, that if you are truly believers to give up interest Allah says to give up anything remaining if you are truly believers. The condition here “In Kuntum Mu3minoon”, don't apply mafhoom al mukhalafa here and say I am not mu3min so I can take Riba.  (If condition A applies then the ruling is X, you cannot jump from it and say since condition A does not apply to me, then the ruling X does not apply to me.)

And then Allah harshly states that if you do not do so, then be informed of a war from Allah and his messenger. If you repent then you have your principle amount, moreover  you will not be committing dhulm and you will not be wronged either. But if you insist in engaging in ribaa, then you are committing dhulm.

These are the last set of verses revealed in the Qur’an as whole and it talks about dealing with ribaa.

Q: If these verses prohibiting Riba were almost revealed near the death of the prophet, then does that mean it was permissible before that?
A: The opinion that ribaa was restricted in stages, is something new, this line of thinking appeared recently. (within last 2 centuries)

However it is clear that in the farewell pilgrimage, two years before the death of the prophet, he made it clear that all interest is forbidden, as Prophet (saaw) said that after today riba is wiped out. Starting with Ale-Imran, interest was forbidden. There might be some tribes who accepted Islam, but were still engaged in ribaa. And this very harsh passage directed towards them or towards anyone came to remind them to disengage with ribaa.

There is not much to say after that and there is not much needed to say after that.


Q:
A: The only implication that they try to invoke is that this is how we should handle Ribaa, that????? to remove Ribaa in stages.

These are the different passages that speak about Riba and Qur’an. We will move on to discuss some of the hadeeth that speak about Riba.

Q: Why Muslims are not providing the solution to the society given the people around are suffering from the financial crisis?
A:Shaikh Jamaal knows of some Shuyookh, including Sami Suwelam and his colleagues who entered into discussion with Western Economist related to Gharar and Ribaa. And someone said if we have this and if we apply this principle of risk and ribaa than we will not be in this state.

Classroom Discussion: We need to realize that this western economic system is not based on any rational arguments or discussion. It is being kept in place by some of the powerful people. These people are trans-national and not in any specific country, and they are benefiting even if there own people are suffering. You can see what is going on in Wall Street right now with the take over wall street movement, they have their own agenda. However, these people who are suffering are still not going to come to some religious teachings for solution to their problems. Today even if you give advice to Muslims to fore go interest or not deal with interest, one faces great resistance from them, let alone giving advice to non-Muslims on this topic.

One of the students mentions that the Western attitude even towards earlier scriptures is still one of ignoring it and not applying it. So telling them about Quranic verses is not going to be very useful as well.

Q: The people who justify the revelation of Riba in stages use the argument that this is how we should try to remove it from the society. How can this be done now, given that the Riba is haram now?
A: Some claim we are still in Meccan period, other say we are in Madni period, ?????


2011-10-16 Class Notes


In addition to the text of the Quran that we discussed how serious and destructive is this Riba. Today we continue with the  discussion on Riba in Hadith.

Riba is one of the Seven Destructive Sins
Prophet (saw) talks about 7 destructive sins which include:
1) Shirk with Allah
2) killing those you have no right to kill
3) Consuming Riba

أخرج البخاري ومسلم وأبو داود والنسائي عن أبي هريرة رضي الله عنه أن رسول الله صلى الله عليه وسلم قال {اجتنبوا السبع الموبقات ، قيل يا رسول الله وما هن ؟ قال الشرك بالله ، والسحر ، وقتل النفس التي حرم الله إلا بالحق ، وأكل مال اليتيم ، وأكل الربا ، والتولي يوم الزحف ، وقذف المحصنات الغافلات المؤمنات }


So the Prophet (SAWS) put it in the same category as shirk, murder etc. Obviously Riba could not reach this height unless it was something very grievous and displeasing to Allah . We heard last week about the declaration of war of Allah and His messenger against those who persist in dealing with Riba.

Consuming interest, recording interest and witnessing transactions with interest are all equal
Muslim records from Jaabir that the Prophet (SAWS) cursed the one who takes interest, the one who pays interest, the one who records it and the witnesses to it. They are all equal.


عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ ‏.‏



It is a basic principle that we support each other in doing things which are good and halal, but we do not help each other on sin and transgression. In the end of the above hadith, Prophet (saw) calls all those who did different acts related to Riba as equal. It is not clear whether this equality is only regarding the curse of Prophet (saw) or it extends to all the text related to Riba (Hadith can be interpreted both ways).  The curse of the Prophet that no one should seek, the curse of prophet implies that Allah swt will not be pleased with that person. When he said they all equal does this mean are they equal in all of the characteristics of riba? In any case recieving the curse in and itself is strong text.

Next we will look at the results of consuming riba, in particular societal results of consuming riba.

Society that openly consumes ribaa
The Prophet saws said that “if illegal intercourse and interest openly appears in the town then they have opened themselves for the punishment from Allah swt.

If illegal sexual intercourse and Riba show up openly into a town, then they (the people of town) have opened themselves up to the punishment of Allah (swt).

أخبرني عبد الصمد بن علي البزاز ، ثنا يعقوب بن يوسف القزويني ، ثنا محمد بن سعيد بن سابق ، ثناعمرو بن أبي قيس ، عن سماك بن حرب ، عن عكرمة ، عن ابن عباس قال : " نهى رسول الله صلى الله عليه وآله وسلم أن تشترى الثمرة حتى تطعم ، وقال : إذا ظهر الزنا والربا في قرية ، فقد أحلوا بأنفسهم عذاب الله "

http://www.islamweb.net/newlibrary/display_book.php?idfrom=2147&idto=2147&bk_no=74&ID=939

These acts will be committed by people, even during the time of sahaba people committed zina, but if there are people around who are stopping these acts so that they do not become wide spread then that is enough for them to be saved from the punishment of Allah swt

If society becomes lexadaisical and does not care about zeena and interest, once zina becomes open and riba gets institutionalized, then that society will not saved from the punishment of Allah swt. These days we see that in most of the Muslims countries Riba has been institutionalized, but Alhamdulillah for last few decades there has been revival to remove this aspect from the society.

With respect to the effect of riba on individuals, Prophet said: “Interest even if it is large amount in the end will result in a small amount ”

This hadeeth could have many possible ramifications which are listed below.

Allah swt destroys any benefits from Ribaa
As Allah said Allah will destroy the interest. Any kind of benefit that individual is hoping from Riba, Allah will destroy this. Allah will put them in hardships where these gains get spent, like hospital bills. No economists can explain that why one person gets a lot of car repair bills while the other don’t even if they happen to buy the same car at the same time. If Allah wills to take away money from individual it is easy for Allah.

For those who are target for the occupy wall street movement, these are the people who can just live for the rest of the life on just the riba they earn on their wealth. Maybe Allah will not take away the wealth from them but their fear of losing the wealth gives them a psychological state as if, they have become poor. Heft bonuses are being given to already rich CEOs when the people are unemployed. This all could be pointing to what the Prophet (saw) is speaking about.

There are a couple of hadeeth that are very strong in their intonation, but at the same time they are disputed among the ulema of hadeeth.

It has been attributed to Prophet saying that there are 70 types of Riba and the slightest of them is having intercourse with one’s mother.


وأخرجه ابن ماجه عن أبى هريرة رضي الله عنه بلفظ "الربا سبعون حوباً أيسرها أن ينكح الرجل أمه".


قال صلى الله عليه وسلم " درهم ربا يأكله الرجل وهو يعلم ، أشد عند الله من ستة وثلاثين زنية " [أخرجه أحمد في مسنده والطبراني في الكبير عن عبد الله بن حنظلة وصححه الشيخ الألباني ـ رحمه الله ـ في صحيح الجامع (3375) ]


It has also been reported that knowingly consuming one coin of interest is worse than 36 acts of illegal intercourse.

Al-Albani accepts this hadeeth where Suhaib Al-Arnaoot does not accept this hadeeth.

Anyone who reads the evidence from Quran and Sunnah, cannot deny the gravity of the sin. It is a unique kind of disobedience to Allah swt. One of its unique aspects is that the harmful effects of this sin are not obvious ... it becomes easy to rationalize it that it is not that bad or harmful. They will say what is wrong in buying a car on interest, shaitan will convince them that it is a good act indeed as you can do lot of good things with this car, e.g. driving to the masjid etc. If you keep the text of Quran and hadith in your mind, Allah swt will protect you from shaitan.

Al Hilya - Legal loopholes to go around fiqh rulings from Islamic history
Even in the history of Islam when Muslims were dominant Muslim businessmen tried to get around Riba. These tricks are called al-hilya (الحلية) --  i.e. “loop holes” and can be used to get involved into Riba w/o calling it Riba. On the top of it there came some Ulemas who spoke about Riba, that this kind of riba is not that bad, and thus confused people even more. And to add the fact that you can benefit personally and if there is doubt that it is harm then why would you sacrifice. Looking for loopholes where you pay interest without paying interest. The classic case is Baye Al-3eena. Classic case is “I sell a thing for a currency and then you buy the same thing back for two currency and pay over time.” In this case the thing you sold is irrelevant in this transaction. This is like going around the shariah. Ulema agree that if this transaction involves collusion (both parties knowingly involved in this transaction from the get go to hide riba) than it is not sanctioned. The real purpose of this trade contract was to cover unusual circumstances where its need may arise due to necessity.

Thus shaitaan can come to Muslims in lot of means and confuse people and try to convince the people to indulge in Riba. Lets take the case of Zina, as there are lot of evidence from Quran and Sunnah, if some one comes and say that zina is not that bad, would anyone of you likely to be convinced that Zina is not that bad. You will not listen to the argument in the first place. You know it is abhorrent and horrible, it is part of our fitrah to know that it is apparent. Unfortunately we don’t put the riba at the same level, even though there are strong text regarding riba. Still we don’t take it seriously. Our perspectives are wrong. We are willing to listen anytime some is about to present their arguments for the justification of riba. From rational Islamic perspective it does not even make sense to listen to these arguments. It is important to think about the text and remind yourself about these texts so that we can be more alert when it comes to Riba.
If there are some argument supporting the Riba and then if we analyse this, inshAllah this should fortify us and strengthen us with respect to Riba. In case of Riba people see the benefit from Riba which is not obvious which comes out of zina. Zina is not universally accepted people still get frowned about this where as riba is so institutionalised and defined the status of the person in the society if you don't get involved in Riba.
Footnote: (The secular paradigm is still dominant today in the world, and in this paradigm Riba is widely accepted and unfortunately we Muslims are part of this (even we may not like it but still we have to accept that the Islamic paradigm is not the dominant paradigm of the world) so unfortunately Muslims also fall for Riba.)


