An attempt to understand the true import of a Quranic term
By Zafarul-Islam Khan
This paper was first published in Islam & Modern Age, Dr Zakir Husain Institute of Islamic Studies, Jamia Millia Islamia, New Delhi, November 2025
Riba, rather “the Riba” (al-Riba), is an Islāmic term about which there is much confusion because in recent times “interest” or “profit” offered by modern financial institutions has been equated with the Riba. In the Subcontinent, Sood and Biyaj too are equated with Riba though both are different from Riba as will be clear from the discussion below. By using “Al” (the Arabic definite article), the Qurān (2:275) has limited Riba to certain commercial transactions, in cash or in kind, which were in vogue in Arabia at the time of the advent of Islam.
Riba in the Quran: “The Riba” is explained in the Qur’ān that it is a “doubled and multiplied” charge on a loan (3:130). The Quran further explains that Riba is an attempt “to devour people’s wealth by false pretence” (4:161) which includes payment or acceptance of bribe (2:188, 4:29).
The āyah prohibiting the Riba was among the last āyahs of the Quran revealed to the Prophet (pbuh) and he, according to Caliph ‘Umar, died before explaining it (Ibn Kathīr 1/335f).
Riba practiced by the Arabs: Arabs did not know “Riba” transactions in which a rate of usury was fixed at the outset. Instead, one loaned an amount of money or commodity or sold goods worth a certain agreed value on the understanding that the debtor/buyer will pay/return the loan after an agreed period of time without any addition to the agreed amount. No addition was paid or demanded if the debtor paid back the due sum at the end of the agreed term. But, if he failed, the creditor allowed him a relaxation for a further agreed period on the condition that the due amount is raised, usually doubled (Ṭabarī 4/59; Jaṣṣāṣ 2/47). Another form of raising the original loan in kind was that the debtor had to pay back a one-year old camel or sheep or the like at the end of the agreed term, but to get relaxation for a further period, he was forced to agree to pay back a two-year old camel and so on. This is the doubled and multiplied Riba mentioned in the Quran (3:130) (Ṭabarī 3/67, 4/59; Qurṭubī 4/202). Arabs knew only this kind of Riba and this is the Riba that was abolished by the Prophet (Qurṭubī 3/356).
When a loan transaction become Riba? A loan transaction became “the Riba” when the creditor/owner of the capital unilaterally raised the amount of the loan at the end of the agreed grace period due to the inability of the debtor to pay back in time (Ṭabarī 3/69; 6/17). There is no issue if the increase was agreed at the time of concluding the transaction (Ṭabarī 3/69).
This form of “the Riba” was practiced by some people of Quraysh and Thaqīf tribes (Ibn Kathīr 1/336). One of the main practitioners was the Prophet’s uncle Al-‘Abbās whose earnings of the Riba were specifically abolished by the Prophet in his last sermon at the time of the Conquest of Makkah (Ibn Hisham 1/603; Ṭabarī 3/72) but the original loaned capital was spared and the debtor had to return it to the lender (2:279).
Riba on loans in kind: The other form of the prohibited “Riba” is to lend certain specified goods in kind on the condition that same will be returned to the lender by increasing weight, e.g., one and a half or two raṭls for a loan of one raṭl. The following six goods have been specified in the ḥadīth for this kind of prohibited transaction: (1) gold for gold, (2) silver for silver, (3) barley for barley, (4) wheat for wheat, (5) dates for dates and (6) salt for salt. Riba has been prohibited in only these six items (Sayyid Sābiq, Fiqh al-Sunnah, 931). Any increase in the returnable loan of these six goods is Riba while an increase in other items is not Riba (ibid., 932). But if one kind of goods is exchanged by another kind of goods like wheat for barley or silver for gold, there is no issue and no question of Riba arises (Qurṭubī 3/347-350). In such non-Riba transactions, the quantity of the goods to be returned has to be fixed at the outset and it cannot be increased later in the case of the failure of the debtor to return the loan in time. Moreover, a debtor in distress must be given grace time to return the loan (2:280).
Reverse Riba: A form of reverse Riba, which too is prohibited, is for a creditor to tell the debtor to pay back his loan before the agreed time and deduct a sum from the loan (Jaṣṣāṣ 1/566). It is also prohibited that someone should pay a fine while returning a merchandise (Ibn Kathīr 1/490).
Bribery and gambling too are Riba: Bribery is prohibited because it is devouring people’s wealth by unfair means, bāṭil (2:188, 4:29, 4:161, 9:34). Gambling too is prohibited for the same reason (2:219). Trading of something known with something unknown is also prohibited, like trading in unharvested seed products or unplucked fruits or agricultural produce which is still in its ears because their actual yield is unknown at the time of the transaction (Ibn Kathīr 1/335). Such transactions are now called “future trading” when a produce is sold and bought before the actual weight of the produce is known or even before a produce is ready. This is a form of gambling which is prohibited in Islam.
