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15 ::::::::::: Ar Riba, Rethinking in Islam, by Abdul Kareem Asri
18 ::::::::::::::::: A Letter to Council of Islamic Ideology, Pakistan
26 ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: PRESS RELEASE
TWO DAYS ULAMA WORKSOP ON THE SUBJECT OF
26 :::::::::::::::::::::::::::::::::::::::::::::::::: RIBA AND ISLAMIC BANKING
29 :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: Riba And Its Implications

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29 :::::::::::::::::::::::: By: Dr. M. Umer Chapra, Research Adviser

29 ........................................................................... Islamic Research And Training Institute

29 .................................................................................. Islamic Development Bank, Jeddah.

The two of them (the bank & customer) are accustomed

33 :::::::::::::::::::::::::::::::::: to exchanging such favours mutually.
Unless the two of them (the bank & customer) are accustomed to exchanging
33 ........................................................................................................... such favours mutually.

“There is no riba except in nasi’ah”, Increase or

decrease on capital amount and time value is not defined
34 ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: here.
“The benefit derived form any loan is one of the different
34 ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: aspects of riba”.
This hadith is mawquf, implying that it is not necessarily from the prophet; it
could be an explanation provided by fadalah, a companion of the prophet, peace
34 ......................................................................................... and blessings of god be on him.

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Ar Riba, Rethinking in Islam, by Abdul Kareem Asri

A Letter to Council of Islamic Ideology, Pakistan

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A Letter to Council of Islamic Ideology, Pakistan

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PRESS RELEASE
TWO DAYS ULAMA WORKSOP ON THE SUBJECT OF RIBA AND
ISLAMIC BANKING

Council of Islamic Ideology organized a two day Ulama Workshop on the

subject of ”Riba and Islamic Banking”, in which renowned Ulamas from all
shades and Schools of Thought participated. The object of the workshop is to
identify all the theoretical and practical issues and then the organization of a
follow up conference to evolve a consensus of Ulamas on this issue. The issues
like the definition of Riba, Interest, reservations of economists and banking
experts, and the identification of those agreements and institutions which use
and employee Riba were discussed. Mufti Abdul Majeed Din Puri, Maulana
Zahid-ur-Rashdi, Maulana Ahmad Ali Siddique, Professor Dr. Shakil Auj,
Mufit Bilal, Maulana Shabbir Hussain Lakhani, Mufti Zahid Athri, Abdul
Karim Asri (Abdul Kareem Asri), Dr. Muhammad Farooq Khan, Hafiz
Zulfiqar Ali, Mufti ghulam Qadir, Iftikhar-ul-Hassan mian, Qazi Abdul
Muqtadir, Maulana Raghib Naeemi, Allama Hafiz Riaz Hussain, Munir Ahmad,
Dr. Hussnul Amin and Members of the Council Dr. Mohsin Muzaffar Naqvi,
Maulana Abdullah Khilji, Maulana Muahmmad Kahn Shirani, Maulana Abdul
Fateh Muhammad Yousaf, Maulana Saeed Ahmad Gujrati, Dr. Rashid Ahmed
Jalandhri and Dr. Sabiha Qadri and others participated in the conference.

In his inaugural address Chairman, Council of Islamic ideology, Dr.

Muhammad Khalid Masud said that under its efforts to harmonize the economic
laws of the country in accordance with the Quran and Sunnah, the Council has
published report on Interest Free Banking in 1980, report on Islamic System of
Insurance in June, 1992 and report: Islam and Current Economic Issues in June,
2007 and once again the Council is providing a platform to Ulamas and
intellectuals by organizing this two day workshop to review the intellectual and
practical progress regarding Riba and interest.

In the second session ulama discussed the issue of Riba and Objectives of
Sharia in this regard. Dr. Farooq Khan said that the real cause of prohibition of
Riba is injustice, exploitation and the social unevenness on the basis of wealth.
Dr. Mohsin Muzaffar Naqvi described in detail the opinion of Ibn Aashoor on
Riba and Objectives of Shariah. Maulana Syed Hussain Lakhani said that while
understanding the interest based system we need to understand the importance,
nature and value of currency notes and in this regard the buying power should
also be brought under consideration. Maulana Raghib Naeemi said that in the
modern period the fluctuation in the value of currency needs more discussion.