Q: Why isn’t the giving part of riba mentioned in the hadith about seven destructive sins, is it lower in the level of kabair?
A: First, Riba is haraam in both taking and giving (ayah of Al-Baqra). Then next we discuss the severity of one compared to the other (i.e. giving vs. taking). There are two parties involved so both are sinning for sure. However, Sh. JZ is not sure whether the one receiving is more sinful then the one giving. May be the giving person was coerced to pay. In any ways, there is no question about Curse upon the person irrespective of fact if you are paying or receiving.

Q: why do people take zina seriously and not riba? will you elaborate more on this later?
A: Zina is closer to the fitra, so there is universal dislike for this act and the harms are quite apparent on the individual as well as the society. Riba is quite the opposite, normally people don’t see harm in involving in Riba at personal or societal level. Secondly people are normally not clear on what is the difference between Riba and trade, as mentioned in the ayah of al-Baqra that “they say that the riba is same as trade”.

Q: can the masses who are bing misled as to the permissibility of riba be held accountable (especially those who do not have access to Islamic education)?
A: Allah will hold him responsible only on what he is intended to do.

What are some of the arguments that one hears to defend Riba? The whole class contributed to the following list:
  1. The Maslaha argument:  The benefits of going to school (for example) outweigh the Haraam, i.e some sort of cost/benefit analysis.
  2. The Daroorah argument: The need/necessity to buy a house.  
  3. Unavoidable: Cannot avoid it, since it is every where!
  4. Non-Muslim Land: Since we are living in the non-Muslim land, so we can follow the law of the land (according to Hanafi madhab)
  5. There is difference in giving and taking of Riba
  6. We will be weak without Riba
  7. Little bit of Interest is ok - “It’s only a small amount” what is prohibited is high interest rates
  8. If you don’t take it then it will be used against Muslims.
  9. Inflation eats away income, hence permissible to use interest.
  10. Conversion to an Islamic system is gradual


The Egyptian argument for allowing interest earned on deposits in banks
What is the Bank? It is a financial intermediary --  It is match making service. You have people who have savings and then you have entrepreneurs on the other side who require funds to run their businesses. In between is the bank!.
When the bank gives the money to make profits they are going to charge and thus in return they pay the bank interest.

Now suppose the bank says we will take your money, we take burden off your shoulder and we will find people who will use this money and make profit and we will invest in them and in return we are going to profit from them and redistribute that profit back to you and to make it easy we are going to fix return for you. Instead of profit sharing we will fix the amount we are going to pay you in advance. We diversify our investments enough that we know our rate of return in advance, that is how they justify a fixed rate. They argue that it is just an investment. (Note: Pi is the symbol for profits)


How does this argument sounds like? In the past two years since the financial disaster of 2008, there are over 400 banks that went bankrupt which means they were not good at investment. This is the logic behind the permissibility of interest by Al-Azhar in Egypt and this is some kind of profit and loss (Fatwa date is 2002 and this goes back to 1910 when this type of logic started). The fatwa says that the money earned on bank deposits is “fawaid” of interest from banks.

There is some other arguments which was not mentioned in the list above. The above list is what we hear from the masses. The following are some of the more scholarly skewed arguments for justification of riba.

Scholarly arguments for riba (by Quasi-Scholars):
  1. The term Riba is Mujmal (vague, ambiguous) i.e. Riba is not well defined thus you cannot use it as legal argument.
  2. Riba is only either excessive interest or compound interest.
  3. Riba is only on consumptions loans and not on production loans. If poor person need food and he takes loan, if you charge interest for this loan it is riba, (and is not permitted) but if someone uses loan for investment then the interest received on this loan is not Riba.
  4. Only Riba al Jahiliyyah is haram, i.e. in time of jahiliyyah, when time came for paying loan, one said to the other party that either you pay me now or we increase the amount.  If there is riba is the original contract agreed upon by both parties then it is not haram.
  5. Only Riba al buyu (riba al sunnah, riba al fadal) is haram and not riba-an-naseeah


Footnote: Some of the ‘innovative’ financial schemes are actually weak Islamic opinions found in old Fiqh books. So one needs to show care in accepting them. Malaysian Islamic banking system excessively use these off the wall opinions within Shafai fiqh to justify their innovative schemes.

Shaikh will be discussing the Egyptian fatwa in detail because the literature on that subject is in Arabic and there is much written about this topic. There is an equally compelling case from India about ruling on ribaa, however much of it is in Urdu. However he will cover the Indian ruling in the upcoming lectures too.

2011-10-23 Class Notes

History of the Egyptian Fatwa about Interest
We will continue with the arguments given in defense of interest. History of the what happened in Egypt goes back pretty far and some very well respected Ulama (in usul al fiqh) had entered into the discussion and it dates back to early 1900s. It is something they call in Egypt Sandooq al tawfeer (صندوق التوفير) “postal savings account”. About 3000 of those people who had deposited money in this account, refused to take interest from their accounts. The ruler got angry and wanted to legalize interest and issued decree to require people to take this interest.  

Mohammed Abduh was head of Azhar and  it seems he was never officially asked to give fatwa on this issue. His student Mohammed Rasheed Ar-Ridhaa, much of the ideas of Abduh came and are known through Rasheed. He said some of the local people from the postal authority asked Mohammad Abduh about his opinion, they wanted to know if this interest account could be sharia compliant in anyway, Abduh’s answer was that this interest is not lawful. Postal authority is abusing this as there was no need for this money. But if money was invested according to the rules of mudaarabah, then the profits would be legal. The ruler was not happy with what Muhammad Abduh had to say, so he got a group of scholars from Al-Azhar to discuss the issue and come up with a more favourable fatwah. They came to the same conclusion that Muhammad Abduh did, which was not to the government’s liking.

Opinion of Rasheed Ar-Ridhaah that the forbidden riba is that of Riba al Jahiliyyah
However from the year 1907-1908, we start finding some people accepting the idea of this riba either paid from postal accounts or banks. The leader of the people who said it is halaal is Rasheed Ar-Ridhaah not Abduh, the argument he is using is, he was one of the first people who claimed that Riba what is haraam is Riba Al-Jahiliyyah. It is not the Riba that is agreed upon in the original contract, but when the time is due to pay any debt, when that payment comes for due they will add interest. He says this is Riba which is haram in and itself. He wrote this in his magazine Al-Manar. He also replied to a request from the Islamic Indian Hyderabad Deccan Government (asking about the interest from bank accounts) and wrote back in a text called “riba and mu’aamalaat in Islam.”  (it was about hundred page document) Any other kind of riba is not haram in and of itself, only risk is that it might lead to Riba al-Jahiliyyah.

Opinion of Muhammed Rasheed that only Riba al Jahiliyyah is Haraam lithaati
Haraam based on its own merit
In Hanafi fiqh there is a distinction between haraam lithaatihi vs haraam lighairihi (i.e. haraam in its own essence, vs haraam due to some external reason or due to what it could lead to). He said Riba al Jaahiliyyah is the only thing that is haraam lithaatihi. One of the big differences between these categories, that haraam lithaatihi is forbidden except in absolute necessity (ضرورة), whereas the lighairihi is forbidden except in cases of need (حاجة).  Therefore you can resort to the lighairihi type riba if there is need. He said that “the bank interest falls under haram lighairihi category, if there is need for them then it becomes permissible.” By doing this he has open the door for “Quite a bit of Riba”. Muhammed Rasheed claims he is following Ibn Al-Qayyim’s opinion on this issue.

Opinion of Abdul Azis Jaweesh that only compound Interest is Riba
He was joined in 1908 by Abdul Azeez Jaweesh He gave a lecture on riba which was published as an article in Liwa in April 1908, his argument is only kind of riba that is haram is compound interest, like you find in Surah Al-Imraan, and his argument was that under the Ottomon empire they allowed this kind of interest. The Ottomans had an opinion that interest is allowed as long as interest does not exceed the principal amount of loan.  

Most important early influence, was Ibraheem Zaki Badawi.

Opinion of Ibrahim Zaki Badawi (1939) that interest of today is not the same as that during the time of Prophet
Nathariyah Al-Riba Al-Muharram (نظريّة الربا المحرم)

He also claimed he is following Ibn Al-Qayyim, he wrote a book, he starts that you cannot claim something haram unless you have evidence in Quran and Sunnah. These interest contracts that we have now did not exist during the time of Prophet and he quotes the view from Ibn Abbas (we will discuss it later). If you agree from the beginning to take or pay interest then it is not Riba. He is basically saying only thing forbidden in riba al-jahiliyyah and everything else is makruh as it might lead to riba al-jahiliyyah.

Opinion of Abdur Razzaq As Sanhuri as codified in Egyptian Civil Code which made Riba halaal in secular legal sense
The reason why Badwi’s book was so important is because he influenced Abdur Razzaq As-Sanhuri. He has a two volume book and it is excellent as long as you ignore the aspect of Riba, called “..?????...” which was series of lecture between 1954 and 1957. Before that time in 1948, one of the the great achievement of Sanhuri, he was the master and originator of Egyptian civil code. Before that time there was debate if they need to codify the shariah (this debate exists even today among scholars whether shariah should be codified or not).  As-Sanhuri came along and he codified the civil code, laws related to business and interest and this is used till today.

Civil code of today’s Syria, Iraq, Libya, Kuwait is based on the civil code written by As Sanhuri, even to this day.
Basing his view on what Badawi and Rasheed Rida wrote, especially he was happy with what Badawi wrote, all these other forms of Riba other then Jahiliyah it is simply makruh. Given the need what we have now a days other forms of interest can be consider permissible. His two objections were (i) compound interest and (ii) riba al-jahiliyyah, all other forms were ok. He claimed that his civil code is completely based on shariah, but this is his view of shariah.

There are 35 articles related to interest in this civil code. And he says that there has to be a limit on the highest level of interest to be paid. Must be agreed upon at the beginning of the contract. Especially for production loans the interest completely ok. So he opened the door of interest in Libya, Iraq, Syria and Kuwait.  This pretty much made Riba Halal.

New opinion of Badawi in 1964 where he disowned his old opinion of 1930s
In 1964 Badawi re-analyzed his views and changed all of his views and changed his opinion. He said that his interpretation of Ibn Al-Qayyim was completely incorrect and all the forms of Riba we have today are without question haram and he became opponent of Sanhuri and his civil code. He recalled his book from circulation.

Opinion of Muhammad Abu Zahrah that all types of interest are Riba (1940s or 50s)
Muhammad abu Zahra was another scholar who wrote Tahreem al Riba and showed that all the kind of interest today fall under the Riba and considered all of them Haram.

There is a line of thinking in Egypt regarding the permissibility of Riba and many texts written in Usool Al-Fiqh, e.g. Abdul-Wahhab Khallaf. He said that the loans and savings accounts were a kind of mudaarabah. The bank is investing it and the people getting it are deserving of their profits. They don’t mention that the govt used to deposit the money in banks and get interest on it without any actual investment. Ali Al-Khafeef (wrote the excellent book on difference of opinions among the fuquha) also said this money is also like mudaarabah.

