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RIBA - AS I UNDERSTAND
Riba mean usury (interest on money lending.)
Quran prohibits charging more than the money lent.
The question is where arises the necessity of lending/borrowing of money?
Generally speaking the necessity of Lending, borrowing, leasing and hiring arise in case of business or in case of helping a needy one.
Now, in which case the lending of money with interest is prohibited?
Quran has not expressly stated the purpose of lending but by
giving description of the debtor (2:280) and clarifying that earning through trading is different, it appears that the discussion relate to lending for helping a desperate one.
Looking into the Book of Allah with reference to the context, we find that the word usury is interwoven in the following verses of Quran: -
[2:270] Any charity you give, or a charitable pledge you fulfil, GOD is fully aware thereof. As for the wicked, they will have no helpers.
[2:271] If you declare your charities, they are still good. But if you keep them anonymous, and give them to the poor, it is better for you, and remits more of your sins. GOD is fully cognizant of everything you do.
[2:272] You are not responsible for guiding anyone. GOD is the only one who guides whoever chooses (to be guided). Any charity you give is for your own good. Any charity you give shall be for the sake of GOD. Any charity you give will be repaid to you, without the least injustice.
[2:273] Charity shall go to the poor who are suffering in the cause of GOD, and cannot emigrate. The unaware may think that they are rich, due to their dignity. But you can recognize them by certain signs; they never beg from the people persistently. Whatever charity you give, GOD is fully aware thereof.
[2:274] Those who give to charity night and day, secretly and publicly, receive their recompense from their Lord; they will have nothing to fear, nor will they grieve.
[2:275] Those who charge usury are in the same position as those controlled by the devil's influence. This is because they claim that usury is the same as commerce. However, GOD permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgement rests with GOD. As for those who persist in usury, they incur Hell, wherein they abide forever.
[2:276] GOD condemns usury, and blesses charities. GOD dislikes every disbeliever, guilty.
[2:277] Those who believe and lead a righteous life, and observe the Prayers (Salat), and give the obligatory charity (Zakat), they receive their recompense from their Lord; they will have nothing to fear, nor will they grieve.
[2:278] O you who believe, you shall observe GOD and refrain from all kinds of usury, if you are believers.
[2:279] If you do not, then expect a war from GOD and His messenger. But if you repent, you may keep your capitals, without inflicting injustice, or incurring injustice.
[2:280] if the debtor is unable to pay, wait for a better time. If you give up the loan as a charity, it would be better for you, if you only knew.
[2:281] Beware of the day when you are returned to GOD and every soul is paid for everything it had done, without the least injustice.
[30:38] Therefore, you shall give the relatives their rightful share (of charity), as well as the poor, and the travelling alien.
This is better for those who sincerely seek God's pleasure; they are the winners.
[30:39] the usury that is practiced to increase some people's wealth, does not gain anything at GOD. But if you give to charity, seeking GOD's pleasure, these are the ones who receive their reward manifold.
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It may be noted that usury has been contrasted with Charity and the subject discussed, at length, in these verses is Charity. Riba appears to have been mentioned as an alternative of charity.
Study of these verses of Quran, read together, shows without an iota of doubt that the best thing with Allah is to help the needy ones by way of Charity but if for valid reasons, one cannot afford to part with his wealth, the least he should do is to help the needy ones by giving money on loan without interest. He would do still better to allow sufficient time or give up the loan as a charity if the debtor is unable to pay (2:280). This according to Quran is obligatory and who ever refrain from it is the companion of Fire.
One thing, which makes the issue clear, is that the debtor spoken of in the network of these verses of Quran is not a businessman. According to Quran he is the one who may not be able to re-pay the loan and loan may have to be written off by way of Charity. Obviously these verses of Quran have nothing to do with lending and borrowing of money for commercial use. While prohibiting usury Allah has excluded from it the field of trading. (2:275)
The irony of fate is that the obligation of helping the poor by lending money without interest has been intermingled with the economic system at large and the very purpose of verse 271-281 of Sura Baqarah and 38-39 of Sura Rum, for keeping alive, at all levels, an interest free package of loans for the poor has been set aside.
In their fervour to purify economic system, and keep alive the institution of Banking the experts have diverted us to the rigmarole of Profit and Loss and have thereby engulfed the scheme of interest free loans, ordered by Allah. This is war against Allah and His Messenger.
I am of the opinion that for the improvement of our economic system we may do whatever we have to within, of course, the framework of fair business, but whatever our economic status in the society we must be prepared to give interest free loan to the needy ones.
Riba free loan, as I understand, is the alternative of Charity, so that, charity failing the other door of help remains open for the survival of the needy ones. It has nothing to do with the commercial loans.
Allah knows better.
With regards
Muhammad Latif Chaudhery