MODERN FORMS OF RIBA

BY MIR MURTAZA

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INTRODUCTION

The Riba (interest) is prohibited in Islam

Dictionary Meaning :
Every increase against which there is no exchange or consideration

Hadith :

Every loan which brings a gain is a Riba based loan

Brief discussion about prevailing modern forms of Riba.

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BANK SAVING ACCOUNT

Saving account allows you to keep money in a safe place.

In return earn interest monthly (pre-determined rate)

Acquiring interest from such accounts is Riba.

Banks invest the deposited money in prohibited trasactions.

By lending money at higher interest rate.

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CHARGES ON CREDIT CARD

Allows you to borrow and spend upto credit limit.

Monthly, pay bill of what you had spent

Failing to pay bill will make you liable to pay interest.

This payment of extra amount on bill is Riba

This interest keeps on increaing multiples of time.

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FIXED DEPOSIT

Type of bank savings or investment account.

Fixed interest rate

Investor can't withdraw the amount for a fixed period.

It is clear form of Riba

With an additional condition of non withdrawal for a fixed period.

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PRIZE BONDS

Type of bond issued by government

People purchase bonds at a low price

After draws, winner gets a prize of huge amount.

Winner gets prize of a higher amount against a low priced bond.

The extra amount got by winner is Riba

Qimar- Gambling is also present in prize bonds.

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NATIONAL SAVINGS SCHEME

Government issues certificates of different dominations.

For example, a person buys a domination of Rs.100,000/-

And it will become Rs.105,000/-, Rs.111,000/-, Rs.118,000/-,

Rs.126,000/-, Rs.135,000/-, Rs.145,000/-, Rs.157,000/-,
Rs.171,000/-, Rs.187,000/- and Rs.207,000/-

On completion of 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 years, respectively

The increase in deposited money is Riba.

The exchange of money is accompanied with a raise/increase

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HOUSE MORTGAGE

It is large, interest based loan for purchase of house or real estate

It has period of more than 5 years.

Interest is accrued monthly

After payment, ownership is transferred.

This loan is explicitly Riba.

The lender/bank only finances the house or property.

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INSURANCE

A contract by which a person or company receives financial

security or reimbursements, when calamity or loss occurs

The insured pays periodical amounts or premiums to the insurer.

If a loss occurs, the insured gets higher amount than paid

The payment of more/extra amount is Riba.

Exchange of money should be equivalent.

Insurance also involves Gharar-uncerntainity

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CONCLUSION

Some modern forms are discussed.

Many more forms disguised under different names/shapes.

Muslims have to remain vigilant.

Consult authentic ulema and Darul Iftas

Ask help from Allah, without His help, it is not possible to be safe
from any sin

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