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Dr. Shakeel Auj said that in the Quran where the word Riba is used, there the
words Zakat and Sadaqah have also appeared in contrast, which indicates that
specific form of Riba is prohibited which is based on injustice and exploitation.
Mufti Bilal said that interest has been declared as prohibited and trade as
permissible in the Quran, therefore, the basis of the Islamic Banking is trade.

On the second day of the workshop the Ulama and experts had discussion
on Shariah agreements as a mode of finance used in Islamic banking and the
laws requiring amendments for the removal of Riba. The representative of Al-
Meezan Bank, Mr. Ahmed Ali Siddiqui said that in more than 60 countries
institutions of modern Islamic banking are working whose positive effects have
started to appear.

Moreover, the agreements applied in these banks are based on the Islamic
principles of Mudarba, Musharka, Murabha. Mufti Abdul Majeed Dinpuri said
that the Council should review the objections raised in the review petitions
remanded to FST by the Shariah Apellate Bench of the Supreme Court.
Moulana Shabbir Lakhani said that the banks should provide its agreements and
other instruments to depositors and clients in Urdu language. Prof. Dr. Shakil
Auj said Musharka, Murabha and Mudaraba agreements need to be discussed
again in the light of Quran and Sunnah. Mufti Zahid said that the issue of
implementation of the instruments and agreements of Islamic Bank relates to
Audit, therefore, audit should be transparent.

Mr. Atiquzzafar said tat mutual consent of the parties to the agreement is
an integral element in Islam, therefore the terms and conditions should be
clearly provided to the investors by the Islamic banks.

It was recommended that the investors should be told by the Islamic

banks that under which Shairah agreement their money is being invested. It was
also proposed that the banking personnel should formally be trained in Islamic
banking. It was also stressed that rules of running business taught by Islam
should be included in the curriculum and government should launch Islamic
takaful institutions.

Maulana Muhammad Khan Shirani, the chief guest of the final session
said that it was heartening to see the Ulamas of all schools of thought sitting
together and hearing each other to solve the issue of Riba. He also stressed that
distinction between Bai and trade should also be discussed and he said that it
was necessary to work in the milieu of mutual understanding.

The Chairman Council of Islamic Ideology, Dr. Muhammad Khalid

Masud bestowed shields to the speakers and discussants.

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(Syed Nasir Raza Zaidi)

Director General (Research)

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Riba And Its Implications

By: Dr. M. Umer Chapra, Research Adviser
Islamic Research And Training Institute
Islamic Development Bank, Jeddah.

RIBA AND ITS IMPLICATIONS

By
DR. M. UMER CHAPRA
RESEARCH ADVISER
ISLAMIC RESEARCH AND TRAINING INSTITUTE
INSTITUT E
ISLAMIC DEVELOPMENT BANK
JEDDAH.

PROHIBITION OF RIBA IN
ISLAM
1. FIVE QUESTIONS THAT THIS COURSE WILL TRY
TO ANSWER
– DOES RIBA INCLUDE INTEREST, AND IS INTEREST
REALLY PROHIBITED BY ISLAM?
– WHAT IS THE RATIONALE BEHIND THE
PROHIBITION OF INTEREST?
– IS THERE A FEASIBLE ALTERNATIVE TO INTEREST?
WHAT ARE THE DIFFICULTIES AND RISKS
ASSOCIATED WITH THE INTRODUCTION OF A NEW
SYSTEM OF FINANCIAL INTERMEDIATION AND
HOW CAN THESE BE MANAGED?
– HOW WILL MONETARY POLICY BE MANAGED
WITHOUT INTEREST?
– WHAT HAVE WE ACCOMPLISHED SO FAR?

