بِسْم الله الرحمن الرحيم
ربا linguistically means "increase"
In Islamic Jurisprudence, it means "Interest"; which is an increase in particular things - and is divided into two categories:
ربا النسيئة - Delay Usury
This refers to conditional excess for delay in payment, and is the more commonly known one, where people borrow money from the bank, loan institutions, or individuals. They give you money and charge you in excess for the service they provide.
ربا الفضل - Excess Usury
This refers to the selling of an item for another of the same type on the spot, but in excess.
رباء النسيئة - Delay Usury
This is further divided into two types:
1) Increasing the debt on the insolvent person (by way of an interest rate)
This is the origin of Riba which used to occur during the Pre-Islamic Days of Ignorance. It's when a person owes another person a sum of money which has to be paid at a certain time, so during the time of paying back, the creditor gives the debtor the option to either pay back the money or allow him more time in return for an interest on the borrowed sum.
Allah has prohibited such kinds of dealings, ordering us in [2:280]:
This verse signifies that if the time of payment is due and the debtor is unable to fulfill it, it is impermissible for the creditor to increase it - rather, he should give him a grace period. When you deal with other people with ease, Allah will put بركة in your wealth.
Imagine how life would be if we didn't have the Qur'an and Sunnah, to guide us through every single step in life. And we need to implement this knowledge in our lives, not just merely study.
2) The Interest taken from selling goods of the same type but in excess.
E.g. Selling gold for gold, dates for dates, silver for silver, wheat for wheat, etc.
It includes selling any type of these items for the same on credit and whatever shares these items in the property of ربا الفضل:
ربا الفضل - Excess Usury
1) This refers to the selling of an item for another of the same type but in excess.
The Prophet ﷺ dictated that this kind of transaction is prohibited in 6 items:
1) Gold
2) Silver
3) Wheat
4) Barley
5) Salt
6) Dates
The Prophet ﷺ said:
Gold
You have gold on either side which differs in quantity or weight. You give 1kg of Gold and receive 1.2kg. This is when it becomes Haraam.
The prohibiton applies to all its types: be it 21 carats, 18 carats, whether it's coined, or in the form of jewelry, etc.
In the Middle East and particularly in Saudi, you are allowed to sell your used gold, and they'll hand you the cash without asking you if you are going to buy from them or not - because they know it's Haraam.
Silver
The Scholars uniformly agree on the prohibiton of selling an item as a payment for another unless both are equal. And the same ruling applies to other things which share the same cause of judgement
However, Scholars differ with regards to the setting of the cause of judgement. The soundest view is that the common property in money is its value. Other similar types are to be valued according to the value of money, regardless if it's silver coins or paper money.
On this basis - if you have 100 Riyals, and you want change, you give it to one and he can give you 50 and 50, a hundred ones, etc. He won't give you 98 Riyals, but 100 in different forms.
However Ibn Uthaymeen is of the view that the value of the money differs depending on if it's in paper or silver form. In those days, where public phones were used (and needed coins to work), getting coins was difficult. There were businessman who would change a 10 Riyal note to coins for you, provided that you pay them 1 Riyal extra. So if you wanted to change 100 riyals, you'll get 95 back in change from them. And it would have been difficult to change it somewhere yourself. So It was due to this he issued this Fatwa.
As for the cause of judgement for the rest of the six items listed above, it's either measured, weighed, and edible.
Does the same ruling apply to whatever share their properties? Yes. Such transactions are prohibited and are condemned as Riba unless there is equality in measurement and weight.
2) Furthermore, if the items share the same cause of judgement but differ in type (such as wheat and barley) it is prohibited to delay payment; it must be made on the spot. However the weight and measurement can differ - I may give you 2kg of barley and receive 1.5kg of wheat.
Evidence: The Prophet ﷺ said, "...If these classes differ, then sell as you wish if payment is made hand to hand..." [Muslim and Dawud]
The same applies to Silver and Gold.
3) If you have Gold or Silver and wish to exchange it for an edible item like wheat, flour, rice, lentils, it is alright for you to give 1kg of Silver, and receive 100kg's of Wheat and you're allowed to delay the payment as well. This is what we deal with in transactions at present.
Many people have deals with a nearby grocery shop where they buy the merchandise and the shopkeeper records each purchase, but pay for it all at the end of every month. This is acceptable.
4) Since items will not be equal when their legal criterion (of measurement or weight) is different - it's impermissible to sell an item that can be measured or weighed randomly for another of the same type.
E.g. He wants three containers of your dates in exchange for his. Instead of him doing the same with his dates, he just randomly scoops it up with his hands. This is prohibited because one doesn't guarantee that both items are equal.
5) The same rulings that apply to Gold and Silver should be applied to Money Exchange nowadays. This is because they share the same property; being of value and can be measured.
If an amount of money is exchanged for another of the same type (A Dollar for a Dollar, Riyals for Riyals) both exchanged items must be equal in value and exchanged on the spot.
However, if an amount of money is exchanged for another which differs in type (Dollars for Riyals), we exchange the items according to their value - because the rate differs, snd both parties (the buyer and seller) must be present at the time as well as it taking place on the spot.
6) From among Riba is العنة, where a person buys a commodity on credit then sells it in cash to the same person at a lesser price. It's a pretext for gaining Riba.
If you need cash badly, it's allowed for you to go to a car-dealer and buy it. After you have it in your name, you can re-sell it to anyone who buys it, although you owe the car-dealer the money in installments. Some Scholars have their reservations on this however.
The Prophet ﷺ said:
7) Avoiding Riba can be very difficult, that's why we're sitting here and learning. Therefore, whoever isn't able to know these rulings should ask people of knowledge. It's not permissible for one to undertake a transaction except with being certain that it doesn't involve Riba.
It's also impermissible to imitate others in any kind of transactions, without considering it first, especially nowadays - when no one cares about how they attain wealth; be it illegally or legally.
The Prophet ﷺ said:
There are many Riba based transactions which take place nowadays. It's so common now, it's become the norm.
And Allah says, in [2:278-280]:
Imagine if Allah declares a war against you. Can you fight Allah? We are such cowards, that if someone starts banging on the door at night, we freak out. And then we want to deal with Riba, and fight Allah and His Messenger ﷺ? How do we expect to handle it?
This verse comprises of many indications and threats:
1) "يأيها الذين آمنوا" and "إن كُنتُم مؤمنين" -> which indicates that it's not proper for a believer, who believes in Allah and His Messenger ﷺ, to deal in Riba.
2) "اتقوا الله" -> which implies that those who deal in Riba don't fear Allah. If they really feared Allah the way they should, they wouldn't be dealing with it.
3) "و ذروا ما بقي من الربوا" -> This is a divine prohibition which obligates refraining from Riba. Thus the one who deals with it is disobeying the command of Allah.
4) "فإن لم تفعلوا فأذنوا بحرب من الله و رسوله" -> Those who deal in Riba should come to know that they're indeed waging war against Allah and His Messenger ﷺ.
5) "و إن تبتم فلكم رؤوس أموالكم لا تظلمون و لا تظلمون" -> Allah addresses the person who deals in Riba as a wrongdoer.
At the same time, as a concluding note:
Allah said in [28:27]:
And Allah said in [2:201-202]:
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