Poll: Are Usury and Interest the same thing?

[Rachel84]

 

[Nabeel]

Usury

"1. the lending or practice of lending money at an exorbitant interest.

2. an exorbitant amount or rate of interest, especially in excess of the legal rate. "

http://dictionary.reference.com/browse/usury


Interest

"14. Finance.
a. a sum paid or charged for the use of money or for borrowing money.
b. such a sum expressed as a percentage of money borrowed to be paid over a given period, usually one year. "

http://dictionary.reference.com/browse/interest

[Arman]

Salamun Alaikum.

The Arabic term ?RIBA? literally translates to ?increase? or ?excess?. In Quran?s verses the term has been used with negative connotation. So, a proper translation would be ?(unfair) increase?. It does not translate to ?interest? ? which has a separate Arabic term for it ? ?FAIDA?.

Per my humble and straight forward understanding - any "excess/increase" charged in a transaction exploiting the vulnerabilities of the counterparty is potentially a RIBA. In a loan transaction when the vulnerability of the borrower is exploited to charge him high interest - it will be RIBA. But if both borrower and lender agree in advance in full satisfaction without any pressure or constraint about the terms of a loan (including any interest, i.e. increased payment to offset inflation, cost of credit etc.) and document it with adequate witness and stick to it fairly - I do not see any "improper excess"/ RIBA in it. However, When dealing with a person in financial difficulty (see verse 2:280) we should postpone any charge of interest / profit ? till his situation normalizes. And it is always best for us if we perform charity.

Dr. Ahmad Shafaat has performed a thorough analysis of the term and discussed in detailed what type of interest should be considered RIBA here:

http://www.islamicperspectives.com/RibaIntro.htm.

I believe, the article of Dr. Shafaat has done quite a thorough job in analyzing the relevant verses of Qur'an on RIBA. He also went a long way to look deep into the Islamic Secondary Sources to investigate where and how the misconceptions peeped up.  However, while I agree with Dr. Safaat on what type of interest may be considered as RIBA ? I believe in a broader understanding of the term. Per my understanding RIBA does not necessarily has to be limited to loan transaction only. Any form of cheating or exploiting or profiteering which violates the fair trade norms becomes a RIBA. For example, cheating an easygoing customer by charging exorbitant price is a form of RIBA; creating a monopoly by restricting competition to overcharge the customers becomes RIBA; trading shares in the market with insider information also should be considered RIBA! The way our traditional scholars have interpreted RIBA to be synonymous as interest (which it is not) appears to me as a "harmful oversimplification" that takes our eyes away from many other areas where RIBA can exist.
Let?s use the term ?unfair access return? in translating Al-Quran 2:275-2:280 to see how they read:

(2:275)   Those who consume (unfair) increase cannot stand except standing like the one whom devil made to flounce from the touch. That is because they say, ?Only a transaction (Arabic: bai-a) is like (unfair) increase? ? while Allah has legitimized transaction but prohibited (unfair) increase. Then whoever - to whom came an instruction from his Master; so he ceased ? then for him whatever has (already) occurred and his command is with Allah. But whoever goes back - then they are the ones ? the companions of the fire; they will be in there permanently.

(2:276)   Allah wipes off (unfair) increase and increases charities (Arabic: sadakah). And Allah does not love any (faith) repressing sinner.

(2:277)   Indeed those who believe and act appropriately and established salaat and gave zakaat ? for them - their reward is with their Master, and they don?t have any fear, nor will they grieve.

(2:278)   O! Those who have believed - be conscious of Allah, and leave what remained of unfair increase if you happen to be believers!

(2:279)   Then if you don?t - so be called for a war from Allah and His messenger; but if you repent then the capital is for you. Do not wrong and you will not be wronged.

(2:280)   And if it happens to be one in difficulty then postponement until ease. But that you (perform) charity, it is better for you ? if you happen to know.

(The above is my personal translation. I strongly recommend to cross-check with other translations. The best option is to read the verses in Arabic.)