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2. THE PRIMARY OBJECTIVE OF ISLAM IN THIS

WORLD
– THE OBJECTIVE IS DETERMINED BY THE
WORLDVIEW
– THE WORLDVIEW OF ISLAM
– THE PRIMARY OBJECTIVE OF ISLAM: TO BE A
BLESSING FOR MANKIND BY ENSURING THE WELL-
BEING OF ALL HUMAN BEINGS.
(107 :‫و أرك إ ر    )ا! ء‬
‫* )( ا'&ح‬
– ALL THE SOCIAL, ECONOMIC AND POLITICAL
SYSTEMS OF A SOCIETY NEED TO BE ORGANIZED
IN SUCH A WAY THAT THE WELL-BEING OF ALL IS
ENSURED, THE FINANCIAL SYSTEM CANNOT BE AN
EXCEPTION.

3. HOW TO ENSURE THE WELL-BEING OF ALL?

– THERE ARE A NUMBER OF WAYS OF ENSURING WELL-

BEING.
– THE MOST IMPORT OF THESE IT JUSTICE
– THE PLACE OF JUSTICE IN ISLAM
‫ا ن‬
( 25 :&‫"! اب واان  م اس   )ا‬# $‫و  أر ر ت وأ‬
( 8: -.‫ا ه ا*ب  ى ) ا‬,‫ا‬
/&0
1# ‫ت &م ا‬2 3‫ن ا‬45 3‫ ا ا‬6‫ا‬
‫ون‬7 8‫ا‬
‫ب "ان‬9# 3‫ان ا‬

– THE WORLDVIEW OF THE WESTERN WORLD LEADS TO

THE EMPHASIS ON LIBERTY A ND FREEDOM: WHY ?
– THE WORLDVIEW OF ISLAM LEADS TO THE EMPHASIS
ON JUSTICE: WHY?
– THE EMPHASIS ON JUSTICE DOES NOT REDUCE THE
IMPORTA NCE OF FREEDOM. IT IS ALSO INDISPENSA BLE

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4. IS INTEREST REALLY PROHIBITED IN ISLAM?

A. AL-QUR’ A N:
FOUR REVELATIONS HAVE PROHIBITED RIBA :
i. SURAH AL-RUM (30:39)
ii. SURAH AL- NISA ’ (4:161)
iii. SURAH AL-‘ IMRA N (3: 130- 2)
iv. SURAH AL- BAQARAH (2:1275- 281)

5. AL-QUR’AN

$‫! *ا إ‬$B C‫ ذ‬،F‫ ا‬8# ‫ن‬:;‫< ا‬:9& ‫ن إ@ آ & م ا>ي‬# & @ ‫آن ا‬B& 8&>‫)ا‬
( 275 :‫م ا( )ا ة‬0‫ و‬G‫ ا‬H‫ ا‬I0‫ ا وأ‬IJ# G‫ا‬

“ THOSE WHO BENEFIT FROM INTEREST SHALL BE RAISED

ON THE DAY OF JUDGMENT LIKE THOSE WHO HAVE BEEN
DRIVEN TO MADNESS BY THE TOUCH OF THE DEVIL; THIS
IS BECA USE THEY SAY: “ TRADE IS LIKE INTEREST” , WHILE
GOD HAS PERMITTED TRADE A ND FORBIDDEN INTEREST:
(2:275).

‫ا‬$‫ذ‬5 ‫"ا‬M6  ‫ن‬45 ،8#N# ‫ ا إن آ‬8# L  # ‫ وذروا‬H‫ ا ا‬6‫ا ا‬# 8&>‫) & أ&! ا‬
‫ و‬278 : ‫ن( )ا ة‬36 @‫ن و‬36 @ ‫ا‬#‫ رؤوس أ‬5 6 ‫ ور< وإن‬H‫ ا‬8# ‫ب‬
( 279

O BELIEVERS! FEAR GOD, A ND GIVE UP THE INTEREST

THA T REMA INS OUTSTA NDING, IF Y OU ARE BELIEVERS
(2:278).