Changes to the Egyptian Constitution in 1971
Things get interesting around 1971, and the Egyptian constitution. In the Egyptian civil code, there was a discussion of some of the sources of law, but it did not state the order. In fact, in Egypt, the Shari’ah is only referred to with respect to the  family law. In the constitution of 1971 article 2 states that the principles of the Shari’ah are a principal source of law (and not the number one source of law), and based on that some members of parliament who tried to make Riba Haraam in Egypt.

Efforts to make Riba Haraam failed
From 1972 to 1978 there was lots of pressure to make sure that government made riba haraam and at the same time there was lot of pressure put on government to make the Riba Halal. So the government in the 1970s they felt the pressure from the what you would call “Islamists” today. After October 1981 they did not feel any necessity to give any credence to the Islamists due to assassination of Anwar Sadaat. This event led to the  abandonment of the effort to make Riba haram

Opinion of Muhammad Sayyid Tantawi that since rate of return is not fixed, it is not interest
Then in Fall of 1989, when the Mufti of Egypt (Muhammad Sayyid Tantawi) at that time at the request of the Egyptian govt was asked to give a fatwa on gov’t investment securities (شهادات استثمار) and postal savings accounts (صندوق التوفير). Began by saying that the scholars are not really agreed on this issue. He finally concluded that the interest paid on these certificates and these saving accounts were the result of an imperfect mudarabah. They were imperfect because the rates were pre-set. In case of real mudharaba as there cannot be any preset.

At the same time he says that we should promote this as mudaarabah, and he quotes Khallaf, saying we cannot trust people that they will give us right percentage of profits as they are not trustworthy and thus we have to make them agree on what is the rate of return.

Using that he said that it was not a problem that these rates are pre determined. He said they are not fixed, these rates change over time, some years it is 4% and some other years it is 16%. He then says that this is not really the real riba. And he says it benefits people, and there are no exploitation by either party, thus he goes on to say that this is not just halal but people should be encouraged to invest in these government securities. Eventually he concluded that both of them are permissible, this original fatwas was in 1989, this opened the door for thing to let it open.

Q: What does he mean by imperfect mudharba?
A: In real mudharba, the money is at risk and you do not know the rate of return at the end of investment period. In his theory, pre-setting that rate of return (interest) is imperfect form of mudharba.

Opinion of Al Azhar University in 2002 for financial institutions
In the fall of 2002, as part of Al-Azhar university issued new fatwa related to bank operation, now they are opening to every kind of riba related to banks. It ends up to be the same guy (i.e. Tantawi), now he is issuing fatwa as part of Al-Azhar. Part of his reasoning is when you deposit your money in a bank, it is a form of wakaalah (وكالة) or agency. This goes against all principles of agency.  A wakalah or agency is only supposed to safeguard the money not take the money and use it and put the money into risk.

Part of text of his fatwa is “Those who deal international Arab and other banks as wakil, giving their savings as agent, to get pre-specified interest that is agreed upon. This form is legally permissible and there is no doubt (shubhaat) associated to it. This is becasue there is No Nass to prohibit this kind of transaction as long as both parties agrees to this kind of transaction. When banks specify these interests these are well found to be correct rates of return and these rates can be adjusted up or down. There is no problem with this whatsoever. These do not fall under the matter of creed or ibadah. This fatwa was issued by Tantawi in December 2002 on 27th of Ramadhan 14??.

It is well known that these rates are arrived at after careful study of the international economic environment and they may go upwards or downwards. In the end he doesn’t even consider this anywhere near riba.

Future of ribaa in Egypt
Tantawi is no longer the head of Al Azhar. The one who is head of Al-Azhar now, he doesn’t agree with this fatwa. Lot of people in Azhar does not agree with this, under the govt pressure they did not speak about this. Speculation is that the original fatwas were under pressure from the government.

Tantawi’s fatwa’s highlights:
1. this kind of faida (benefit) is not covered in Quran and Sunnah.
2. This is by mutual consent.
3. It is kind of mudaraba, rates are not fixed but are pre-specified and may go up and down
4. It is beneficial as the people know what they are getting.

He is still under minority among ulemas and critiqued by many scholars. We will discuss the fatwa of Tantawi later (it is available online).

Discussion about how can scholars make this find of opinion. And shaikh answered that even if you consider la illaha ... much of the humanity will reject it, it is not because the message is not clear. Shaikh also mentioned that even strongest of scholars can make statements that are outlandish. Look at the Mutazila’ these were highly qualified scholars of that time and yet their hawa led them to opinions not agreed upon by the majority.

The transitional government in Libya is planning to revoke ribaa as one of its first actions, let us see what happens.

How many of you when you hear a fatwa that ribaa is allowed, go further and try to understand it,

Rasheed Ridaa’s magazine, Al Manaar has great influence over many people, that magazine opened discussions about even the five daily prayers, and he says that the time of Bedouin, the people did not have anything to do and five daily prayers were not a big burden for them, but for the people today, it is ...., he changed his opinion about it, but not yet about ribaa.



Fatwas about Ribaa in Pakistan

In 1999, Shariah Appellate of Supreme Court banned interest in all its form.
Banning interest in all its form and whatever name it is called. And then court specified step by step approach to execute it. In 1991, the federal shariah court of Pakistan declared laws that allow interest as violation of Islam. The federal govt of Pakistan and number of banks filed 67 appeals to this law. Part of the one who filed this was federal govt itself. That is why it was taken to Pakistan highest court Shariah Appellate Court and the bench consisted of Justice Khaleel Ur Rahman, Justice Muhammed Taqi Ad-Deen Uthmani, Justice Wajihudden Ahmed (missed the 4th person)

The conclusion of the court was 1100 pages long. Khaleel Ur Rahmaan wrote most of it, 250 pages written by Taqi Usmani. The reason it is so long is that it had to respond to the 67 appeals. They concluded in agreement that there is no question that this thing we now know as interest is Riba. This was decided in 1999. No concrete impact on banking, except it is called a Profit and Loss account, or Mudaarabah.

An example of flawed argument trying to support interest: Tantawi said, he was trying to prove that the pre-agreed rate is the most just, “suppose I bought a taxi and I hired a driver and I tell him to research what is his daily earning and say he came up with 10 pounds a day, so he says there are two options (i) to share what ever the driver brings in (ii) or to pre-agree with 10 pounds. Suppose if they agreed to share 50 - 50, this will lead to conflict and this might lead the driver not giving out the actual amount that he earned. Even if tells the true earning I will always doubt him whether he is hiding some earnings. Second option is to have fixed amount so that driver can do his best to earn and thus as long as both party agree this is not prohibited by shariah.

Next time we will discuss the issue of Ribaa in dar al harb, or non Muslim lands.


2011-10-30 Notes


We will now be discussing some of the proofs to permit some interactions with Riba. We will discuss the next topic in details the remaining will be gleaned over.

Ribaa in Dar al Harb
Dar al Harb is the land with which Muslims are at war. Today we will discuss an opinion which had quite a bit of influence, which says that Riba is permissible in dar al harb (دار الحرب). The famous Fatwa (from European Fiqh council) which says that it is allowed for one to buy house on Riba in Europe and USA is based primarily on this opinion that Riba is permissible in dar al harb.

Opinion of Gharib al Jamal
Some say, it is Wajib  (author of this opinion is Gharib al-Jamal), upon us to take interest in the non-muslim land. This is the first issue we’ll look at.

This view, general point related to fiqh as a whole. Shaikh Jamaal Zarabozo has seen this view quoted in a number of papers, and it is quoted as Hanafi view. That riba is permissible in dar-ul-harb. They quote it as a view of one of the madhab, and that as long as it’s an opinion amongst one of the respected madhab, then we can resort to it when we need to. This is done, without having much discussion on the issue and it is not asked whether the opinion is correct or not. First of all, does this approach even make sense? Do we do this for all other acts? Is this approach allowed for layman? what about scholars? do they have any excuse?

Important principle to adhere to when there is difference of opinion
In Islam, if there is a difference of opinion then we have to take that matter back to Allah (swt) and His Messenger (pbuh). It is not sufficient to take one opinion, the existence of an opinion does not mean it is sound as well.

Surah An-Nisaa 4:59


O you who have believed, obey Allah and obey the Messenger and those in authority among you. And if you disagree over anything, refer it to Allah and the Messenger, if you should believe in Allah and the Last Day. That is the best [way] and best in result.



Statement in Usul-al-Fiqh: “Not every difference of opinion is to be given respect unless that opinion has some value to it”.
Typically a layperson cannot analyze these differences of opinion so by necessity he would take it to a scholar and the scholar may say that it is correct and it is my madhab. You can follow this opinion of the scholar as long you have no capability to analyze that opinion, but this approach does not work with the issues which are supposed to be known to masses by necessity (dharurah).

Analogy of incorrect opinion about Salat
For example, we know enough of Islam to know that Salat is obligatory. If some one comes and says that Salat in his madhab is for people above 50 years, then even a lay person has enough knowledge to realize that it is not correct opinion. So the people who say that this is Hanafi opinion, should realize that this is a situation where one should know enough to realize that this is not correct opinion.

Basic issue with this fatwa: You cannot counter a widely accepted and known prohibition of an act by a weak opinion.

Q: some people say in these cases where they are not sure (buying house on riba) they can make istikhara?
A: You are to make an istikarah on issues which are halal or permissible, you cannot make istikharah that if riba is ok for me then make it easy for me. It does not make any sense. Similarly you cannot say that I will make istikharaa about zina and since nothing happened, so now I am allowed to commit zina. You cannot do this.

Q: About shopping for fatwa
A: There is a fabricated hadeeth that the difference of opinion in my Ummah is Rahmah. The ultimate goal should be to please Allah swt. If you are madhab shopping then you are not trying to please Allah swt. If your intention is to find the easiest, it is a grave mistake, and it is a sin. You can fatwah shop for pleasing Allah swt but not the other way around. The hadith of Ayeesha is also misquoted that if prophet saw had a choice between the two issues he would follow the easy opinion, the part which is left out is that he would stay the farthest from haram.

Q: Do the masses know that ribaa is haraam?
A: Ribaa is haraam and is known by Dharuraah.  In the parts of the Arab world, there is no question that ribaa is haraam. Even when discussing the fatwa of Tantawi, he did not say the ribaa is halaal. He says that this kind of practice is okay, which was about money deposited in bank accounts and he called it weak form of mudharbah. However, what may be lacking in masses is that what is Riba, as a lot have misunderstanding that it is only excessive interest, etc.