Another point which Dr. Shafaat has tried to emphasize, which I also agree, is that from a strict Quranic view it is not possible to establish "Giving RIBA" as a sin - unless if RIBA is defined / viewed as a "bribe" to get some undue favor from any authority. Giving a high interest on a loan being the victim of a situation cannot be a crime any more than getting robbed or getting raped or getting cheated.

A fair transaction (BAI-A) is based on the principle of A?DL (equity) - where both the parties act out of satisfaction and zero compulsion and willingly agree on the terms. When one party "takes unfair access return" through some form of exploitation then the transaction moves from A?DL to the direction of JULM and the excess amount becomes RIBA. On the other hand if one party voluntarily provides concession to the other party without any expectations of return from the counterpart - solely to please Allah - the transaction moves to the direction of IHSAN and the concession becomes SADAKAH. Thus RIBA is a "moral term" - opposite to SADAKAH - not an "economic term". The economics is left to men to figure out.

This is my personal understanding of RIBA, which I present for your consideration. Apply your own judgment and understanding. May Allah guide us all to the straight route.

Best regards,

Arman Aziz

[Rachel84]

Usury

"1. the lending or practice of lending money at an exorbitant interest.

2. an exorbitant amount or rate of interest, especially in excess of the legal rate. "

http://dictionary.reference.com/browse/usury


Interest

"14. Finance.
a. a sum paid or charged for the use of money or for borrowing money.
b. such a sum expressed as a percentage of money borrowed to be paid over a given period, usually one year. "

http://dictionary.reference.com/browse/interest

wishful thinking


noun:
interpretation of facts, actions, words, etc., as one would like them to be rather than as they really are; imagining as actual what is not.

Origin: 1925?30

Related forms
wishful thinker, noun

http://dictionary.reference.com/browse/wishful+thinking?s=t


hypocrisy


noun:
1.
a pretense of having a virtuous character, moral or religious beliefs or principles, etc., that one does not really possess.
2.
a pretense of having some desirable or publicly approved attitude.
3.
an act or instance of hypocrisy.

Origin: 1175?1225; Middle English ipocrisie

http://dictionary.reference.com/browse/hypocrisy?s=t



arrogance


noun:

offensive display of superiority or self-importance; overbearing pride.

Origin: 1275?1325; Middle English

http://dictionary.reference.com/browse/arrogance?s=t

[Nabeel]

Rachel, maybe you should also look up the words 'rude' , 'stubborn' and 'immature'? 

How about you actually try to discuss or refute what has been posted regarding your question instead of resorting to name-calling?  Armanaziz has posted a good answer.

[Jafar]

A transaction An increase of wealth through exploiting the vulnerabilities or misfortune of the counterparty is potentially a RIBA.

The above is the exact definition.
It can be achieved without or with 'interest'.

People with misfortune / weak, help them, don't manipulate them or take advantage of them for your own personal purposes.

[Man of Faith]

Peace,

Yes. Usury is exploiting a person for illicit financial or resource gains. And so does God think too. Or anyone else who is sane to himself.

God bless you

[muslims]

I believe we cannot simply claim interest is riba when the whole world are based on the fractional reserve banking and inflation etc, and thus. . . how could we ignore the fluctuation of money etc ? It is not the best system, but that's what we have right now. . . therefore, we have to used our wisdom and balance the rules in the Quran according to reality. Balance between the Maslahat against the Mudharat. . . . Accordingly, interest alone does not determine whether it is riba or not.


However, generally there are 4 types of riba that we must be aware , and Allah defined riba through what have not been mentioned in the Quran.

For example,

                  Allah explains "A", and if not "A", then it is "B" (riba)
                  Allah explains "C", and if not "C", then it is "B" (riba)

Therefore. . . .

                   Alif, Lam, Ra.
                   [This is] a Book whose verses are perfected
                   and then presented in detail
                   from [one who is] Wise and Acquainted
                   11.1


. . .

First category: Trade vs. Riba

                   Those who consume interest cannot stand except as one stands who is being beaten by Satan into insanity.
                   That is because they say, "Trade is like interest."
                   But Allah has permitted trade and has forbidden interest.
                   2.275

Take note that I do not believe the word is "interest", it means something else. The main point from this verse is that what does not fall within the category of "Trade", it is "Riba". Therefore, we have to find out what is "Trade" from the Quran, and other than that . . it is "Riba".



