Why Business Is Different From Interest – An Islamic Perspective

Inaz Ilyas- Jamiah Naleemiah 

 

Islam is a complete and comprehensive code which guides man in every aspect of his life. In this scheme of things, the economy too plays an important role in man’s life. Did you know that “Protecting Property” is one of the most important objectives of Islamic Shariah?

The Qur’an and Sunna (Prophetic Traditions) clearly explain this idea in many verses:

“Indeed those who devour the property of orphans unjustly are only consuming into their bellies fire. And they will soon be in a blazing fire”
(An-Nisa:10)

“What God has bestowed on His Messenger from the people of the townships, belongs to God, to His Messenger and to the kindred and the orphans, the needy and the wayfarer; in order that it may not make a circuit between the wealthy among you”
(Al Hashr:7)

Sa’ad bin Zaid bin Amr reported:”I heard the messenger of Allah saying: “He who dies while defending his property is a martyr; he who dies in defense of his own life is a martyr, and he who dies in defense of his faith is a martyr; and he who dies in defense of his family is a martyr”.(Abu Dawud and Tirmidhi).

Thus Islam has placed great value in protecting wealth and property. On the other hand, it has prohibited and condemned business transactions where injustice prevails. As such, Islam considers Riba (Interest/Usury) as a grave sin since it negatively affects one of the parties.

The main rationale in the prohibition of interest in Islam is injustice given that justice is an important cornerstone of the Islamic worldview. It is noteworthy that Islam has clearly differentiated between business transactions and interest-based transactions. Allah says in the Qur’an as follows:

“God has permitted trade and forbidden interest”
(Sura Baqarah V.275)

Despite this, there are some who claim that Interest is a kind of business transaction. This claim is not new to Islam. The Qur’an clearly mentioned this false claim and gave an appropriate response:

“Those who devour usury will not stand (before God) except like one whom Satan has driven to madness by his touch. Because they say: “Trade is like usury”. Whereas God has permitted trade and forbidden usury. He that receives admonition from his Lord and mends his ways shall not be punished for the past. His case is for God (to judge); but he that pays no heed shall be among the People of the Fire and shall abide in it. God will deprive usury of all blessing but will bestow increase for charity. He bears no love for the ungrateful sinner
(Al Baqarah:275-276)

O ye who believe! fear God and give up what remains of your demand for usury if ye are indeed believers. If you do it not, take notice of war from God and His Messenger: but if ye turn back ye shall have your capital sums; deal not unjustly and ye shall not be dealt with unjustly
(Al Baqarah:278-279)

Syed Qutb states in his famous commentary Fi-Zilalil Qur’an (In the Shade of the Qur’an) that no other issue is condemned and denounced so strongly as interest in the Qur’an. Though the word Riba literally means growth, increase, excess, etc, it technically refers to the “premium” that must be paid by the borrower to the lender along with the principal amount as a condition for the loan. It is also defined as exaction of a charge over and above money owed, which is usually paid out of the sweat and blood of the borrower regardless of whether he profits as a result of the loan or not.

Moulana Abul Ala Mawdudi in his commentary Thafheemul Qur’an (Meaning of the Qur’an) explains three main reasons for the prohibition of interest in Islam:

1-In ordinary business transactions mutually equitable exchange of benefits between buyer and seller prevails. Buyer receives benefits from the article and the seller receives compensation for his effort and time spent on making the article available. But in interest-bearing transactions exchange of benefits does not take place equitably. The interest receiving party gains a fixed amount for using the loan and the other party to the transaction has something at his disposal which may not always yield a profit.

2-In business transactions profit is made only once for a particular article while lending on interest ensures continuous profit which multiplies with time.

3-One makes a profit after having exerted one’s effort, intelligence and time. On the contrary interest without toil and effort gives easy and surplus money benefitting only the lender.

Although it seems wealth multiplies through interest and shrinks as a result of charity, the fact is otherwise, since charity is blessed and exploitation is devoid of blessing and only earns God’s Wrath. Serious economic crises experienced by capitalist countries from the 1920s to the 1970s and even as recently as the 2000s has spurred interest in an Islamic economic system which ensures justice for all and sundry.

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