Ulema divide ribaa between Muslim and Non Muslim into different categories:
1) Where the lender and the borrower are in a Muslim country (dar al Islam)
2) When Muslim and Non Muslim are in dar ul Harb
3) You are in a country where there is no Amaan baynahuma (no legal relationship, where you don’t have to respect each other)

Opinion of Majd ul Deen ibn Taymiyyah in his book .....
Lets say a non-Muslim enters the Islamic state illegally. So he is not considered dhimmi nor a visitor. There is one minority view that it is permissible to engage in Riba with such a non-Muslim. This is in a book by Majd Ul-Deen  ibn Taymiyyah (grandfather of the well known ibn Taymiyyah). The specific quote is “Riba is haram in dar al Islam and dar al harb between Muslim and harbee except in case when there is no Amana between them”. Ibn Rushd from the Maliki school in his book “bayaan wa tahseel” is of similar opinion. The logic of the opinion is that such people are not in aman of the islamic state (mustaman), so one is allowed to take Riba from them but not pay them Riba. In other words you are allowed to take their wealth with their permission. Even these people say it is acceptable to take riba from them but not take loans from them. That is a minority opinion.

Majority opinion about Riba between Muslim and Harbee
The strongest opinion is that Riba is Haraam between Muslims and Harbee and is prohibited under all circumstances. There’s no evidence that it is permissible under any circumstance. Al-Nawawi says in Majmooah that in this matter men and women are equal, slave and free are equal and whether the Muslim is in a land of war or peace. This is the opinion of our madhab, and Imaam Maalik and Imaam Ahmad and Abu Yusuf and the majority of other scholars.

Case 1: In an Islamic state -- is it permissible for Muslim to engage in interest with a non-Muslim
The texts are clear and unrestricted (mutlaq) that Riba is haraam for a Muslim (harrama al-riba). What about between the non-Muslim citizens of the Islamic state? In general they are allowed to follow the laws of their faith.

Is it allowed for non-Muslims to deal with each other in Riba in an Islamic state
On this point there is a Hanafi book “al-maqsoot” by Sarakhsi. There are some inauthentic hadiths there. It is said that Prophet (saw) wrote a letter once to the Christians of Najraan that those who deal in Riba have no truce (pledge) with us (this is not authentic).  Prophet saws wrote to the Majoos, you have to give up riba or he will make war with them. This hadith shaikh could not find. There is a general principle that Quran and Sunnah judges what they are allowed. e.g. We know that the Jews were prohibited from ribaa, therefore even in an Islamic state they will be prohbited too. They have a special exemption for their belief, (footnote: what is worse, kufr/shirk or ribaa, of course kufr). Their belief is a special exemption, but that does not mean that they are allowed to do whatever they please in a Muslim land. Similarly they are not allowed to commit zina and are not allowed things which were prohibited by all prophets. They cannot consume alcohol publicly. Sh. is not sure about the pork.

Case 2: The dealing of Ribaa between Muslim and Non-Muslim in Dar al Harb
There is agreement among all fuqhas of all madaahab that for a Muslim to pay Ribaa to Non-Muslim in Dar al Harb is Haram. The fatwah which says it is okay to have a 30 year mortgage in dar al harb is abusing the position even in the hanafi school, which says that it is not allowed to give interest (wealth) to harbee.

The basic idea in hanafi view is that it is okay to take interest from them in Dar al Harb, here they say that they want to hurt the harbee and take some of their wealth to help Islam and Muslims. Giving interest goes against that idea. Ibn Abideen for instance makes it very clear that its purpose is to take Riba from them with their permission. Even if you are in Dar al Harb under whatever circumstances (Visa, Citizenship, etc....), you are not allowed to cheat them. If they are willing to give you something out of a contract, then it is permissible according to this opinion to take this from them.

Who holds the opinion about taking interest from Non-Muslims in a state that is antagonistic to Muslims
This view goes back to very early days. The opinion that it is permissible to take interest from harbees in daar ul harb, this is the opinion of Abu Haneefah (based on explicit narration from himself), Muhammad Ibn Hassan Al-Shaibaani, Al-Thawri, An-Nakhaee, and it is one narration from Imam Ahmad as well.

Proofs for their opinion that it is permissible to take their interest
Now let us start discussing their proofs:

1) Their first piece of evidence is the hadith “There is no riba between a Muslim and a Harbee in Daar Al Harb.”  

(لا ربا بين مسلم و حربي في دار الحرب)

One of the problems with this hadeeth is that the Laa (there is no) here could be la nafiyy (La to negate existence) -- لا النفي or it could be the La An-Nahy (La of Prohibition) -- لا النهي. We cannot say it is La Nahy for sure. How do you know which one it is? If you cannot prove this that it is this La or that La then there is a principle in Usool in Fiqh that you cannot use it as a proof, i.e. you have to first establish the meaning of the text before using that text as a proof in trying to derive a rule.

[footnote: In Quran there are examples of both La of nafiyy and La of Nahy. The sign of the La of Nahy is the use of fatha on the noun following La (accusative case, maftuh), e.g.

فَلَا رَفَثَ وَلَا فُسُوقَ وَلَا جِدَالَ فِي الْحَجِّ ۗ

Here there is fatha on Rafatha and Fathuqa and Jidala so these are all La of Nahy (prohibition). However, Riba is invariable with respect to case marking, so there is no way to know if riba is maftuh after La in the above hadith]

The second problem with this hadith is that this hadeeth is narrated by Makhool who is originally from Kabul, he is from the time of the Tabieen. Abu Hatim said about him, I don’t know anyone more knowledgable from Shaam than Makhool (d 131), Makhool is reporting from the Prophet (saw), thus this is Mursal as we are missing name of the Sahabi, thus from the point of view of Ulema of Hadeeth this is daeef and they would reject this hadeeth. However As-Sarakhsi says “This hadeeth even though it is mursal, but makhool is faqeeh and trustworthy and mursal report from someone like him is acceptable.” However, Sarakhsi did not give us the complete picture here.

This hadith cannot be traced to Makhool in a trustworthy way in the first place. Even the hanafi scholar of hadith Al-Ayni said “This hadeeth is ghareeb and unknown and there is no source for it with complete chain.”  So they are using this ghareeb hadeeth to particularize (make takhsees) of a clear verse from Quran, which they cannot do. It is well known that Hanafis are very strict when it comes to takhsees of the text of Quran. Even if you understand the way they understand, it doest support their madhab specifically. So this opinion coming from Hanafi madhab is even strange, that they would allow this. The second strange thing is that the fatwah goes even against their madhab, because they say that you cannot pay interest to harbee. This is not only argument.


2) Hadeeth of the Prophet during his Farewell Pilgrimage wherein he explicitly voided the Riba of Abbas ibn al Muttalib

They have an argument that when Prophet (saw) during the Farewell Pilgrimage said “The Riba of Jahiliyyah has been voided and the first Riba that I am voiding is the Riba of Abbas ibn al Muttalib, and all of this Riba is done away with (i.e. wiped away)”. This is in the 10th year of Hijra.

These Fuqaha argue that Abbas (ra) was taking Riba in Dar al Harb up until that point. This to them is proof that it was Halal between the mushrikeen and the Muslims in Dar al Harb. Since Fath Makkah was earlier than this. What is this riba Abbas was engaged ? When did Abbas became Muslim? He became Muslim before Fath Makkah and then he went back to Makkah and continued to deal with Riba. This is one of their stronger proofs. The people on the other side have presented a number of arguments in response to it, but none of them are really strong.

i) This was a particular exception for Abbas
This is the weakest part of their argument, if makkah was conquered in 8 Hijri and this statement is made in the year 10 Hijri. According to some report from Ibn Ishaq, that he was sent back to Makkah after accepting islam, thus he was hiding his Islam when he returned to Makkah, and he did not want to reveal that he was a Muslim by not fulfilling his prior contracts.

ii) It was a riba that existed before hand, and prophet saw was prohibiting now at that point.

iii) This was the final prohibition of riba (for those who claim that the prohibition was progressive)
Other argument is that the verse 275 in Baqarah was last verse and this final prohibition might not have reached all the Muslim, thus Prophet gave the final verdict on this, that now riba is prohibited completely.

iv) Abbas was engaged in Riba al Fadl and not Riba al Bayoo

v) Strongest from the contemporary scholars  the complete and final prohibition of Riba did not take place until that time. there is some evidence to bolster this argument.

Sh. Jamaal: The evidence what they are using is not definitely strong enough to counter the verse of the Quran. You cannot take actions of individuals to refute the strong and explicit verses of the Quran dealing with ribaa.

3) Incident of Abu Bakr where he bet with kuffar about the victory of the Romans after it was revealed in the Quran

After Surah Rum was reveled where Romans will be victorious. Abu Bakr bet with some of the kuffar that this would take place and Abu Bakr won this. Their argument is that taking money from the Kuffar even if the action that is done is not halal is allowed.

Lets us assume it is gambling, since some claim that Abu Bakr knew that the Quran was the truth and anything that was explained would definitely occur and that he was not really gambling because of his certitude.  But let us consider it to be gambling.

This incident occurred pretty early in Islam. The only other aspect is that Abu Bakr got this money and Prophet (Saw) did not allow him to keep it with him but to give it away (this is based on authentic hadith). If the Riba was not prohibited until the end time, this event happened while it was permissible to do.

4) Shariah of the previous nations applies to the Muslims, specifically about Jews allowed to take interest from non Jews in Deutoronomy

If you go to the old testament there is a passage that prohibits the Jews from accepting interest from fellow Jews but it is permissible from non-Jews.

Shaikh Jamaal says that he has seen a later hanafi quoting this text from Deuteronomy and claiming that taking interest is permissible from non Jews is from the sunnah of the people before us. Shariah of people before is our shariah and he attributes to very famous Hanafi book called 3ila As-sunan, compiled by Zafar al-Uthmani at-tanawi based on what he is taught by Sh. Ashraf at-tanwi. Sheikh could not find this any where in the book, there is no index on the book and he spent considerable amount of time trying to find the passage.

The Shariah of people before is our shariah If it confirms our sources. In this case, we have a text which is opposite to it (verses in surah Maida tells us that Riba was prohibited for jews), how could you possible say that their law is our law, when that claimed law is rejected by verses of Quran.

5) Riba contract with non Muslims is Fasid in Dar al-harb (rational argument)

(Footnote: Shaikh says if anything it should be considered baatil and not faasid, because for contract to be faasid it may have some riba terms, but if the contract is through and through riba then how can it be called fasid!)

Riba contract is fasid contract (in dar al-harb) and it is allowed to take their money even without the fasid contract, in any ways without fasid contract as they are our enemy. Thus, it is allowed for us to take their money through fasid contract.

Shaikh gave the example of occupied France during World War II. The Germans occupied France and the French were conducting business with the occupiers or Germans. So if the Germans were willing to hand over their money to the French, wouldn’t the French people take it?

You are not deceiving them or cheating them but they are willing to give it to you. This is not the statement from Abu Haneefah, but other Hanafi scholar like Ghassan. But lending the money in first place is like contributing to their economy which is benefiting them and may not weaken them as the argument goes.

