5. Introduction
5
Federal Shariat Court Vs. Supreme court
on the elimination of Interest in 1991.
67 Appeals.
Following are 5 of the arguments presented
by the supreme court to defend the
elimination of INTEREST.
6. Study of the Qur'anic Verses Dealing with Riba
6
1. Surah Ar-Rum
"And whatever riba you give
so that it may increase in
the wealth of the people, it
does not increase with
Allah.“
[Ar-Rum 30:39]
7. Study of the Qur'anic Verses Dealing with Riba
7
2. Surah Al-i-'Imran
"O those who believe
do not eat up riba
doubled and
redoubled."
[Al-i-'Imran 3:130]
8. Study of the Qur'anic Verses Dealing with Riba
8
3. Surah Al-Baqarah
“Those who take interest will not
stand but will stand whom the
demon has driven crazy by his
touch. That is because they have
said: 'Trading is but like riba'. And
Allah has permitted trading and
prohibited riba.
10. Arguments against the Shariah
Court
10
The verses of the Holy
Qur'an which prohibit riba
were revealed in the last
days of the life of the Holy
Prophet, (S.A.W), and he did
not have an opportunity to
interpret them properly.
FIRST ARGUMENT
11. 11
The Holy Prophet (SAW)
announced the prohibition of
riba in his last sermon during
his last Hajj (10th year after
Hijra).
He also declared that the first
riba decreed to be void is the
riba payable to his uncle Abdul
ANSWER OF FIRST ARGUMENT
12. 12
A deeper study reveals that this
argument is misconceived. In fact the
prohibition of riba was effective at
least from the 2nd year of Hijra but the
Holy Prophet, Sall-Allahu alayhi wa
sallam, deemed it necessary to be
announced at the time of his last
sermon which was the most attended
gathering of his followers.
ANSWER OF FIRST ARGUMENT
13. 13
The second argument runs on
the basis that the word 'riba'
refers only to the usurious
loans on which an excessive
rate of interest used to be
charged by the creditors. As far
the modern banking interest, it
cannot be termed as 'riba' if the
SECOND ARGUMENT
14. 14
Imam Abubakr Al-Jassas (D.380 AH) in his
famous work Ahkamul Qur'an has explained riba
in the following words:
"And the riba which was known to and
practiced by the Arabs was that they used to
advance loan in the form of Dirham (silver
coin) or Dinar (gold coin) for a certain term
with an agreed increase on the amount of
the principal advanced."
ANSWER OF SECOND ARGUMENT
15. 15
Where the modern commercial loans are concerned, they were
not in the days of the Holy Prophet, (S.A.W), nor has the Holy
Qur'an addressed them while prohibiting 'riba' and the basic
philosophy of 'riba' cannot be applied to these commercial and
productive loans where the debtors are not poor people. In
most cases they are wealthy or at least economically well-off
and the loans taken by them are generally used for generating
profits. Therefore, any increase charged from them by the
creditors cannot he termed as Zulm (injustice) which was the
basic cause of the prohibition of 'riba'.
THIRD ARGUMENT
16. 16
The third argument differentiates between
consumption of loans and commercial loans.
The word "Al-Riba" used in the Holy Qur'an is
restricted to the increased amount charged on
the consumption loans used to be taken by
the poor people for their day to day needs and
the rich people used to charge heavy amounts
from them.
EXPLANATION OF THIRD ARGUMENT
17. 17
Validity of a Transaction is not Based on
the Financial Status of a Party.
The Nature of Qur'anic Prohibitions.
Productive Loans in the Age of Antiquity.
ANSWER OF THIRD ARGUMENT
18. 18
The fourth says that the Holy Qur'an has prohibited riba-al-
jahiliyya. In which if the debtor could not pay off the loan at its
due date, the creditor would give him more time against
charging an additional amount. According to this theory, if an
increased amount is fixed in the initial agreement of loan, it
does not constitute riba al-Qur’an. However, it does fall in the
definition of riba-al-fadl, prohibited by the Sunnah. Its
prohibition is of a lesser degree which can be termed as
makrooh and not haram.
FOURTH ARGUMENT
19. 19
Account of Riba al-Jahiliyya
(Riba al-Qur’an)
"The Riba of Jahiliyya was a transaction
whereby a person used to sell a commodity for
a price payable at a future specific date,
thereafter when the date of payment came and
the buyer was not able to pay, the seller used
to increase the amount due and give him more
time."
ANSWER OF FOURTH ARGUMENT
20. 20
The seller used to keep on increasing the
amount in exchange of additional time
given to the buyer.
Also Known As Riba Al Quran and Riba Al
Nasiah.
21. 'riba al-fadl' or 'riba-al-sunnah
21
It means that the quantity on both sides must
be equal to each other and if the quantity of
any one side is more or less than this
transaction is also a Riba transaction,
because in the tribal system of Arab these
commodities were used as money. However,
this transaction was termed as riba by the
Holy Prophet, Sall-Allahu alayhi wa sallam,
and this meaning was not covered by the
term 'riba al-Jahiliyya'. Therefore, it was
called as 'riba al-fadl' or 'riba-al-sunnah'.
22. Six Commodities
22
"Gold for gold, silver for silver,
wheat for wheat, barley for
barley, date for date, salt for
salt, must be equal on both
sides and hand to hand.
Whoever pays more or
demands more (on either side)
indulges in Riba."
23. 23
The fifth was that although the modern interest-
based transactions are covered by the prohibition of
'riba', yet the commercial interest is the back-bone of
the modern economic activities, no country can live
without being involved in interest-based
transactions. Islam, being a practical religion,
recognizes the principle of necessity and it has
allowed even to eat pork in extreme situation where
one cannot live without eating it. The same principle
should be followed, and on these basis of this
necessity the laws permitting the charge of interest
should allowed.
FIFTH ARGUMENT
24. 24
We can compromise on extreme basis but not
if we have a solution for it.
Islamic Banking should be implemented.
Quran has stated laws for economic
transactions and Muslims should follow these
laws to keep their earnings RIBA free.
ANSWER OF FIFTH ARGUMENT