Riba, Interest and Inflationary Adjustment ??? Is riba the same as modern day interest? Does not riba mean the "inordinate" exploitation of a person? Like a person lends $100 and just wants $10 each month for an unspecified period of time which when totaled may be many times the original. Also if I 'lend' a bag of rice to someone and at the end of the year want a bag of rice, same quantity and quality, that seems to be justified. But if I lend, say the money for a bag of rice, then at the end of the year the chances are that while I may get the same quantity of money back yet because of inflation the quality will not be there, hence the interest or the increase because of the increase in the cost of living. Please comment on this. Reply Riba' refers to a fixed increment, related to time, on a lent amount. If this is what modern day interest is, which I think it is, then obviously there is no difference between the two. It is quite clear from the Qur'an that the riba' which was forbidden was not only that which was demanded on loans of personal use but also that which was demanded on loans of commercial use. In surah Al-Room 30: 39, the Qur'an says: Whatever you give of riba' bearing loans, so that your amount increases in the wealth of others does not increase in the sight of Allah, but whatever you give away in charity, seeking Allah's pleasure, these are the people who shall truly enjoy increments. This verse quite clearly implies that the loans given (on which riba' was demanded) among the Arabs of the times when the Qur'an was revealed included commercial and business loans. As the words: "so that your amount increases in the wealth of others" clearly indicate that the loans referred to in this verse were business and commercial loans. In view of the above argument, in my opinion, riba' on all types of loans was prohibited by the Qur'an. If a person demands his principal amount in real terms, that is if he demands the same purchasing power which he had initially lent, such adjustment shall not fall under the head of riba', and would therefore, not be prohibited. It would be fully justified and allowed to make inflationary adjustments to the amount lent. Thus, if I have lent $100 at a time when 5 bags of "A" quality rice could be purchased by this amount, I shall be fully justified in demanding $115 if the price of 5 bags of the same quality of rice has risen to $115. Such an adjustment, as stated earlier, does not come under the folds of riba'. I hope this helps. Regards The Learner