Abu Yusuf says that Riba in Darl al Harb is Haraam. His argument is that the verse of Quran is very clear and in order to override or particularize that we need to have strong proof. We know that for Muslims zina, khamr, etc.. are haram in dar al harb, whether or not you are engaged with Harbees or not, it is going to effect us.

If you are going to allow these kind of things in Dar al Harb, then there will be the question of Hijra for these people, that what are you doing to leave this dar ul harb. Since the rulers in dar al Harb are antagonistic towards Muslim residents and they should be making plans to migrate out of the land and not make plans to buy a 30 year mortgage.  Not making Hijrah and making it as home is itself very problematic. This is one of the arguments. There are some other points where there are refutation against it.

Footnote: The terms dar al harb, dar al Islam, dar al Kufr were not explicitly mentioned in any hadeeth. However the condition of being in Dar al Harb was explained in the hadeeth.


Conclusion: Thus the burden of proof lies on the people who claim that dealing with interest is allowed in dar al-harb and they have to bring explicit verses or hadeeth of the prophet, not actions of some individuals or shaky arguments.

(There was no class on Nov 6th, 2011 due to Eid)

2011-11-13 Class Notes


Today we will discuss couple of topic which are also invoked to justify Riba. Today’s topic is much broader scale these issues which are used to justify Riba are also used for other topics.

Some of the argument specific to Riba, the common layman would not understand that’s why they are not quoted so often, so if you want to issue fatwa to masses then you wont use technical reasons.

We will start discussion 3 topics.
  1. Argument of Maslaha
  2. Argument of Daroora or necessity
  3. Issue of Islam will remain weak if we don’t resort to interest (this one infuriates  Sheikh the most, this came up in Forty hadith class and other online seminars). This is not used by ulema but used by people as argument.


The first two points go well beyond interest and are invoked to justify many other things as well.

1) The Maslaha argument (المصلحة)

What is Maslaha? General welfare, public welfare. Good for individual or community in general. It is in our interest as Muslims to resort to interest. General community benefit of buying homes cheaper and effectively, this ownership benefits override the harms of interest.

The fatwas from European and US fiqh council they invoke this principle of Maslaha.

Definition of Maslaha (generally accepted definition):
This comes from the verb (صلح), these words existed before the time of Prophet (pbuh) and they used to use this term for justifying many of the practices of Jahiliyyah like burying the infant was kind of Maslaha to bury children that are unwanted/unneeded. But when shariah took this, it gave its own definition and understanding, what is beneficial for ummah and the community. The first point to be recognized is that the true benefit (maslaha) is what Shariah identifies as the benefit and also the true harm (al-mafsada) is what the shariah identifies and defines as harm. It is not just public welfare without any constraint that community can do anything in the name of Maslaha.

There is one scholar -- Al-Tufi (الطوفي) -- shi’i but with Hanbali leanings, he is only one in the history in Islam who said “all the laws should be based on Maslaha”, whatever looks good from utility, equity and welfare then from the shariah point of view we consider this as permissible. He was placing maslaha above everything. This risala of Maslaha is been revived recently by those who have some leaning towards this idealogy. (Footnote: Shaikh cautions us not to spend our time reading this risala.)

Ibn Al Qayyim and Ibn Taymiyah made similar statements that “if a law does not bring about maslaha it is not part of the Shari’ah”. But they make the point that by definition the laws of the shari’ah bring about maslahah and that anything that is haram by definition brings about the antithesis of maslaha (al-mafsada).

If you take one paragraph out of context then we can come into wrong conclusion.

In the Maliki school they use maslaha as a legal principle in comparison with other schools. They use this as method of reasoning by which a ruling can be determined. It is like using as guideline to look at the case and see that it applies and come to some conclusion.

Al-Shaatibi is one of the leading Maaliki scholars, a unique thing about him is that he looks at the bigger picture. Most of the usooli on the other hand take a point or a verse and do not pay attention to the bigger picture. So he was one of the greatest scholars in Islam for looking at the bigger picture of what the Shariah is all about, in particular two books called Am-Muwaafaqaat (الموافقات)  and Al-I’tisaam (الأعتصام).

He talks about the goals of the shariah and he divided Al-Maslaha into 3 categories.
  1. المصلحة المعتبرة - Acceptable Maslahah
  2. المصلحة الملغاة - Rejected Maslahah
  3. المصلحة المرسلة -- Something upon which the texts are silent about i.e. there is absence of direct text


What is meant by acceptable maslahah is that it is explicitly supported by text i.e. Quran and Sunnah. Like the preservation of health, we will find evidence in the shariah and therefore what is beneficial for health will fall under category #1. You have to be careful about this, if you keep the door wide open then it can lead to wrong conclusion. Do laws of shariah have goals or principles behind them? Asharis say that there is no such thing, these are laws of Allah and you have to obey them just as is. However, others disagree with Ashari’s and they say that there are some goals, wisdom and purpose behind all the laws of Shariah and this is all about to bring good and welfare for human being. The welfare is what Allah knows the best. However we have to obey these laws even if we don’t know the exact maslaha behind some of these laws.

Some examples of acceptable maslahah
For example, The idea of death penalty for someone who commits adultery, also the idea of polygyny (Footnote: it is the practice of a man to have more than one wife, in Shariah it is known as polygyny even though some english books use the word polygamy), these things are which Allah made clear and halal and these are beneficial for the community as the whole and thus this falls under the category. The first category is considered non-controversial.

Rejected Maslahah
The second category consists of things that are considered non-beneficial through a text, such as: shirk, gambling, and riba. These are things that Allah (SWT) has told us that they are harmful (or in some cases the harm exceeds the welfare, e.g. alcohal). Thus you cannot use maslaha to make them permissible as these are al-mafsidah (evil).

Thus first two all are agreed upon.

Maslahah Mursalah
This leaves the question of the maslahah mursalah -- something the texts are silent about. Maliki’s use this category of mashalah as a principle by which a legal ruling can be derived ....  . In these cases there is no direct text but you can show obvious benefit and so it forms part of the shariah

In order for something to be acceptable in this third category there are some criteria which has to be met which are pointed out by Ash-shatabi -- so when we talk about legal principles, we’re talking about this third category and the most part we are talking about the Maliki school.

Other schools have something close to it, e.g. in Hanafi school they have istihsaan (استحسان), but this is slightly different.
For first two categories are agreed upon by all that these are not legal principles as there is direct text, e.g. we don’t have to argue that there is no benefit in drinking therefore it is not allowed.

As-Shatibi’s Conditions for Maslaha being used for a fiqhi ruling

1. Whatever is claimed to be a maslaha (common good) must be compatible with the principles of Islamic law such that it doesn’t oppose any recognized principle nor oppose any acceptable rule. (should not go against what is in category #1 and #2)

2. The claimed common good must be rational. It must be related to mu’aamalaat -- things we can analyze. It can not apply to things like ‘ibaadah. E.g. one cannot make a new form of dhikr based on maslahah. So in realms of business transactions or politics etc... this principle may be used.

3. There must be a need for what is claimed to be Maslaha. The use of maslaha becomes necessary when it preserves any of the 5 goals of the Islamic law: religion, life, familial relations, sanity, wealth. (Arabic Terms: Deen (religion), Nafs (Life)
Aqal (intellect), Nasl (progeny), Maal (wealth)). This has to do with something where there is no specific text about.

The problem with maslahah is that people have a tendency to go to extremes and misapply it. They make it to overrule the other texts of the shari’ah or not take it into consideration at all (i.e. not considering maslaha at all).  The dahiris are a good example of the latter case.

The shariah has come to bring good  i.e. maslaha and remove the harm i.e.Mafsadah.

This concept of maslahah is part of the flexibility of the Shari’ah if something new comes up and you analyze it in the light of shariah, in some cases something might be considered acceptable maslahah, but in other times and places they might change. Another famous principles that is frequently misused is “Fatwas need to change with time and place.” The key point here is that there is no fatwa or Ijtihaad any time you have Nass i.e. clear text from the Quran and Sunnah. You are talking about personal reasoning of a mujtahid which can change over time and place.  

But you can’t change the Qur’an and Sunnah at your leisure. e.g. you cannot say Riba used to be haram but may be it should be halal now. On the other for dealing with the issue of vaccination you may invoke maslaha al-mursala. If there’s a clear source from Q or S, there is no room for ijtihaad. Excellent principle, but have to know how to apply it.

Historically speaking, maslaha did not come into discussion early on, but they brought them in the case of necessity.

Examples: Collecting the Qur’an, the starting of Islamic schools, paying people to be teachers/muftis. Abu Bakr compiled Quran as there was no direct order or direct prohibition from prophet to do this, so there was maslahah in that case. However, he did not compile hadith because it was also part of maslahah. If Abu Bakr had compiled e.g. 1000 hadeeth, then it would have become a canon and anything else would have been apocryphal. Important to note that there was maslahah in both of these cases.

But using maslahah to justify interest is an abuse of the concept of maslahah. Riba clearly falls under the second category.

2) Daroorah -- The law of necessity
What is the basis for the law of necessity ? There are 5 verses in the Qur’an about daroorah.

[Al-An’am:145]

Say, "I do not find within that which was revealed to me [anything] forbidden to one who would eat it unless it be a dead animal or blood spilled out or the flesh of swine - for indeed, it is impure - or it be [that slaughtered in] disobedience, dedicated to other than Allah . But whoever is forced [by necessity], neither desiring [it] nor transgressing [its limit], then indeed, your Lord is Forgiving and Merciful."


2:173


He has only forbidden to you dead animals, blood, the flesh of swine, and that which has been dedicated to other than Allah . But whoever is forced [by necessity], neither desiring [it] nor transgressing [its limit], there is no sin upon him. Indeed, Allah is Forgiving and Merciful.


6:119

And why should you not eat of that upon which the name of Allah has been mentioned while He has explained in detail to you what He has forbidden you, excepting that to which you are compelled. And indeed do many lead [others] astray through their [own] inclinations without knowledge. Indeed, your Lord - He is most knowing of the transgressors.


Maida: V3

Prohibited to you are dead animals, blood, the flesh of swine, and that which has been dedicated to other than Allah , and [those animals] killed by strangling or by a violent blow or by a head-long fall or by the goring of horns, and those from which a wild animal has eaten, except what you [are able to] slaughter [before its death], and those which are sacrificed on stone altars, and [prohibited is] that you seek decision through divining arrows. That is grave disobedience. This day those who disbelieve have despaired of [defeating] your religion; so fear them not, but fear Me. This day I have perfected for you your religion and completed My favor upon you and have approved for you Islam as religion. But whoever is forced by severe hunger with no inclination to sin - then indeed, Allah is Forgiving and Merciful.


16:115


He has only forbidden to you dead animals, blood, the flesh of swine, and that which has been dedicated to other than Allah . But whoever is forced [by necessity], neither desiring [it] nor transgressing [its limit] - then indeed, Allah is Forgiving and Merciful.