. . .

Second category: Personal effort vs Transaction out of nothing

                   O you who have believed, do not consume usury,
                   doubled
                   and multiplied
                   but fear Allah that you may be successful
                   3.130

What does not come from our "personal effort", it is "Riba". For example Network Marketing, or the concept of leverage of People Time and People Money (OPT & OPM) etc. It is creating money out of nothing, and it is Riba.



. . .

Third category: Sadaqah vs Bribery etc.

                   Allah destroys interest
                   and gives increase for charities
                   And Allah does not like every sinning disbeliever.
                   2.276

                   And whatever you give for interest to increase within the wealth of people will not increase with Allah .
                   But what you give in zakah, desiring the countenance of Allah - those are the multipliers.
                   30.39

What does not fall within the category of "Sadaqah", then it is "Riba". Therefore, we have to find out what is "Sadaqah" from the Quran, and other than that. . .it is "Riba".



. . .

Fourth category: Just Transaction vs Gambling/Theft/Extortion/Fraud etc

                   And [for] their taking of usury while they had been forbidden from it,
                   and their consuming of the people's wealth unjustly.
                   And we have prepared for the disbelievers among them a painful punishment.
                   4.161

What does not fall within the category of "consuming people's wealth justly", then it is "Riba". Therefore, we have to be certain that we acquire our wealth justly, without oppressing others and even though the transaction were entered voluntarily. . . otherwise, it is Riba.


. . .

Allah's warning . . .

                   And if you do not (leave riba),
                   then be informed of a war from Allah and His Messenger.
                   2.279

[Jafar]

For example,

                  Allah explains "A", and if not "A", then it is "B" (riba)
                  Allah explains "C", and if not "C", then it is "D" (riba)

The above thought process is a logical fallacy.
The correct statement should be:
                  if not "A", then it is not A, it might not be B, C, D or others either
                  if not "C", then it is not C, it might not be B, A, D or others either

                   Those who consume interest cannot stand except as one stands who is being beaten by Satan into insanity.
                   That is because they say, "Trade is like interest."
                   But Allah has permitted trade and has forbidden interest.
                   2.275

What does not fall within the category of "Trade", it is "Riba". Therefore, we have to find out what is "Trade" from the Quran, and other than that . . it is "Riba".

The above statement said:
Trade is not Riba or Riba is not Trade
and the following is not within the statement
Other than Trade is Riba

The next step of deduction should be:
What makes trade not a riba, what's the essence of Trade?

Trading implies a consent to exchange of something with values.
It makes both parties satisfied and happy.
It makes both parties happier than before.

Thus Riba might be:
Not implies a consent to exchange of something with values.
Not makes both parties satisfied and happy.
Not makes both parties happier than before.

But certainly it's not; what's not Trade is Riba.
As there are other deeds other than Trade which is not Riba.

Second category: Personal effort vs Transaction out of nothing

                   O you who have believed, do not consume usury,
                   doubled
                   and multiplied
                   but fear Allah that you may be successful
                   3.130

What does not come from our "personal effort", it is "Riba". For example Network Marketing, or the concept of leverage of People Time and People Money (OPT & OPM) etc. It is creating money out of nothing, and it is Riba.

The above verse is not entirely clear of what it meant by doubled and multiplied.
But it's clear that it doesn't mention any "personal effort" or "network marketing" as you said.

All money is created out of nothing and it doesn't make any parties suffer.
The conception of Riba and Money is a totally different thing.

The objective of money is to act as a token to make trade easier.
A mechanism for quantification of "value" to trade.
With the advent of money people trade more intensively because it's easier.

Third category: Sadaqah vs Bribery

                   Allah destroys interest
                   and gives increase for charities
                   And Allah does not like every sinning disbeliever.
                   2.276

                   And whatever you give for interest to increase within the wealth of people will not increase with Allah .
                   But what you give in zakah, desiring the countenance of Allah - those are the multipliers.
                   30.39

What does not fall within the category of "Sadaqah", then it is "Riba". Therefore, we have to find out what is "Sadaqah" from the Quran, and other than that. . .it is "Riba".

