Riba

Introduction:

Riba- A definition:

Riba means Interest. Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin. Simply, unjust gains in trade or business, generally through exploitation. There are two types of riba discussed by Islamic jurists: an increase in capital without any services provided and risktaking, which is prohibited by the Qur'an, and commodity exchanges in unequal quantities, prohibited in the Sunnah. The word was linguistically used by the Arabs prior to Islam to refer to an increase. In commercial practice, it referred to the increase on loans, namely, interest. The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." When currencies of base metal were first introduced in the Islamic world, paying a debt in a higher number of units of this fiat money was not considered riba; jurists were concerned with the real value of money (determined by weight only) rather than its numerical value.

Rationale Behind the Prohibition of Riba:

1- Riba requires taking the other's money for nothing. For example, one who takes two Dirhams in cash or credit for one, he receives one Dirham for nothing. Then, money is badly need for one's need and it has great inviolability for the Prophetic Hadith that reads. "A person's wealth is as sacred (inviolable) as his blood". Thus, it becomes Haram to take one's wealth for nothing.

2- Allah, The Exalted, has prohibited Riba since it may lead one to be jobless, i.e. prevents one from working to earn money. In other words, a rich person can get more money through Riba and this makes him earn livelihood easily without any effort that is needed in trade, industry or work in general. So, this practice (i.e. Riba) will deny so many benefits from reaching people, and it is well-known that the public interest depends on trade, industry, and other forms of business.

3- Riba prevents people from giving money as a good loan, which constitutes one of the...