These verse form the basis of Law of necessity, these all based on being compelled to eat something in the case of survival. The law of necessity is to protect 5 things as mentioned. If any of the these are jeopardized then can we invoke the law of necessity ? What is agreed upon is Deen comes first and the life comes after that, and for the rest there is come difference of the opinion. Even these goals of shariah have relative priority, e.g. you have to protect your life, but in case of jihad (protecting deen) you sacrifice your life.

(Then there was a long on some cases)
Someone puts a gun to your head to rape a woman, will you do that?
Someone puts a gun to your head to kiss an idol, will you do that?
Someone puts a gun to your head to kill another person, will you do that?

Let us agree on some things -- just the idea that there is some kind of hardship, that does not justify any kind of exemption in the Shari’ah. Not all hardships are to be avoided or can be avoided or can be excused. Protecting your life is goal of shariah but you cannot do that by taking someone else’s life or jeopordizing someone else’s honor or violate huquq Allah related to communal matters. Similarly verses like: “Allah has not made any hardship in the religion” cannot be used as an excuse to get out of the obligation, e.g. fasting will be hardship. Putting one of the goals of shariah at risk is one of the conditions of ….

Definitions of Daroorah -- Al-Bazdawi (Hanafi scholar) in his book kashf al asraar (كشف الأسرار). Daroorah -- if you refuse to eat, you fear that you will either lose your life, or lose a limb. E.g. someone forced to eat carrion, then this is a case of necessity. In this definition losing a limb is also included based on the assumption that the life after loosing that limb is greatly hampered.   
Zarkashi and  Suyuti (Shafai scholars): Being in a state if you do not invoke this principle you will die (هلك) or you will be close to dying.  
Maliki Scholars: Where one fears for his life either Qataan or Dhannan.
Ibn Qudaamah from the hanbali school: You fear losing your life qat’an or dhannan.

Jamil Mubarik (one of contemporary scholar): Fear of destruction or great harm to one of the necessities of life for oneself or others, with definitive or probable expectation unless that person does that action. (there is a good reason to expect that harm will happen)

The scholars understand that the law of necessity (just like the law of maslaha discussed earlier) does not open the door for just about anything. Some very clear principles are laid down.

1) Invoking of the law of necessity must be in accordance with the principles of the shari’ah. E.g. with respect to wealth the law of necessity is about preserving wealth and it is not about getting ahead. In that regards, buying a house is not to protect one’s wealth but to get ahead financially with all of the associated benefits of home ownership in modern life.
There are limits to law of necessity in case of maal, there is never a case to invoke necessity.

We will continue inshaAllah next class from here.

2011-11-20 Class Notes


Justifications used by people to deal with interest
Today InshaAllah we continue with justifications people usually invoke to justify interest.

Law of Necessity
The question of the law of necessity, we’ll spend much time studying that as the law of necessity and principles of law of necessity go well beyond the scope of this class. We’re living in a non-muslim land, the whole society, the whole system, they don’t understand our needs/peculiarities, that in itself forces us in situations, none of these options end up being good options from shariah point of view. In the modern age new things have come up which did not exist earlier so we need to find islamic view on these e.g. things like organ transplant, all sort of medical issues, the field of medicine itself -- is related with the preservation of life. If we don’t understand the law of necessity properly, we can end up making literally fatal conclusions or disasters.

Important principles before invoking the law of necessity
Last time we discussed certain verses that point to the law of necessity. Now we’ll discuss the parameters for invoking the law of necessity.

Principle #1: It must be in accordance with the goals of Shariah

Invoking the law of necessity must be in accordance with the goals of the Shariah. You invoke law of necessity when one of the goals of the shari’ah is threatened with either complete destruction or a great deal of harm. So when life is being threatened, Aql is being threatened, Deen is being threatened etc.... is when law of necessity should be invoked.

Getting more of this dunya, getting more of the amenities, non-necessities of this life, this could never be the cause of invoking the law of necessity. The law of necessity is an exceptional case, something outside the norm, and it is to be invoked for specific reasons. In the case of maal (wealth) we have to be careful as typically none of the goal of shariah are being threatened in anyway, so gaining more wealth or even protecting it, does not allow us to fall into haraam due to invoking the law of necessity.

Principle #2: It does not make everything permissible

Similarly, within the laws of Shariah, the law of necessity does not make everything permissible. You have to realize that there are limits to the law of necessity. For example, there are certain principles that shariah upholds that you’re not supposed to violate even with the law of necessity. Like taking someone else’s life just in order to preserve your own.
So, within the necessities of shariah, there are even rules within them that do not allow you to violate other people’s life, honor, etc.

Principle #3: The situation that invokes necessity must be a present and real situation

In order to invoke the law of necessity the condition that you’re invoking for must be a present or clear situation. It cannot be a mere possibility or that you expect something might happen. Lets say, you’re afraid that your house might burn down. Can you say for example, that you’re going to take insurance to defend against something that might happen when you don’t know if it’s ever going to happen (so you are taking something haraam to prevent a possibility).

Before you invoke the law of necessity either the emergency case must be present or it’s about to happen. Q: Can I call insurance when my house is on fire? A: You should call the fire dept if your house has started burning, not an insurance company :). Q: are rights of non-muslims the same as muslims when invoking the law of necessity, can you take a non-muslims life or is it protected in the same way? A: you’re on a boat, boat can hold 5 people and there are 6 of them. In some books of fiqh, they would say take the non-Muslim. If you’re all from Islamic state, that person has the same rights. Suppose you have one from a warring state, then you can do it.

Principle #4: The law of necessity may only be invoked if one cannot find a permissible alternative that could alleviate situation

Necessity has to be direct and constraining. For example: if you are starving to death, and you have pork and some unpleasant food as an alternative, then you can’t go for the pork. e.g. you cannot say I don’t like biryani so I will go for the pork since I am starving.

In general, hunger does not allow one to invoke the law of necessity, unless, for example, you are diabetic. Hunger pains are a discomfort, but they are not life-threatening.

Principle #5: Only the minimal amount that is necessary can be sought

You have to limit yourself to the minimum necessary, you cannot pig out on the haram. This is what people claim when they say you can only buy one house using interest, and anything beyond that would be a luxury and not necessary.  The principle is only the necessary and within limits, buying a million dollar mansion is going beyond your needs. This is a just a discussion based on the fatwa that we discussed earlier and it is not the opinion of Shaikh Jamaal, as should be obvious when you read the notes. Once you go beyond the minimum necessary, you need to read the verses from the quran that discuss this priniciple. What is common in these verses that we read, (فمن اضطر غير باغ و لا عاد) you do not do it willfully nor excessively.

Principle #6: Harm is not to be removed by a similar harm

For example, there are two of us starving. (And here we are talking about violating the rules of shariah so it is not to be taken lightly and that is the reason why starving is a good example.) You cannot go to the other person and take his food invoking the law of necessity because in this case taking the other person’s food will make him die and you don’t have the right to do that. You cannot cause death of another individual in order to save your own life.

Principle #7: Greater harm can be removed by a lesser harm

If you are starving and you know somebody else has food and they would not sell it to you. In that case, do you have the right to steal it from him? Yes because of the above principle. Since stealing is a lesser harm compared to death from starvation. But you have to compensate him for the food you have stolen as you cannot take someones’ maal without compensating him even in the case of necessity.

Principle #8: What one can do is not be excused by what one cannot do

Example: Sh prays sitting due to knee problem as he can’t do sujood, does this mean he cannot stand in prayer? No, the reason he cannot make sujud this does not mean that he should not stand.
You must always do the things that you are capable of doing.

Principle #9: Necessity renders some forbidden acts lawful

Things that are normally unlawful becomes lawful in a state of necessity. This is by definition.

Law of necessity can only be invoked by the person in dire straits and it weighs on his conscience
This is something that goes to the individual and the individual’s conscience. This is a heavy responsibility. A sheikh might be able to find alternate ways rather than invoke the law of necessity, but ultimately, it is the individual that determines that he is in the state of necessity.

No sin upon individual who does forbidden act due to invoking law of necessity
If all the conditions are met, then it means that there is no sin upon him in doing the acts that he needs to do.

Q: Is it obligatory to follow the law of necessity?
E.g. if you’re dying and all you can eat is pork. If you don’t eat pork is it suicide? Some say it is an obligation, while others say it is not an obligation. Some say that if you do not eat pork, then that is a sin, as Allah swt says “wala taqtulu anfusakum”

Q: Is it ever a case of necessity to resort to medicine? Is it ever a case that you take medicine for law of necessity?
A: Ibn Taymiyah says that you cannot resort to law of necessity in cases of medicine, because according to him there is always a halaal alternative. He says that there are halaal alternatives such as dua and rukiyah available.

The alternative he gave is a general alternative and it is available in all circumstances, even when you are starving. And this is where his argument falls short a bit as his proposed alternatives are not related to direct asbaab for this case. Some scholars say it is an obligation for you to take medicine and some say that is not the case.

The law of necessity does not allow taking away the rights of others, e.g. if you steal from someone to survive, you are still responsible for paying it  back. Sharia will not punish such a person as being a thief, however, the court will make you payback as you are still responsible for anything stolen.

Q: What about invoking the law of the necessity to give credence to the law of riba?

Some scholars say that under any circumstances one is not allowed to resort to the law of necessity to get involved in Riba.

Where would be a case of necessity if someone is forced to pay riba?

Example 1: if you are starving and you need 1 date, someone gives you 1 date but says “you have to give me 3 dates after the days”. Scholar say in this case, you should only return 1 date.

Example 2: Someone goes to hospital in emergency, and incurs a debt of surgery. In the Western world, you then have to pay back the health bill over a period of time and that will by default involve riba after the grace period.

Q: What about the fatwa about buying a house on interest, can it be based on law of necessity?
A: Example, someone has 6 or 7 children and no-one will rent to them. Because of laws that require minimum number of bedrooms for occupants. Can they invoke the law of necessity?  Students gave them many alternatives. Splitting family in half and rent two houses/apartments (involves excessive hardship), make hijra to other states or countries where they allow renting to the large families (may involve excessive hardship)

Riba is one of the worst sins one can commit, so you have to consider all of the halal alternative: Sheikh’s comment that no one mentioned this alternative: Suppose there is an (innovative) Islamic housing scheme, there might be some aspects in the contract that are not good, but it is not Riba. Can they avail of it?

You should always strive to seek a halaal alternative. It is obligatory upon you that you do not invoke law of necessity without being constrained.

Opinion: Riba can never be invoked due to law of necessity
Bakr Abu Zaid: Riba is a terrible crime, and Allah has declared war on them. Riba can never be a situation of necessity and none of the Ulema has declared that you can take Riba in the name of necessity.

Fatwas: Riba can never be invoked due to law of necessity
(i) Conference of Ulema in Cairo: “Borrowing money with riba is haram, it is never permissible either due to need (hajah) or necessity (dharoora)”

(ii) Lajnat-Ad-Daa’imah : One is not to get involved in riba in any circumstances (مطلقا).

