Title:
Does the Prohibition of Riba Apply only to Interest on Personal Loans?
Article:
The Supreme Court of Pakistan, in
determining the applications and implications of the term “Riba”
asked for assistance of religious scholars and other interested people of the
country. For this purpose, answers to ten questions were sought. The second
among these questions was:
What is the true scope of the
transactions to which the bar of Riba is applicable? Can the term Riba also be applied to the commercial and productive loans
advanced by the banking and financial institutions and to the interest charged
thereon?
My Reply
to this question follows:
As should be clear from my answer to
the first question, there is nothing in the meaning and the connotation of the
word “Riba” on the basis of
which one may say that its implications are restricted to loans for personal
non-business/non-commercial use only. In view of this fact we are bound to
interpret from the verses of the Qur'an, which prohibit “Riba”
that they apply equally to “Riba”
earned on personal as well as commercial loans.
If anyone is of the opinion that the
related verses of the Qur'an refer specifically to Riba
earned on personal loans and not on commercial/business loans, the
onus of evidence to this effect, in such a case, shall be on that person. An
acceptable evidence, in this case shall be either 1) one that proves that the
word “Riba” in the classical
Arabic language applies to interest on personal non-business loans only; or 2)
one that shows that the words and the context of the verses of the Qur'an do
not allow us to include commercial/business loans in the scope these verses.
In the absence of this evidence
there is no basis for us to restrict the application of the related verses to a
particular kind of loan.This evidence becomes even more indispensible when we
see that in Al-Room 30: 39, the
Qur'an has explicitly referred to the fact that people, during the times when
the Qur'an was revealed, used to give commercial and business loans and charge
interest on such loans. The Qur'an says:
And whatever interest bearing
loans you give away so that it increases in the wealth of others, it does not
increase in the eyes of God. And whatever Zaka'h
you give away to earn the pleasure of God, these are the people that are sure
to get an increment.
The words: “…interest bearing
loans you give away so that it increases in the wealth of others”, is an
adequate evidence to the effect that in the days of the revelation of the
Qur'an financial loans were given for commercial and business purposes besides
personal/non-commercial purposes. Thus, in the presence of the above verse and
in the absence of either of the two evidences mentioned above, my answer to the
second question is: the prohibition of Riba
applies to all kinds of loans whether taken for personal/non-business usage or
for commercial purposes. The word “Riba”
and the implication of the verses of the Qur'an in which this word is used
also applies to the commercial and productive loans advanced by the banking and
financial institutions and to the interest charged thereon.
20th
March 1999