IF Y OU DO NOT DO SO, THEN BE AWARE OF BEING A T WAR

WITH GOD A ND HIS MESSENGER. BUT IF YOU
Y OU REPENT, Y OU
CA N HAVE Y OUR PRINC IPAL. NEITHER SHOULD YOU
Y OU
COMMIT INJ USTICE, NOR SHOULD Y OU BE SUBJECTED TO
IT. (2:279)

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6. HADITH

H‫ ا‬RQU H‫ رل ا‬8" ‫< و‬, H‫ ا‬RU H‫*لرل ا‬:‫ل‬Q* <, R"6 H‫ ا‬RS‫ ر‬T 8,‫و‬
‫>ي‬#‫ وا‬# -‫و *ل وه اء)روا‬،<&‫ه‬W ‫< و‬6‫آ< وآ‬# ‫ ا و‬I‫< و آ‬,
( -# R5 0‫وا‬
THE PROPHET, PEACE A ND BLESSINGS OF GOD BE ON
HIM, CURSED THE RECEIVER A ND THE PAYER OF
INTEREST, THE ONE WHO RECORDS THE TRA NSACTION,
AND THE TWO WITNESSES, A ND SAID: “ THEY ARE ALL
ALIKE [IN GUILT]. (REPORTED BY MUSLIM FROM JABIR;
ALSO TIRMIDHI A ND MUSNA D AHMAD).

<‫آ‬B& ‫ )دره ر‬: ‫< و‬, H‫ ا‬LU H‫ *ل رل ا‬:‫ *ل‬،1.X‫ ا‬IY ،130 8 H‫ا‬, 8,‫و‬
R:* ‫ ودار‬0‫ أ‬-‫( روا‬1$‫ ز‬8[X[‫ و‬1 8# W‫ أ‬، "& ‫ وه‬IT‫ا‬

THE PROPHET, PEACE A ND BLESSINGS OF GOD BE ON HIM,

SAID: “ A DIRHAM OF RIBA WHICH A PERSON RECEIVES
KNOWINGLY IS WORSE THA N COMMITTING A DULTERY
THIRTY-SIX TIMES (REPORTED BY AHMA D A ND
DARAQUTNI FROM A BDALLA H IBN HA NZA LAH).

‫ اس‬L,86B) :‫< و *ل‬Q, H‫ ا‬LU H‫ رل ا‬8, <, L"6 H‫ ا‬RS‫ ه&ة ر‬R‫ أ‬8,‫و‬
R.‫ وأ داود وا‬0‫ أ‬-‫( روا‬-‫ر‬Y 8# <U‫ن  &آ< أ‬45 ‫ ا‬I‫ إ@ أآ‬0‫ أ‬L & @ ‫ن‬#‫ز‬
<T# 8‫وا‬

THE PROPHET, PEACE A ND BLESSINGS OF GOD BE ON

HIM, SA ID: “ THERE WILL COME A TIME FOR MA NKIND
WHEN EVERY
EVERYONE ONE WILL TA KE RIBA , A ND IF HE DOES NOT
DO SO, ITS DUST WILL REA CH HIM. (REPORTED BY A BU
DAWUD A ND IBN MAJAH FROM A BU HURAYRAH).

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The two of them (the bank & customer) are accustomed to

exchanging such favours mutually.
7. WHAT IS RIBA ?

– LITERARY MEANING OR EXPANSION

– INCREASE OR ADDITION15QS@‫ اوا‬-‫ ) ا&ذ‬AND
GROWTH OR EXPANSION‫) ا او اء‬

TECHNICAL MEANING
A PREDETERMINED INCREASE AS A CONDITION FOR THE
LOAN, IRRESPECTIVE OF WHETHER THE INCREMENT IS
SMALL OR BIG.