Islam prohibits exploitation: The reason for prohibition of such transactions is to prevent exploitation of people in need. On the other hand, any trade mutually agreed between two parties is lawful (2:275, 4:29). The Qur’ān further says, “Allāh has permitted trade and forbidden Riba” (2:275). Trade (tijārah) by mutual agreement is allowed without any restriction (4:29) and there is “no blame if one can earn one thousand dirhams using one dirham” (Ṭabarī 5/20).
Doubtful application of the term: The issue of “Riba” has been complicated in recent times by extending it to transactions which do not fall under its prohibited specifications, viz., one-sided raising of the amount of the loan in the case of the failure of the debtor to repay a loan, in cash or kind, which is a clear exploitation of a debtor’s adverse situation. Moreover, the application of the term of “Riba” on bank “interest” fails to take into account the fact that banks do not seek or take loans from account holders, and also because account holders enjoy no power to force banks to agree to a certain required rate, let alone raise it.
The modern scourge of inflation: This doubtful application of the term of “Riba” to certain modern transactions also does not take into account the reality of inflation in modern economies as a result of the introduction of fiat (paper) money of no intrinsic value of its own and which could be printed at will by every government in the wake of America’s unilateral abolition in 1973 of the gold standard as cover for printing paper money. Today, inflation continuously lowers the value of deposited money which is not adequately compensated by the interest paid by banks. Inflation was unknown to the old-world economies when prices were set in gold and silver and remained static for centuries. This is not the case today. The interest or profit paid by banks, which fluctuates and is entirely decided by banks, hardly compensates the depositors for the loss they suffer due to inflation over any period of time.
Duty of jurists to come with a reasonable and practical solution: Our jurists and scholars and fiqh academies should study these issues and come up with practical solutions. The following book, though old now, should be helpful in this reappraisal: Iqbal Ahmad Khan Suhail, What is Riba?, ed. Zafarul-Islam Khan, repr. 2005, New Delhi, Pharos (a translation of Riba Keya Hai? originally published in 1936). Urdu and Arabic editions of this book are also available from Pharos.
Sources cited:
The Holy Quran
Ibn Hisham = Ibn Hishām, Al-Sīrah Al‑Nabawīyah, ed. Muṣṭafā Al-Saqqā et. al., Cairo, Maktabah Musṭafā Al-Bābī Al‑Ḥalabī, 1955 (in two volumes)
Ibn Kathīr = Ibn Kathīr, ‘Umdah al-Tafsīr, Mukhtaṣar Tafsīr al‑Qur’ān al-‘Aẓīm, ed. Aḥmad Shākir, Cairo, Dār al-Wafā’, 2nd ed., 2005.
Iqbal Ahmad Khan Suhail, What is Riba?, ed. Zafarul-Islam Khan, repr. 2005, New Delhi, Pharos (a translation of Riba Keya Hai? originally published in 1936; also available in Urdu and Arabic from the same publisher)
Jaṣṣāṣ = Aḥmad ibn ‘Alī Al-Rāzī al-Jaṣṣāṣ, Aḥkām al-Qur’ān, ed. ‘Abd al-Salām Muḥammad ‘Alī Shāhīn, Dār al-Kutub al-‘Ilmīyah, Beirut, ed. 3, 2007
Qurṭubī = Qurṭubī: Muḥammad ibn Aḥmad al-Anṣārī al‑Qurṭubī, Al-Jāmi‘ li aḥkām al Qur’ān, Cairo, Dār Al-Kutub al-Miṣrīyyah, 2nd ed., 1353H/1935
Sayyid Sābiq, Fiqh al-Sunnah, Al-Fatḥ li’l-i‘lām al-‘Arabī, Cairo, 2004.
Ṭabarī = Ṭabarī: Ibn Jarīr Al-Ṭabarī, Jāmi‘ al-Bayān fī Tafsīr al-Qur’ān, Beirut, Dar al-Ma‘rifah 1980 (offset ed. of Būlāq 1327 AH). Also used online edition: http://Quran.ksu.edu.sa/tafseer/tabary/sura9-aya3.html
The author studied in Indian madrasas, Al-Azhar and Cairo universities and earned his PhD in Islamic Studies from the University of Manchester in 1987. He is the author and translator of over 50 books in Arabic, English and Urdu. His latest work is The Glorious Quran, an English translation and commentary on the Holy Qur’ān.
Comments