However we should recognize the fact that they don’t have any specific evidence that law of necessity cannot be invoked for riba, You could fall into ribaa in case of necessities, for example you are hospitalized and large bill is made out to you and you cannot pay for it. Here you could conceivably be forced into ribaa. In general in Muslim lands there are always alternatives which may not be available to people living in non-Muslim lands.

In Saudia, they have sharia courts and civil courts, people used to deal with western banks and get the loan on Riba and then they would go to the Shariah court in Saudi and get the Riba cancelled. So the gov’t caught on it and made it compulsory to go to the civil courts, when you deal with western banks, which upheld the Riba contract.


What is dharura?
We discussed it last time. It is a situation where you life is in risk or you are in dire straits and you are facing harm, not only to your life, but even towards Aql, Nasl, ... as well.

There is actually some difference of opinion that Riba does not become lawful, but in these situations of Darura it is just a Rukhsah to get involved in Riba in this dire situation.

In general the great hardship (haraj) has the same ruling as necessity (dhuroora). However, as we discussed earlier that not all hardships are to be avoided, if they don’t disrupt your life greatly then you take that hardship (this comment was in regards to permissibility of car liability insurance where the state mandates such an insurance and the question came that can you live without a car? the answer is subjective to the individual in some cases it will be case of great hardship and law of necessity may be invoked, in other case it may not be that. Riba is a great fitnah as the harm is usually not perceived as great as some of the other major sins such as zinaa.

Next we will tackle the topic that discusses that Muslims will remain weak if they do not get involved in ribaa.


2011-11-27 Class Notes


We will try to remove doubts and confusions about the reasons to stay away from ribaa.

3rd Argument: If we do not resort to riba we will remain weak and poor
A common argument is that if we force ourselves to avoid ribaa, it will be cause for economic weakness and cause us to loose. And they say the goal for the shariah to make Muslims stronger and not weaker and to benefit Muslims in this world and hereafter. And they argue that ribaa should be made permissible for us to succeed economically.

Every time shaikh delivers a lecture on Islamic finance, he hears this argument and it irks him tremendously.

Classroom discussion about the above argument

(i) Strength comes from Allah and we should obey Allah and have tawakkal and gain strength only through Allah swt.

Allah destroys anybody who consumes ribaa (see verse below), and the hadith from Prophet saw says that riba even in large amount will become smaller in the end. There is no benefit in engaging in ribaa, even if you look from a secular perspective, we cannot say that they are getting stronger through riba, that is not the case. Through involvement of riba this is an unstable system and you can see it now in the collapse.

Sahih International
Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.

The current financial crisis is not because of government spending, all these governments spend a lot. The fantastic growth of the debt is the problem. If you look at the amount of debt, it can be handled by the sovereign governments, but the growth due to interest is the real problem, this is what has ballooned and it is beyond their means now. The debt will continue to grow due to riba and eventually you get buried under riba induced debt increase.

There are many papers on Islamic view of the economic collapse (just google  “islamic view of financial crisis”). Two basic things that shariah has protected us are gharar and ribaa  and the two main causes of economic collapse are gharaar and ribaa. Islam controls humans as a whole by managing their greed and israaf, both of which are big issues that fuel the financial collapse almost every decade.

In the United States, the corporations have 3.8 trillion dollars in cash and they say we are in recession. And they are reluctant to hire workers and complain about the taxes they have to pay. Islam touches upon how to control greed and at the same time how to control the market as well. Islam touches upon the issues related to the psychology of the people and the economy as a whole.

(ii) Remaining away from ribaa, you might not like it, but there might be something good for you.

Sahih International

Fighting has been enjoined upon you while it is hateful to you. But perhaps you hate a thing and it is good for you; and perhaps you love a thing and it is bad for you. And Allah Knows, while you know not.

[2:216]

When the muhajeerin left Makkah and went to Madinah, they gave up their houses and their wealth, it was gone. Imagine they had used this argument to stay in Makkah and said to the Prophet that he should migrate on his own. Even after fatah Mecca they did not get it back, all given away to gain the pleasure of Allah swt.

Sahih International
For the poor emigrants who were expelled from their homes and their properties, seeking bounty from Allah and [His] approval and supporting Allah and His Messenger, [there is also a share]. Those are the truthful.

(iii) Wordly means are not be relied upon to increase our self sufficiency


Sahih International
O you who have believed, indeed the polytheists are unclean, so let them not approach al-Masjid al-Haram after this, their [final] year. And if you fear privation, Allah will enrich you from His bounty if He wills. Indeed, Allah is Knowing and Wise.

Allah swt gave the command, ..... if you fear poverty from that, Allah swt will provide from his bounties.

There is a market of Ukaaz, that is where people who would come to hajj would take their merchandise for trading. So hajj was tied into the economy of the mushrikeen.  And the command came that the mushrikeen are not allowed to perform Hajj from next year. This was a big shock to the system and apparent meaning of the command was that harsh time are to be expected and Allah swt reminded us not to fear poverty as He will provide from His bounties.

(iv) If you follow Allah’s command He will provide a way out for you

Allah swt says is surah At-talaq [65:2]


Sahih International
And when they have [nearly] fulfilled their term, either retain them according to acceptable terms or part with them according to acceptable terms. And bring to witness two just men from among you and establish the testimony for [the acceptance of] Allah . That is instructed to whoever should believe in Allah and the Last day. And whoever fears Allah - He will make for him a way out

65:3

Sahih International
And will provide for him from where he does not expect. And whoever relies upon Allah - then He is sufficient for him. Indeed, Allah will accomplish His purpose. Allah has already set for everything a [decreed] extent.

(v) Umar (RA) is explaining Asbab-al-Nasar to his general
Similarly there is famous letter from Umar to his general Sa’d bin Ibi Waqqas, which explains the causes by which Muslims are given victory. He said: “When you go to battle you may be weaker or similar to them. The difference between us and them is that we do not commit sins as they do. So make sure that your soldiers do not commit sins as they do.”

(vi) Our behavior show that we are interested in being powerful than obeying Allah swt
We continually demonstrate to Allah swt that we are more interested in being more powerful than obeying Allah swt. Our preference is for worldly power over spiritual power. Shaitan convinces us that this way we will be able to obey Allah swt. Historically in Najd, Saudi Arabia, women would not go out for work and they would prefer taking care of the homes and family. Recently, there has been increase in the women working; this was through a bizzare undertaking by the religious women as they wanted to showed that they could take work as well, and it is by choice that they do not work -- after this they ended up working anyway. Shaitan achieved his objective in convincing them to show their capability.

(vii) Riba is a financial product and is tied to supply and demand dynamics
Even the existence of riba in Muslim countries is an issue of supply and demand. How many trillions of dollars are in the Muslim world (for an overview of all the money in the world: http://xkcd.com/980/huge/). We could have a lot of economic power if we wanted, if this flock of people said we won’t deal with interest (financial products are  a matter of supply and demand). As long as people continue to demand them and seek riba through different means these are going to be continually offered. That’s why we have riba in muslim world, because people are still seeking money without giving any consideration to means of getting money. If we get to a point where we say we don’t want riba, it will go away.  

Ribaa is not a requirement for economy. Every Muslim should know that. Allah swt has sent shariah to govern our lives. If ribaa was required, then Allah swt would have allowed it. So no Muslim can argue that it is required for the survival of the economy.

Every Muslim should know without any doubt that riba is not required for even the capitalist economy. This actually has been discussed even by non-Muslim scholars, however, we will not go in that direction today.

Islamic institutions have to compete with non-Islamic banks. People expect the same returns from Islamic banks as they expect from secular banks. The market the Islamic financial institutions are dealing with is that if you give me the same return islamically then it is fine otherwise I will go the haram way. As seeking the capital gain has become the prime focus without paying attention to how that gain is achieved. Even in the most conservative Islamic organizations, they are facing this pressure and they are forcing themselves to accept and give these fatwa which allows them to compete with secular banks.

We have a good number of Muslims who will not accept haraam under any circumstances, but if you look at the Muslim mass as a whole, it is not true. It is because of the weakness of the Iman and chaising the dunya. It is a weakness of their belief. Wealth is a great trial so you give your cautions while dealing with money. It is not that they disbelieve the Quran. We are not talking about people who are starving, it comes from people who have money.

Shaikh gave a khutbah recently and somebody came to him, who was a new convert and he was very poor, and he said that he just bought savings bond, a $50 bond, and he said, I have to give it up. It was quite obvious that he could really use that additional money, but he was willing to give it up.

People who have money, it is a big fitnah for them. The strength of their Imaan alone is not strong enough for them to give up ribaa. If our imaan is strong, we will give up ribaa.

There might be situations where people are misled or misinformed about riba.

There is a conference going on among the leading Muslim economists in Saudi Arabia about relationship between ribaa and interest. And this is a result of the fatwa of Tantawi which we discussed earlier, wherein banks are intermediaries and where your interest from a bank is called a mudaraba or some type of profit and it is not ribaa.



We have bank customers with deposits in banks. Capitalists use these deposits and invest the money. And they say that the profit should come back to the investors. And they say that they diversify their investments, and if they it carefully they can figure out their rate of returns, which might become moot due to current economics circumstances. There is a big problem when you complete the circle, the capitalists are simply borrowing money and they are paying interest. So how can you take these earnings from interest and then return it to depositors and call it profit. And this part is completely unjustified from the shariah perspective. When bank is dealing with the depositors it is like pooling of money, which is allowed and we can pool and invest that money to get return on our share of the pool. That is not the problem. The problem is that bank is providing money to capitalists through individual contracts which are pure riba based. e.g. bank is giving money to a startup on 6% and the company is not making any money and is paying 6% to the bank. On the other hand an established business may be making 600% and is still paying 6% to the bank.

And people are using Tantawi’s fatwa and focusing only on the front end of the deposits without understanding the reasons for the return on investments. Borrowers are paying interest to the bank, how can you justify it and then focus only on the front end and say you are trying to determine the profit earnings for depositors.

In the beginning of the next quarter, we will discuss paying interest to yourself, paying interest between husband and wife, before we start discussing student loans.

Money does not necessarily bring happiness, it brings stress.

4th Argument: The verses concerning riba are Mutashabih and Mujmal
Another argument put forward to justify interest is that verses about interest are mutashabih (unclear) and mujmal (undefined) and that the prophet did not live long enough to explain these verses.This argument is commonly based on a statement from Umar that if I could ask one thing from prophet it would be about Riba.

In Pakistan, as part of appeal to Supreme Court’s decision, a person wrote that among the last verses of the Quran were the verses about riba and Prophet saw passed away without explaining it to us. Then he quotes the statement from Umar which is recorded in sahih bukhari.

Basically they say that the meaning of interest is unclear and we cannot make any rulings about it.