 ‫< و إذا أ*ض‬, H‫ ا‬LU H‫ *لرل ا‬:‫< *ل‬, L"6 H‫ ا‬RS‫ ر‬C# 8 F$‫ أ‬8,
< ‫ى‬T ‫&آ! إ@ أن &ن‬X5 1‫ دا‬L, <0 ‫ أو‬،! & X5 ً _ <‫هى إ‬B5 ً S* ‫آ‬0‫أ‬
(< R5 R !‫ ا‬-‫ )روا‬C‫ ذ‬I* <‫و‬

WHEN A NY ONE OF Y OU GRA NTS A LOA N A ND THE

BORROWER OFFERS HIM A DISH [OF FOOD], HE SHOULD
NOT ACCEPTED IT; A ND IF HE OFFERS HIM A RISE ON A N
ANIMA L, HE SHOULD NOT RIDE, UNLESS THE TWO OF THEM
ARE ACCUSTOMED TO EXCHA NGING SUCH FAVOURS
MUTUA LLY (REPORTED BY AL- BAYHAQI IN HIS SUNA N
FROM A NAS IBN MALIK)

Unless the two of them (the bank & customer) are

accustomed to exchanging such favours mutually.

8. ISLAM IS NOT ALONE IN CONDEMNING

INTEREST
– HINDUISM
– JUDAISM
– CHRISTIANITY
– A NUMBER OF PHILOSOPHERS AND SCHOLARS

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“There is no riba except in nasi’ah”, Increase or decrease on capital

amount and time value is not defined here.
9. RIBA AL-NASI’AH

<U R5 ‫ري‬9‫ ا‬-‫( روا‬1`‫ ا‬R5 @‫ )@ ر إ‬:‫< و *ل‬, H‫ ا‬LU R‫ أن ا‬1#‫ أ‬8,

“ THERE IS NO RIBA EXCEPT IN NASI’A H” (REPORTED BY

AL-BUKHA RI FROM USAMAH IBN ZAYD)

<T‫! و‬5 1"M# T ‫ *ض‬I‫ )آ‬:‫< *ل‬$‫ أ‬، ‫< و‬, H‫ ا‬LU R‫ ا‬a0U ،, 8 1b5 8,
R !‫ ا‬8 ،‫*ف‬# (‫ ا‬-T‫ و‬8#

“ THE BENEFIT DERIVED FORM A NY LOA N IS ONE OF THE

DIFFERENT ASPECTS OF RIBA ” (REPORTED BY AL-
BUY HA QI FROM FA DALA H IBN ‘ UHAY D(. THIS HA DITH IS
BUYHA
MAWQUF, IMPLYING THA T IT IS NOT NECESSARILY
FROM THE PROPHET; IT COULD BE A N EXPLA NA TION
PROVIDED BY FA DALA H, A COMPA NION OF THE
PROPHET, PEACE A ND BLESSINGS OF GOD BE ON HIM.

“The benefit derived form any loan is one of the different aspects of
riba”.
This hadith is mawquf, implying that it is not necessarily from the
prophet; it could be an explanation provided by fadalah, a
companion of the prophet, peace and blessings of god be on him.
10. RIBA AL-FADL

‫هي‬B5،1,MW <7e GMW 8#}:‫ل‬QQ* ‫< و‬, H‫ ا‬RU R‫ ا‬8, <, H‫ ا‬RS‫ ر‬1##‫ أ‬R‫ أ‬8,‫و‬
8# ‫ ل‬# -‫ إد‬R5‫و‬،‫ وأ داود‬0‫ أ‬-‫ أاب ا{ روا‬8# ً3, ً R6‫  أ‬5،! 5،1&‫< ه‬
861 *‫ ر‬172‫ب ا ص‬،‫آب غ اام آب اع‬

FROM ABŪ UMAMA H: THE PROPHET, PEACE BE ON HIM,

SAID: “ WHOEVER MA KES A RECOMMENDA TION FOR HIS
BROTHER A ND ACCEPTS A GIFT OFFERED BY HIM HAS
ENTERED RIBĀ THROUGH ONE OF ITS LARGE GA TES.”
(BUIŪ GH AL- MARĀ M, KITĀ B AL- BUY Ū‘ , BĀ B AL-RIBĀ ,
REPORTED ON THE A UTHORITY OF A HMAD A ND ABŪ
DĀW Ū D)