The verse indicate that Sadaqah is not a Riba.
Which is consistent with 2:275.
Sadaqah give benefits / happiness to the receiver.
While the doer / giver of Sadaqah might not receive any (direct) benefits, yet he/she's not suffering either.

Comparing with trade where both parties receive benefits, it implies that Sadaqah is 'higher deed' than Trade.

But certainly it's not; what's not Sadaqah is Riba.
As Trade is not Riba..

Fourth category: Transaction vs Gambling/Theft/Extortion/Fraud etc

                   And [for] their taking of usury while they had been forbidden from it,
                   and their consuming of the people's wealth unjustly.
                   And we have prepared for the disbelievers among them a painful punishment.
                   4.161

What does not fall within the category of "consuming people's wealth justly", then it is "Riba". Therefore, we have to be certain that we acquire our wealth justly, without oppressing others. . . otherwise, it is Riba.

This is the nail to the coffin, the silver bullet.

Riba is consuming people's wealth unjustly, because such act cause suffering on others while the doers receive benefits.
Or in other words: Benefiting from the suffering of other people.

Some of such act might includes (as you said and I added):
- Theft
- Extortion
- Fraud
- Raid / Robbing
- Plundering
- Bribery and Kickbacks
- Confiscating through force
- Escape from obligation
- Forced labor
- Slave acquisition
- Slave trading
- Drug acquisition
- Drug trading
and millions of other horrible deeds which caused suffering on others and increased the wealth of the doers.

Salam / Peace

[muslims]

The above thought process is a logical fallacy.
The correct statement should be:
                  if not "A", then it is not A, it might not be B, C, D or others either
                  if not "C", then it is not C, it might not be B, A, D or others either

There is a slight mistyping . . the second part is B (Riba/Unjust)

                  Allah explains "A", and if not "A", then it is "B" (riba)
                  Allah explains "C", and if not "C", then it is "B" (riba)

What Allah want to inform us, is "just" and "unjust" transaction.
Just transaction have been clearly defined in the Quran.

Therefore. . .the unjust transaction is not specifically mentioned in the Quran
because it can can be D, E, F, G, . . . Z, AA, BB, CC, . . . you name it, and we group all these into "B" category.


. . .

The next step of deduction should be:
What makes trade not a riba, what's the essence of Trade?

Trading implies a consent to exchange of something with values.
It makes both parties satisfied and happy.
It makes both parties happier than before.

You find out what is Trade from the Quran, if it is not trade. . then it is Riba.

But certainly it's not; what's not Trade is Riba.

Allah clearly say. . .

                   That is because they say, "Trade is like interest."
                   But Allah has permitted trade and has forbidden interest.
                   2.275

Meaning, Trade is not Riba, and what is not trade can fall within the other three categories of Riba.


. . .

The above verse is not entirely clear of what it meant by doubled and multiplied.
But it's clear that it doesn't mention any "personal effort" or "network marketing" as you said.

Since interest is not Trade. . what is "doubled and multiplied" "interest" ? ie. "doubled and multiplied" not "Trade" ?

It is "transaction out of thing". . . and what is "transaction out of thing"? could it be "network marketing" ? Forex ? It is the transaction that leveraging (enslaving) people time and money ? Leveraging people's effort, ie. it is slavery.

What is the transaction which does not fall with the category "transaction out of thing"?

Personal effort or one that you pay people salary for them to perform your work, ie. trade, employment agreement.

Secondly, I'm not referring to any traditional interpretation or people's work because I don't agree with their interpretation that Riba is limited to "usury". The above is from my own understanding. Therefore, I don't understand the concept of "Riba" that people are writing about.


. . .

But certainly it's not; what's not Sadaqah is Riba.

Similarly, you have to understand what is Sadaqah. . . because if it is not sadaqah, then it is bribery and bribery is Riba. That's why Allah mentioned these two in the same verse.

Secondly, don't compare "sadaqah" with "trade", because "sadaqah" is not "trade". That's why Allah specifically compare "sadaqah" with "riba". It is in different category. . . and obviously Allah does not compare "sadaqah" with "interest".   


. . .

