Concept of Riba and its

Modes in Classical and

Contemporary world
Presented By :
Nazakat Hussain
Junaid Munawar
Musanif Shah
 Concept of Riba

• RIBA is any earning, income, profit or benefits being earned, taken or

received through wrong means, bad intentions, shady practices or wicked
participation.
• Riba is not only treated as immoral, unjust filthy but furthermore threat to
Socio economic life of society.
• Riba leads to crimes of various nature, through Cruelty, Humiliation,
Exploitation, Self- importance, Discrimination, Power, Lust Selfishness,
Greed and self-esteem.
 Concept of Riba
• Riba is as a combination of evil and sins.
• Riba is bad practice to earn & gain.
• Riba bring instability in the community life.
• Riba is the source for the increase of inflation.
• Riba create classes in the society.
• Riba create injustice in seeking the rights.
• Riba is non transparent economic activity.
• Riba is the most hated practice in Islam.
• Riba is a social crime.
 HOLY QURAN AL-BAQARAH 2:275-6
• People who indulge in Riba shall be raised like those who have been Driven to madness
by the touch of Devil.
• That is because they say that Riba-based transaction is just like trading, while Allah has
permitted trade and prohibited Riba.
• Hence those who have received the warning from Allah and have stop accordingly, may
have what has already passed, their case being entrust to Allah but those who revert to
Riba-based dealings, shall be the inhabitants of the hell-fire and abide therein for ever.
• (You must know that) Allah deprives Riba from all blessings and blesses charity; He
loves not any ungrateful sinners.
 AL-BAQARAH 2:278-79
• O you believers! Fear Allah and give up Riba that remains outstanding if
you are true believers.
• Watch out! If you do not obey this directive, then Allah declares war
against you from Himself and from His Prophet.
• But, if you give up your outstanding Riba, then you can claim your
principals. Neither should you cause harm with Riba to others, nor should
others harm you.
 HADIATH REINFORCE CONCEPT OF
QURANIC RIBA
• Prophet Muhammad (PBUH) Said At the last Pilgrimage, All Riba of
Jahilliya is null and void. In this respect, the first Riba I (PBUH) withdraw
that the borrowers owe to my uncle Abbas; it is cancelled completely.
(Muslim)
• The Prophet (PBUH) cursed all those who take Riba, who give Riba, who
write a Riba contract and the two witnesses to a Riba contract. He
(PBUH) further said: "They are all alike (in fault).“ (Muslim 2995)
 RIBA IN FINANCIAL AFFAIRS
• Riba must be eliminated from the financial transactions.
• No thing is more horrific as compared to Riba that Islam has prohibited.
• Nothing is more dreadful than Riba, is remains in widespread threatening socio
economic activities in both theory and practice.
• Riba convert financing system into lending system that make the money as a
commodity and owner of the wealth, a seller and user of the same as buyer.
• Riba does not justify money to be a medium of exchange and brings the love of
money instead of respect for the money.
 Classical Mode of Riba
• In Classical Mode there are two types of Riba
Riba Duyun
• Unjustified increment in money lent whether in kind or cash over and above the
principal amount.
Sub Types of Riba Duyun
Riba Qard Increase (interest) on the principal sum of the loan is agreed upon at
the point of contract
Riba Jahiliyyah Increase levied on the borrower for late repayment or failure to
repay the financial loan
 Classical Mode of Riba
Riba Buyu
• Occurs in trading and exchange transactions in which unequal exchange
of certain commodities (gold, silver, dates, etc.) of same kind and same
basis.
Sub Types of Riba Buyu
Riba Fadl Due to unequal amount/quantity
Riba Nasi`ah Due to extension of time of delivery
 Hadith prohibiting Riba-al-Fadl
• Holy Prophet (SA) said 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.
 Contemporary Mode of Riba
• In contemporary mode there are different types of Riba
• Commercial interest (Tijarti sood) interest paid on loan taken for
productive and profitable purpose.
• Usury(sari sood) interest paid on loan taken for personal need and
expenses
• Simple interest (Sood e Mufrad)
• Compound interest (sood e Murakkab)
 Contemporary Mode of Riba
• Bai surf
• Short selling (qabl as qabza or sale before permission )
• Bai al Dain
• Bai al kali bil kali
• Bai al inna