In sahih bukhari there is a statement from Umar RA: There are 3 things about which I wish that prophet would have not left without explaining: (i) inheritance of the grandfather, (ii) the inheritance of Kalaalah and (iii) some issues related to Riba.
It seems from his statements that there were some aspects of riba that he wished that they were explained.

There is another quote from Umar and this is the one quoted in Newspaper Dawn, here is the way it is quoted, after the statement that he wished that he could have explanation of some aspects of riba “therefore stay away from Riba and stay away from doubtful matters”. This is in the same quote that is given to prove that Riba is mutashabih. He got the quote wrong as the quote implies to leave the riba as it is doubtful. What Umar is saying is that there are things that are clearly riba and then there are things about which we have doubt, so leave the doubtful matter as well.

There’ another narration from Umar in which he says there are many things we know about Riba, but there are some things that we do not know the details about. Commentators say that he is referring to purchasing gold vs silver on deferred payments, i.e. riba al-fadl.

In the Hanafi school, there is a very famous scholar al-Jasaas. He wrote a book called Akhaam al-Qur’aan. In it he says that Riba is mujmal (مجمل) --which means: something not detailed, not spelled out. Example: Salaat is not specified or detailed in Quran so you have to go to sunnah. Basically what he is saying is that the definition of mujmal term has to be given somewhere else in the Shari’ah. Therefore Riba is only going to be those things that are specifically described like riba al fadl and riba al jahiliyyah anything else which is not specified in the text cannot be considered as Riba. This is the basis for the people to consider that Riba is mutashabih.
Eg. Let’s say you add a singing portion to Salaah, that would be incorrect.  This view of al-Jasaas is a minority view.

He quotes the statement of Umar as well. If you say it is Mujmal then it applies to specific texts. Perhaps that is the basis of many of the modern day arguments, such as the appeal to supreme court’s decision in Pakistan. If on the other hand it was a generally well known term then it applies to all forms of riba. Scholars have responded to al-Jusas’s position by saying that riba pre-existed Islam, and hence it is a general. Therefore it applies to all types of Riba whether explicitly mentioned in the text or not. Al-Jusas’s argument was slightly different then the modern day versions, now his original position is being abused by expanding its scope.

5th Argument: The only riba that is Haram is Usury and not interest.

Usury in the modern day is excessive amount of interest. Even secular people limit on the legal amount of interest.

Basement for their argument: [3:130]

Sahih International
O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.
(the word should have included interest in the translation of above verse besides usury, here they have used usury to capture the meaning of double and multiplied)

What they do is that, the verse says “double and quadruple”, Does this verse say anything about consuming interest less than double and multiplied? It is silent about taking interest less than double and quadrupled. There is a logical argument they make, for example if I say I am going to give lecture till 8:00, that does not say anything about whether I will continue after 8:00. If from this statement I derive the conclusion about the opposite, I will not be lecturing after 8:00, which I did not say. You heard a positive statement and you derive a conclusion about the negative statement. This kind of reasoning is called as divergent indication i.e. mafhoom al-mukhalafa (مفهوم المخالفة), which is a way of reasoning in fiqh. (if A then B is extended to if not B then not A)

The counter arguments to this are:
1. Hanafis reject the concept of mafhoom al mukhaalafah. This is not an acceptable form of reasoning for them.
2. When applying mafhoom al mukhaalafah, there are certain conditions that have to be followed. One of the conditions is that the conclusion that you make cannot contradict an explicit text.

Argument two can easily be supported to be “harram Allahu al-riba” -- hence you are contradicting the mantooq i.e. explicitly stated text.

3. Also, the original statement may just be describing the common case -- it doesn’t mean to allude to any other case.

Based on these points, you can not conclude that if it is not doubled and multiplied then it is not riba.


2011-12-05 Class Notes


The main goal was to show that there is no excuse or sound justification given for any Ribawi transactions anywhere even in the United States.

We started with what the Quran and Hadith have to say about riba. We saw the strong terms used by Allah and the wordings of the prophet, it is hard to imagine how anybody can look for loopholes to indulge in riba.

Wealth is such a fitna that even with all of these strong evidences from Qur’an and Sunnah, people have tried to find ways to justify riba transactions.


We’ve looked at various justifications such as maslaha, necessity, non-Muslim land, ummah would become weak without Riba, or that small amounts of Riba are OK. And we have shown that they are all weak or not sound. we have only two more  arguments left.

Riba is unavoidable since it is everywhere


ليأتين على الناس زمان لا يبقى منهم أحد ، إلا آكل الربا ، فمن لم يأكل ، أصابه من غباره


The hadith related to[the time when the one who will not eat Riba will still be affected by the dust of it] is a weak hadith in Sunan Abi Daud. This is a weak hadith but the meaning may be true.  Living in this country you could probably argue that there is some truth to it. If you sign a rental agreement, there is some interest involved, if you are late then you will be charged interest. If you make deposits that are to be returned, then they will repay you with interest. If the government owes you money they will repay you with interest.

But it does not mean that you cannot avoid it, nor can anyone use it as a justification to enter into Ribawi contracts.

But if you give up the money that you earn in interest, that act might be pleasing to Allah swt.

There used to be time with credit card companies, that if you paid in full but if you were late once, then you could call them to waive the interest, they would do so, but not anymore? What do you do in a situation where you have to pay interest? You make payment and make tawbah. If you don’t pay, then that will increase the riba, so it is best to pay it.

Tax penalty involves a fee and also interest. Not paying it would lead to more harm then good. All you can do is ask Allah for forgiveness and ensure that you do not fall into the same situation again.  Groups who refuse to pay IRS in the US, most of them end up in jail.  In the next quarter we will discuss whether penalty is interest or not.


Another justification for riba is the difference between consumption loans and production loans.

Justification for riba: In the time of the Prophet (SAWS) the loans were only consumption loans and there were no production loans. Consumption loans were for personal needs, production loans were for businesses. And they are arguing that it is okay to enter into ribawi contracts for production loans.

In order to understand this justification, we have to study the following:
1) Historical evidence: is that true that there were only consumption loans during the time of the Prophet?
2) Even if it’s true, Allah has made a set of riba transactions. The word applies to everything in that set. They are saying that it is a subset that is excluded that is exempted. This is what is known as particularization or takhsees (التخصيص). What is the proof for this Takhsees that these people are making?

There are two fields that if you know them well, you can debunk most of the arguments. Those two fields are Uloom al Hadith and Usool al Fiqh. Simply its non-existence in the time of the Prophet (SAWS) is not a proof -- it needs to be specifically excluded.

Evidences for ruling out the justification for production loans
1) The historical evidence is also likely to be historically incorrect. It was certainly known in the Byzantine (Eastern Roman Empire) empire and areas around the Arab world at the time. In books of Seerah we can find evidence of people borrowing money for investment purposes. The Byzantine empire also known as the Eastern Roman empire began to adopt interest around the 5th century. The Western Roman empire adopted interest in the 15th century. The Byzantine empire had different rates and laws for different types of activities.

Sometimes they would finance through borrowing since they were travelers.

Therefore historically speaking even around the Arab lands, production loans were known. Some of it is a little bit indirect, or in books of Seerah were less clear or well authenticated. But the burden of proof still lies upon them that this is a takhsees.

2) Riba is riba, regardless about the purpose, whether it is personal or business loans.

Justifcation: Riba is needed to protect us against loss inflected due to inflation and printing money

Companies when they see inflation, they have to raise prices.

Suppose you have $10,000 in your bank account as your saving. If prices go up, the real value of your deposits goes down.

Suppose if you 10,000 and you paid zakat of 250 and next year your money is next year is of 10,000 due to inflation. But nobody asks the shaikh that we should adjust our zakat money due to the inflation in price. Basically the argument is saying, that he wants to get involved in Riba then also start arguing that due to inflation, his 2.5% of zakat is also less in value this year then it was last year. So lets start paying higher percentage of zakat then! And the people will never bring this side of the argument but they do want to get Riba for inflation. If people are raising the question of inflation to be just why don’t they raise this same argument for justice with respect to their zakaat?

Interest is usually bigger than inflation, why? Because they want a real rate of return. And hence interest will always be greater than inflation for private citizens, excluding sovereign debt.  What is the inflation rate based upon? It is based on consumer price index (CPI).

Some are arguing that they want to charge enough interest to cover the losses due to inflation, So have they calculated their own CPI?  What is your own CPI? Somebody could use the fall in prices of house to calculate it, and let us say that house prices have fallen 25%, does it mean that your personal CPI is -25%.  Even if you consider prices of electronics, they are going down, but the features are increasing. Shaikh is trying to make a point that the prices of what you are interested in buying are going down, you should not care about the prices of goods that are not halaal for us, such as alcohol or cigarettes or pork. So if somebody is serious in making this argument, you have to calculate your own CPI of goods that you intend to purchase. And you are being covered in many ways by salary increases due to cost of living increases, bonuses etc.

So you really cannot seriously argue that you should deal with interest in order to protect against losses due to inflation.

We are not saying that inflation will not harm you or that inflation will not decrease your holdings. But you cannot determine how much interest should you charge and you cannot correctly calculate the safeguards that are there to already protect you from inflation.

Analogy: Somebody said that I drink enough alcohol to not give me kidney stones. This is the analogy that comes to Shaikh’s mind when you try to use this justification for dealing with interest.

This is a flimsy justification and you should stay away from interest.

There is a hadith (there is dispute about its authenticity among scholars) about inflation, and some people came to the prophet to set the prices as a protection against inflation. And the prophet replied that Allah is the musa’ir -- the one who prices things.

Even if you are on a gold standard, you still get inflation. And when the Muslims were fighting Jihaad, this would lead to an influx of wealth which would also reduce the value of money.

There is a large amount of literature out there of hyperinflation or where currencies get devalued. The majma’ al fiqhi have had numerous discussions about what to do in cases like this -- how can you protect the lender under the extreme circumstances.

There is a major fiqhi issue with limited liability.  Eg. a trucking company that went under and yet the owner is a billionaire.

Justification: If we don’t use interest then it would be used against the Muslims

Explanation of their justification: If you put your money in interest bearing accounts, then they are by law required to pay it to you. First of all don’t put your money in interest bearing account. However if you put your money in a bank, the bank benefits from it. The bank keeps a fractional reserves as required by law. And they have consumers who borrow money based on their fractional reserves. They create money based on the reserve ratio. They do benefit from the deposits.

For example, say person A has $100000 in bank account (and bank needs to keep on $20000 based on reserve ratio). Then if person B comes in asking for $80000 loan. The bank will create an account of $80000 for person B and now the bank has created $180000. So basically the bank here is making money!

The argument that they will use it against the Muslims is bogus. There is no such thing as we are giving up the interest that is due to your deposits in checking accounts.


Conclusion is that interest is Haram. We have ruled out all of the justifications as unsound.

Next quarter we will discuss credit cards, mortgage, student loans and practical issues related with ribawi contracts.

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