ربا Riba, is the Arabic term for the prohibition of interest on money. Taking, paying or witnessing Riba transactions is considered impermissible (Haram).
Riba is commonly translated as usury or interest. Translating a technical term is a difficult issue. Already the translation of interest in English and the German word for it “Zins” is challenging; it needs to be looked into different cases: it could be used in German as synonym for return on equity (Eigenkapitalverzinsung), as the internal rate of return (Interne Zinsfußmethode), in some economic models for profit on assets (Güterzins) and even for monthly payments of rent for flats (Mietzins) besides a more defined word for interest paid for money lent (Geldzins). Considering these two closely related languages like German and English, it gets clear that we need to review the proper meaning of the Arabic word “Riba” in the classical sources to receive a proper and precise understanding of this key term.
The Quran was not sent at once in came over a period of 22 years in multiple revelations; the first relevation regarding Riba is those of Sura Al Rum (30), verse 39:
“That which you give as Riba to increase the peoples wealth increases not with God; but what you give in charity, seeking the goodwill of Good, multiplies manifold.”
Riba lexically means “increase” and has therefore a different ethymological root than in English or other European languages. This verse is giving more an advise than an abolition in the sense that taking money on money, does not increase with God, but giving money to charity does increase with God.
“And for their taking Riba even though it was forbidden for them, and their wrongful appropriation of other peoples’ property, We have prepared for those among them who reject faith a grievous punishment.” – Second revelation, Sura Al Nisa (4), verse 161.
A verse which is more directed to the Jews and Christians which received prior to the Muslims the abolition of Riba (Hebrew “Ribbit”).
“O believers, take not doubled and redoubled Riba, and fear God so that you may prosper. Fear the fire which has been prepared for those who reject faith, and obey God and the Prophet so that you may receive mercy.” – Third relevation, Sura Al Imran (3), 130-2
This verse is directed towards the practice of a prolonged credit with an increase of the principal; which is called Riba Al Jahiliyya.
“Those who benefit from Riba shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say: ‘Trade is like Riba’ while God has permitted trade and forbidden Riba. Hence those who have received the admonition from their Lord and desist, may have what has already passed, their case being entrusted to God; but those who revert shall be inhabitants of the fire and abide therein for ever.” Sura Al Baqarah (2) verse 275
The verses after 2:275 elaborating further on the subject and ending with a war declaration from Allah and his messenger for those who still go on taking Riba. This verses are the strictest against this practice to be found in the Quran.
The other important primary source are the sayings of the prophet (pbuh) which are authenticated by scholars with a chain of known reliable persons transmitting them.
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt – like for like, equal for equal and hand to hand. If the commodities differ, then you may sell as you wish, provided that the exchange is hand to hand.”
Based on these saying an increase in money is abolished even without passage of time; the six commodities were used as money. The contractual implication are the conditions of simultaneity and equality. An increase without passage of time is referred to as Riba Al Fadl in the literature.
“From Anas Ibn Malik: The Prophet, peace be upon him, said: ‘When one of you grants a loan and the borrower offers a ride on an animal, he should not ride, unless the two of them have been previously accustomed to exchanging such favors mutually.”
The above saying refers to Riba Al Nasiah, which occurs when there is delay in closing a transaction in any of two types from the six commodities mentioned before, whether there is an increase or profit or not. The exchange is permitted, however, if one type is currency and one type is not. According to this saying the amount of Riba is not subject of the conditions, even gifts should be avoided. And therefore the commentaries of the Quran agree that Riba is forbidden, whether is small or high.
A working definition could be as follows:
“Riba is named any increase in money to be paid regardless time based on contracts about money itself (loan).”
It is credential to understand that the term “Riba” has its own genuine meaning derived from those sources and that interest has different roots and usage. Islamic law basically differentiates between profit, interest and rent, which in most European languages are differently used. From the Islamic perspective this distinction is crucial. One argument to bear in mind is that the increase (riba) in money enables the vicious circle of indebtment; while the Islamic ruling should prevent this from being happen without hampering trade.
It shall be noted that the abolition of Riba is known in Judaism and Christianity as well and named in Hebrew “Ribbit” with the same linguistic meaning like in Arabic:
XXIII, 19-20 Book of Deuteronomy: “You must not lend on interest to your brother, whether the loan be of money or food or anything else that may earn interest.”
Also the new testament shows similar content like the Quran:
Luke VI: 34-35: “And if you lend to those from whom you hope to receive, what thanks can you expect? Even sinners lend to sinners to get back the same amount. Instead, love your enemies and do good, and lend without any hope of return. You will have a great reward, and you will be sons of the Most High, for he himself is kind to the ungrateful and the wicked.”