The document discusses the Islamic concept of riba (interest/usury). It defines riba as an additional premium that must be paid along with the principal amount of a loan. There are two main types of riba - riba al-nasiah, which is interest on delayed loans, and riba al-fadl, which is interest due to an unequal exchange of goods. The Quran prohibits riba in four separate revelations, and the Prophet strongly condemned taking, giving or facilitating riba transactions. The key difference between Islamic profit and interest/riba is that profit is from an exchange of goods or services, while interest produces more money without any exchange, which is prohibited.
The document discusses the Islamic concept of riba (interest/usury). It defines riba as an additional premium that must be paid along with the principal amount of a loan. There are two main types of riba - riba al-nasiah, which is interest on delayed loans, and riba al-fadl, which is interest due to an unequal exchange of goods. The Quran prohibits riba in four separate revelations, and the Prophet strongly condemned taking, giving or facilitating riba transactions. The key difference between Islamic profit and interest/riba is that profit is from an exchange of goods or services, while interest produces more money without any exchange, which is prohibited.
The document discusses the Islamic concept of riba (interest/usury). It defines riba as an additional premium that must be paid along with the principal amount of a loan. There are two main types of riba - riba al-nasiah, which is interest on delayed loans, and riba al-fadl, which is interest due to an unequal exchange of goods. The Quran prohibits riba in four separate revelations, and the Prophet strongly condemned taking, giving or facilitating riba transactions. The key difference between Islamic profit and interest/riba is that profit is from an exchange of goods or services, while interest produces more money without any exchange, which is prohibited.
The document discusses the Islamic concept of riba (interest/usury). It defines riba as an additional premium that must be paid along with the principal amount of a loan. There are two main types of riba - riba al-nasiah, which is interest on delayed loans, and riba al-fadl, which is interest due to an unequal exchange of goods. The Quran prohibits riba in four separate revelations, and the Prophet strongly condemned taking, giving or facilitating riba transactions. The key difference between Islamic profit and interest/riba is that profit is from an exchange of goods or services, while interest produces more money without any exchange, which is prohibited.
THE PROHIBITION OF RIBA TYPE OF RIBA CONSUMPTION AND PRODUCTION LOAN
THE MEANING OF RIBA
Riba literally means increase, addition, expansion
or growth. It is, however, not every increase or growth which has been prohibited by Islam. In the Shari'a, riba technically refers to the "premium" that must be paid by the borrower to the lender along with the ' principal amount as a condition for the loan or for an extension in its maturity. In this sense, riba has the same meaning and import as interest in accordance with the consensus of all the fuqaha' (jurists) without any exception. The term riba is, however, used in the Shari'a in two senses. The first is riba al-nasi' a and the second is riba al-fadl.
THE PROHIBITION OF RIBA..cont..
The prohibition of riba appears in the Qur'an in four different
revelations
Thefirst of these (III:39), in Makka, emphasized that while interest
deprived wealth of God's blessings, charity raised it manifold. The second (III:161), in the early Madina period, severely disapproved of it, in line with its prohibition in thepreviousscriptures.It placed those who took riba in juxtaposition withthosewho wrongfully appropriated other people's property and threatened both with severe punishment from God. The third revelation (III:1302), around the second or third year after Hijra, enjoined Muslims to keep away from riba if they desired their own welfare (in the comprehensive Islamic sense). The fourth revelation(11:27581),near thecompletion of theProphet's mission, severely censured those who take riba,established a cleardistinction between trade and riba, and required Muslims toannul all outstanding riba, instructing them to take only the principal amount, and forego even this in case of the borrower's hardship.
THE PROHIBITION OF RIBA
The Prophet, peace be upon him, also
condemned, in the most unambiguous words not only those who take riba, but also those who give riba and those who record the transaction or act as witnesses to it. He even equated the taking of riba to committing adultery thirty-six times or being guilty of incest with one's own mother
TYPE OF RIBA
AL-BUYU {Involve exchange of ribawi
products: ie: money (gold, silver) and staple foods} AL-FADL (different in quantity or size) AL-NASIAH (postpone, defer, or wait; ie: not immediate)
AL-DAIN (Loan and repayment)
AL-QARD (promise with certain benefit or extra amount as a term of payment of the loan) AL-JAHILIYYAH (Extra charge to the loanee when he/she cannot pay on time)
HISTORY OF RIBA
It was prohibited since Pharaohs time
During Babylon 12% of interest was charged by banks Plato (ancient Greek) wrote it is illegal for a person to charge interest on the loan given to his friend-money cannot make money Roman time: Originally interest is prohibited, later it was allowed to charge interest not more than 12% Riba was prohibited Among Jews; but not to others In Christian: Originally interest is clearly prohibited until 13 th century. After Industrial revolution through Napoleon Civil Law (1804) and 1808 interest was allowed up to 5% in the civil case and 6% for business. More than that considered as criminal offence. Law of Italy restricted up to 5% based on agreed upon by the two parties. During Jahiliyyah time interest charged between 40 to 100%. To some extent their wives and daughters became prostitute because of the riba. Because of riba many Arab run to desert became gangster and robber.
DIFFERENCES BTW. PROFIT AND INTEREST
Purpose of business is seeking for profit
through selling a product with a price exceeding the cost. (Exchange process of a product with another product or product with money = mubadalah) Surplus money will be charged 2.5% as a zakat (depend upon haul and nisab) Bank can reinvest deposit money with permission by the depositors Interests are prohibited in Islam Interest all the time based on self-centered
ISSUES ABOUT INTEREST
REASON FOR INTEREST
Debtors are at risk Creditors make profit with the money Capital a productive things Future value of money