Or in other words: Benefiting from the suffering of other people.

Some of such act might includes (as you said and I added):
- Theft
- Extortion
- Fraud
- Raid / Robbing
- Plundering
- Bribery and Kickbacks
- Confiscating through force
- Escape from obligation
- Forced labor
- Slave acquisition
- Slave trading
- Drug acquisition
- Drug trading
and millions of other horrible deeds which caused suffering on others and increased the wealth of the doers.

You name it. . . any transaction that is unjust or oppressing other people, even though one that entered voluntarily, because it is not "Trade"!

But certainly it's not; what's not Trade is Riba.

Therefore, what is not Trade or fall within the other three categories, it is Riba.

. . .

And Allah said:

                   Alif, Lam, Ra.
                   [This is] a Book whose verses are perfected
                   and then presented in detail
                   from [one who is] Wise and Acquainted
                   11.1


From these four categories of Riba. . I believe Allah has covered all transactions, nothing is left for people to oppress other people.

[Jane]

YES it is the same principle even if it is not the same word. As the idea that there can be a distinction between amounts of interest and morality attached to this, is of course an illusion.

Interest is interest whatever the amount and all interest charged is theft since it adds more units into the currency that have no value and therefore decreases the value of the whole currency overtime; eventually making everybody (except banks) poorer.

There is a reason why God banned it: it was illegal to charge it in Europe except for Jewish moneylenders up until some powerful, supposedly Christian folks decided that the Jews were getting a bit too rich and they wanted a go as well. They figured actually they knew better than God and what He actually meant was interest is only bad when it's excessive, otherwise 'it's okay as it's good for business', hence 'usury' was renamed with a new made-up definition and interest on loans became the norm. Now look at us today - developed, yes...but drowning in debt.

[Jane]

Cast your bets...

[Existential1]

YES it is the same principle even if it is not the same word. As the idea that there can be a distinction between amounts of interest and morality attached to this, is of course an illusion.

Interest is interest whatever the amount and all interest charged is theft since it adds more units into the currency that have no value and therefore decreases the value of the whole currency overtime; eventually making everybody (except banks) poorer.

There is a reason why God banned it: it was illegal to charge it in Europe except for Jewish moneylenders up until some powerful, supposedly Christian folks decided that the Jews were getting a bit too rich and they wanted a go as well. They figured actually they knew better than God and what He actually meant was interest is only bad when it's excessive, otherwise 'it's okay as it's good for business', hence 'usury' was renamed with a new made-up definition and interest on loans became the norm. Now look at us today - developed, yes...but drowning in debt.

To sister Jane, well-said.  I was going to write something extremely similar, but you hit it.
 

To those who argue that we can't exist in today's world w/out paying interest, that's why Allah is Most Forgiving.  Sometimes to exist in the world we inherited you have to compromise to prevent undue harm, like homelessness.

[Arman]

Interest is interest whatever the amount and all interest charged is theft since it adds more units into the currency that have no value and therefore decreases the value of the whole currency overtime; eventually making everybody (except banks) poorer.

Salamun Alaikum. Let's discuss the case rationally. I am presenting you 3 cases and one hypothetical question - which will help me understand your position.

First Case: let me quote an example from the work of Dr. Ahmad Shafaat which I referred before.

The common understanding of riba leads to the prohibition of certain lending arrangements, for which there seems to be no moral or logical basis. For example, consider the following two situations:

A rich man loans to a working man, with limited income and having a family to support, $100,000 to buy a house. The loan is to be paid by monthly payments of $850 over 15 years. This is equivalent to lending the money at 6% annual rate of interest compounded monthly. The house is in the name of the borrower and would remain in his possession unless a monthly payment remains unpaid for a certain agreed number of months, in which case the rich man will take possession of the house.

The same rich man himself buys a house with $100,000 and rents it to the working man for a monthly rent of $1000. The rent can be reduced to $850 if the tenant takes the responsibility for repairs. If the rent remains unpaid for a certain agreed number of months the tenant can be evicted from the house and can be sued for the unpaid rent and any damage done to the property..

