Riba In Islam: Halal or Haram?

Historically speaking, most societies have taken a strong stand against riba (usury). Some ancient civilizations were known to be usurious and have developed rather sophisticated ways of dealing with it; some of these practices are still used today. Ironically, they are also supported by the same arguments. For instance, riba is simply charging access
interests for the act of lending. The individuals who wanted to gain this lazy income have said, “If it is excessive then it is wrong!” By playing on the word “excessive” and diluting its original definition, they were fabricated by inspiration. This practice is cited in the Quran:

The act of charging extra for the use of money, or any commodity, without the existence of a real transaction (where the exchange is based on a real barter of different commodities and its related skills), is considered a nominal fictitious transaction, or riba.
Employing time-value over money to justify profit is considered lazy profit, or nominal productivity, which is forbidden.
Thus, in Islam, and all Abrahamic religions, riba is forbidden. Societies also prohibit it; equating its criminality to murder! That is why prophet Mohammad (PBUH) said, “The sanctity of believers dem (literally blood or life) is as sacred as the sanctity of his mal (money, wealth or possessions).” We even find amongst the ancient Romans similar notions. “And what do you think of usury?”, Cato has said,”What do you think of murder?”.

Riba is forbidden based on clear narrations in the Quran and Sunnah. Even so, there is still a notion that there may be a way around it, which makes Islamic scholars continue to educate the public on its sin and criminality against real economic productivity. Riba, as Muslim scholars have pointed out, is destructive to relationships. Many divorces take place because of financial stress. Let us look into the reasons behind anxiety and personal stress. Modern day stress is likely related to paying bills and dues. In fact, nothing puts more pressure on personal finances than an overdue credit card or home mortgage. Almost all bankruptcies and foreclosures are directly related to the effects of usury. Not to mention the rat race, where the majority of people have to carry on with their lives holding two jobs, stuck in traffic, and only seeing their families for a short period of time, if at all. This is the leading cause of divorces, suicides, and extra-marital affairs. All the non-violent and violent crimes are directly related to the hidden unrelenting pressures to keep paying more, and anxieties about rising rates, where all the variable lines of credit will go up. Auto loans, student loans, liens, and garnishments are also clearly related to creating usurious transactions, making them fake nominal productivity. Mental illness is on the rise, one factor being the fast-growing urban development and modern living that local governments, school districts, and individuals cannot afford without being forced to borrow and pay higher taxes. It is this debt pressure that adds to everyone’s stress; insanity in a box of financial entanglement.

Once the door is open for lazy money and lending for interests, the wealthy will have little to no incentive to invest in real brick and mortar transactions. The rich will look for many different ways to achieve capital preservation and growth; mostly related to debt financing based on paper pushing, and backed by paper growth that hopes to eventually become real. Simply, it is trading papers like two kids exchanging trading cards with one of them calling it an investment, and the other calling it a job; another sign of insanity.
Jobs created are nominally productive because they are cleaner, preferred, socially acceptable, and desired. No one wants that hard under-the-sun, or inside-a-factory tool-carrying, or even robot-repairing job! New skills have to be developed to feed new grads based on more jobs related to nominal production. Therefore, new trade treaties have to be negotiated to find that source of lazy money. Unproductive economies shift further to nominal paper money jobs while investments are fleeing to easy exploitative economies; insanity at best. Health wise, people have to join a gym or a yoga studio to move! They have to be educated on how to burn all this excess caloric intake because we move less; insane!

Because we have to create growth to be sustainable, money supply is skyrocketing with no collateral insight. Metaphorically this is called printing fiat money, and prices are increasing where inflation may get out of control (Remember, money is supposed to represent value backed by either a precious metal or strong, productive economy). One way to control inflation and uncontrollable employment is by introducing less money and eventually raising rates to slow it down. Doing the opposite and hoping for an equitable equilibrium somewhere is another sign of insanity.

This is all due to excitement over Riba! A cycle of self-destruction is created once capital and jobs become lazy. In Islam, a transaction has to be productive and creative. Open free markets are a must for transactions to exchange real property, skills, and introduce new ideas and products. Regulations and initiatives have to clearly encourage real transactions by providing incentives and support, also known as service sectors. This is to sustain real productivity as well as discourage any economic exploitation of capital use and labor abuse. We also have to provide necessary laws to prohibit child labor, protect the weak from being victimized, and define victimless crimes as real victim crimes, prostitution being a prime example. Islam sees Riba as a tool of exploitation, monopoly, and unnecessary treasury where money is not employed for its original three purposes: real spending (not waste), real savings to protect and help, and real investments to preserve growth and create jobs.

Islam encourages philanthropy and all acts of the non-profit transaction to sustain real productivity and creativity.

This is done by encouraging donations and supporting socially beneficial initiatives such as education, health, environment, and ecology for non-profit. This achieves introducing more people to the workforce as well as caring for the weak. Meaning, there is no need to borrow money or reverse mortgages to care for the needy and the elderly if real production is the foundation of an economy.