4‫آ ا"ل ج‬،{‫ ر‬I‫ ا‬8Y}:‫ل‬QQ * ‫ و‬R, H‫ ا‬RU R‫ ا‬8, T 8, F$‫ أ‬8,
G#Qn‫ ا‬R5 R_‫وا‬R !‫ ا‬-‫روا‬،R$QJ‫ ا‬ImM‫ا‬،R$J‫اب ا‬،‫ آب اع‬398 *‫ ر‬45‫ص‬،
8Y 1‫آ‬،om‫ا‬

FROM A NAS IBN M ĀLIK: THE PROPHET, PEACE BE ON HIM,

SAID: “ DECEIVING A MUSTARSAL [A N UNKNOW ING
ENTRA NT INTO THE MARKET] IS RIBĀ . ( SUYŪ TI, AL-JĀ MI‘
AL-SAGHĪ R, UNDER THE WORD GHA BN; KA NZ AL-‘ UMMĀL,
KITĀ B AL-BUY Ū‘ , AL-BĀ B AL- THĀ NĪ, AL- FASL AL- THĀ NĪ, ON
THE A UTHORITY OF SUNA N AL- BAYHAQĪ)

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I‫ آ‬pT‫ } ا‬:‫*ل‬، QQ‫< و‬Q, H‫ ا‬RU R‫ ا‬8, R5‫ أو‬R‫ أ‬8 H‫ ا‬, 8,
RQ5 R$X "‫ ا‬n0 8‫ا‬، (a_) 395 *‫ ر‬42‫ص‬، 4‫"ن{آ ا"ل ج‬# ‫ر‬
1‫آ‬،oQm‫ ا‬G#Qn‫ ا‬R5 R_‫ ؛ وا‬pn‫ب ا‬Q،‫آب اع‬،‫ اري‬q5
Q‫ ا‬RQ5 R$‫ا‬:‫ ؛ وآ ا"ل؛ وا‬pT‫ا‬

FROM ‘ABDALLAH IBN ABĪ AWFĀ: THE PROPHET,

PEACE BE ON HIM, SAID: “A NĀ JISH [ONE WHO
SERVES AS AN AGENT TO BID UP THE PRICE IN
AN AUCTION] IS A CURSED TAKER OF RIBĀ.”
(CITED BY IBN HAJAR AL-‘ASQALĀNĪ IN HIS
COMMENTARY ON AL- BUKHĀRĪ CALLED FATH
AL-BĀRĪ, KIT Ā B AL-BUYŪ‘, BĀ B AL-NAJSH; ALSO
IN SUYŪ TI, AL-JĀMI‘ AL- SAGHĪ R, UNDER THE
WORD AL-NĀ JISH AND KANZ AL--‘UMMĀL, OP.
CIT., BOTH ON THE AUTHORITY OF TABARĀNĪ’S
AL-KABĪR)

‫"ا‬6 @ ] : Q‫< و‬, H‫ ا‬LU H‫ *ل رل ا‬:‫ *ل‬،
#m‫ ا‬8 ‫دة‬, 8,‫و‬
، ‫ وا‬،"Q; "Q;‫ وا‬،ُQ ُ‫ وا‬،1bM 1bM‫ وا‬،a‫ >ه‬a‫ا>ه‬
،‫ف‬QUe‫ ا‬->‫
ه‬QM7‫ذا ا‬4Q5 ،Q ‫ًا‬Q& ،‫ اء اء‬،IJ X
ً J# ،q q‫وا‬
، 81 *‫ ر‬، 1211 ‫ ص‬، 3‫ ج‬. # -‫ روا‬.[Q ‫ًا‬Q& ‫` إذا آن‬W v‫"ا آ‬5
. ‫>ي‬QQ#‫ ا‬-‫اً؛ وروا‬Q $ ‫رق‬Q a‫ ا>ه‬G‫ف و‬m‫ ب ا‬، ‫آب ا*ة‬

FROM ‘UBĀDAH IBN AL-SĀMIT: THE PROPHET,

PEACE BE ON HIM, 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.” (MUSLIM, KIT Ā B AL-
MUSĀ QĀ T, BĀB AL-SARFI WA BAY‘I AL-DHAHABI
BI AL-WARAQI NAQDAN; ALSO IN TIRMIDHĪ

Page 35 of 35