The main difference between the two situations is this: In the first situation the house will belong to the working man after 15 years and even before that he can sell it to pay off the outstanding loan and keep any additional amount for himself and his family. In contrast, in the second situation, although paying every month the same amount of $850, the working man will have nothing after 15 years or even after 40 years. The only choice he has is to vacate the house, after giving an advance notice, and leave the house in the possession of the rich landlord.

Please help me understand how the rich man in the case above is stealing from the poor man in the first example where the arrangement is based on interest and not in the second example where the arrangement is based on rent.

Second Case: Let's assume a poor man has a piece of land but has no money to buy seeds to start cultivation. He has the following options:
1) Beg for some money (i.e. pure charity) and buy the seeds.
2) Borrow the money at a reasonable interest rate from a bank and buy seeds with the money to start cultivation.
3) Steal the money and buy seeds. Since stealing and borrowing with interest is same any way. At least he won't have to pay anything back!
4) Wait and pray to Allah for the seeds.
5) Don't cultivate, have faith in Allah - Allah will feed you and your family.
Which one would you think is the best "islamic" option for the poor man?

Third Case: I have been nominated as the custodian for the wealth of an orphan. The orphan is now 8 years old, I need to look after his estate for the next 10 years and then hand it over to him.
Assume, the orphan's living expenses are covered from the estate. In top of everything else his parents left him $100,000 in cash. Also assume I live in a high inflation economy. In order to give the orphan some protection against inflation I put the money in a bank @ 5% compound interest and as a result after 10 years I am able to hand him over $162,890/-.

The extra $62,890/- is stolen money, right? Question is who stole from whom? Considering inflation, if I would hand over $100,000 to the orphan after 10 years, would I be considered to have put my best effort to perform my duty of giving orphans their wealth with "full measure and the weight with equality" as Qur'an commands in 6:152?

Finally a hypothetical question: Any form of interest is theft, then let's go to the courts in all countries (except the few "sharia" countries, who rule based on "infallible" imams' rullings) and lodge  complaint. We should find somewhere at least one rational judge who, using his intellect, would see all form of interest as theft and ban it, right?

Hope you can give insightful and rational response to my questions above - which would enlighten me to a great extent.

BTW, just in case if you haven't noticed my understanding of riba... I posted it earlier on this thread.

May Allah guide us all to the straight route.

Regards,
Arman

[Nabeel]

http://www.sparklywater.com/viewtopic.php?f=5&t=183

[Jane]

Armanaziz and all who support a distinction between interest and usury can I remind you that:

'Necessary evil'...
is
still
EVIL!

Falsehood needs to be defended but THE TRUTH does not.

I started this thread for the poll only, out of my own curiousity - I did not intend to start a debate; other than viewing the result of the poll when it is over I have nothing else to say on this matter.



Peace.

[Aladin Azra]

The easiest way to understand ribaa is to take is as an opposition to "selling" (not trading). So, selling is Halaal and ribaa, as an opposition, is Haraam. This mean that we can sell goods or our work, but we cannot sell what is not meant to be sold, ie. money, renting objects, currency exchange with profit, etc. Renting is even worse for economy then money lending.

[jkhan]

The easiest way to understand ribaa is to take is as an opposition to "selling" (not trading). So, selling is Halaal and ribaa, as an opposition, is Haraam. This mean that we can sell goods or our work, but we cannot sell what is not meant to be sold, ie. money, renting objects, currency exchange with profit, etc. Renting is even worse for economy then money lending.

I am not getting what you have written in its entirety...
You mean to say interest is Haram..
Further, do you say that opposite of selling is Riba (what is it in English to be exact)..

So you can't sell money to earn money... So selling goods at exorbitant price is fine...  Coz it is selling. 

So money lending is not allowed..

Pls explain in a manner that one can grasp what you say in black and white..

[Aladin Azra]

Everything which is not selling goods and/or work is ribaa, each money flow without goods/work is ribaa. I cannot name it usury or interest, because these are just a few of ways for ribaa. If one is selling his position (being bribed) it's also ribaa, if one is bribed to testify it's ribaa, if one's selling land it's ribaa, if one's selling a water spring it's ribaa, if one's selling air (don't laugh, it's here already) this is ribaa...