In short, Riba is a real source of destruction to societies and real value. It destroys all sorts of relationships, exploits the weak and needy, and concentrates wealth in fewer hands. Riba builds an unhealthy foundation for the wealthy to be lazy by seeking mostly nominal transactions; Riba is true insanity to the human race. Hence, when we read this verse in the Quran, we understand and realize the destructive nature of Riba versus the productive nature of real transactions:

“Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. This is because they say: “Trading is only like Riba (usury),” whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the Fire – they will abide therein.”
[ Quran 2:275]

“And so it is that against every Prophet We have set up the evil ones from among men and jinn, some of them inspire others with specious speech only by way of delusion. Had it been your Lord’s will, they would not have done it. Leave them alone to fabricate what they will.”
[ Quran 6:112]

The act of charging extra for the use of money, or any commodity, without the existence of a real transaction (where the exchange is based on a real barter of different commodities and its related skills), is considered a nominal fictitious transaction, or riba.
Employing time-value over money to justify profit is considered lazy profit, or nominal productivity, which is forbidden.
Thus, in Islam, and all Abrahamic religions, riba is forbidden. Societies also prohibit it; equating its criminality to murder! That is why prophet Mohammad (PBUH) said, “The sanctity of believers dem (literally blood or life) is as sacred as the sanctity of his mal (money, wealth or possessions).” We even find amongst the ancient Romans similar notions. “And what do you think of usury?”, Cato has said,”What do you think of murder?”.

Riba is forbidden based on clear narrations in the Quran and Sunnah. Even so, there is still a notion that there may be a way around it, which makes Islamic scholars continue to educate the public on its sin and criminality against real economic productivity. Riba, as Muslim scholars have pointed out, is destructive to relationships. Many divorces take place because of financial stress. Let us look into the reasons behind anxiety and personal stress. Modern day stress is likely related to paying bills and dues. In fact, nothing puts more pressure on personal finances than an overdue credit card or home mortgage. Almost all bankruptcies and foreclosures are directly related to the effects of usury. Not to mention the rat race, where the majority of people have to carry on with their lives holding two jobs, stuck in traffic, and only seeing their families for a short period of time, if at all. This is the leading cause of divorces, suicides, and extra-marital affairs. All the non-violent and violent crimes are directly related to the hidden unrelenting pressures to keep paying more, and anxieties about rising rates, where all the variable lines of credit will go up. Auto loans, student loans, liens, and garnishments are also clearly related to creating usurious transactions, making them fake nominal productivity. Mental illness is on the rise, one factor being the fast-growing urban development and modern living that local governments, school districts, and individuals cannot afford without being forced to borrow and pay higher taxes. It is this debt pressure that adds to everyone’s stress; insanity in a box of financial entanglement.

Once the door is open for lazy money and lending for interests, the wealthy will have little to no incentive to invest in real brick and mortar transactions. The rich will look for many different ways to achieve capital preservation and growth; mostly related to debt financing based on paper pushing, and backed by paper growth that hopes to eventually become real. Simply, it is trading papers like two kids exchanging trading cards with one of them calling it an investment, and the other calling it a job; another sign of insanity.
Jobs created are nominally productive because they are cleaner, preferred, socially acceptable, and desired. No one wants that hard under-the-sun, or inside-a-factory tool-carrying, or even robot-repairing job! New skills have to be developed to feed new grads based on more jobs related to nominal production. Therefore, new trade treaties have to be negotiated to find that source of lazy money. Unproductive economies shift further to nominal paper money jobs while investments are fleeing to easy exploitative economies; insanity at best. Health wise, people have to join a gym or a yoga studio to move! They have to be educated on how to burn all this excess caloric intake because we move less; insane!

Because we have to create growth to be sustainable, money supply is skyrocketing with no collateral insight. Metaphorically this is called printing fiat money, and prices are increasing where inflation may get out of control (Remember, money is supposed to represent value backed by either a precious metal or strong, productive economy). One way to control inflation and uncontrollable employment is by introducing less money and eventually raising rates to slow it down. Doing the opposite and hoping for an equitable equilibrium somewhere is another sign of insanity.

This is all due to excitement over Riba! A cycle of self-destruction is created once capital and jobs become lazy. In Islam, a transaction has to be productive and creative. Open free markets are a must for transactions to exchange real property, skills, and introduce new ideas and products. Regulations and initiatives have to clearly encourage real transactions by providing incentives and support, also known as service sectors. This is to sustain real productivity as well as discourage any economic exploitation of capital use and labor abuse. We also have to provide necessary laws to prohibit child labor, protect the weak from being victimized, and define victimless crimes as real victim crimes, prostitution being a prime example. Islam sees Riba as a tool of exploitation, monopoly, and unnecessary treasury where money is not employed for its original three purposes: real spending (not waste), real savings to protect and help, and real investments to preserve growth and create jobs.

Islam encourages philanthropy and all acts of the non-profit transaction to sustain real productivity and creativity.

This is done by encouraging donations and supporting socially beneficial initiatives such as education, health, environment, and ecology for non-profit. This achieves introducing more people to the workforce as well as caring for the weak. Meaning, there is no need to borrow money or reverse mortgages to care for the needy and the elderly if real production is the foundation of an economy.

In short, Riba is a real source of destruction to societies and real value. It destroys all sorts of relationships, exploits the weak and needy, and concentrates wealth in fewer hands. Riba builds an unhealthy foundation for the wealthy to be lazy by seeking mostly nominal transactions; Riba is true insanity to the human race. Hence, when we read this verse in the Quran, we understand and realize the destructive nature of Riba versus the productive nature of real transactions:

“Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. This is because they say: “Trading is only like Riba (usury),” whereas Allah has permitted trading and forbidden Riba (usury). So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the Fire – they will abide therein.”
[ Quran 2:275]