Nowadays are tackling the fatwa of the Islamic Research Academy in which respectful scholars legalize interest on money deposited in banks. They say that determining the percentage of interest is subject to special economic studies. That is to say, it is not fixed but fluctuates according to prices and so on. The percentage of interest, they claim, is also subject to the principle of public interests. But really, I’m not fully satisfied with this fatwa. So what is your opinion on this issue?
All praise be to Allah and may His blessings and peace be on His last messenger,
May Allah reward all the qualified scholars who are sincere in their ijtihad.
Riba is forbidden by consensus. Allah said,
“يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ * فَإِن لَّمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِّنَ اللَّهِ وَرَسُولِهِ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ.”
“O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.” [Sahih International 2:279-280]
Muslim reported from Jabir,
“لَعَنَ رَسُولُ اللَّهِ – صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ – آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ: هُمْ فِي الْإِثْمِ سَوَاءٌ.”
“The Messenger of Allah (blessings and peace be upon him) cursed the one who devours usury, the one who feeds him, the scribe and two witnesses, and he said, “They are the same.””
Riba (usury) is given many definitions. In the language, it means increase. Technically, it is an increase in one of the two properties exchanged or deferment of payment in one of two cases:
1- In sales: exchanging the usurious items mentioned in the hadeeth below for something of the same kind in different measures. This is called Riba al-Fadl (increase). If the items are of different kinds but are usurious properties of the same category (cause of prohibition; with gold and silver being one category and the rest being another), they may be exchanged with a difference in measure. However, they must be exchanged without deferment (i.e. the transaction must be hand to hand). If one was deferred, that would be a type of riba called, Riba al-Yadd (hand; here means handing). For example, gold may be traded for a different amount of silver as long as the exchange is immediate with nothing pending between the traders. The same applies to wheat for barley. If we trade wheat for wheat, then it must be equal for equal and hand to hand. Of course, silver for wheat has none of those restrictions.
These rulings are because of the Prophet’s statement:
“الذَّهَبُ بِالذَّهَبِ، وَالْفِضَّةُ بِالْفِضَّةِ، وَالبُرُّ بِالْبُرِّ، وَالشَّعِيْرُ بِالشَّعِيْرِ، وَالتَّمْرُ بِالتَّمْرِ، وَالْمِلْحُ بِالْمِلْحِ، مِثْلاً بِمِثْلٍ، سَوَاءً بِسَوَاءٍ، فَإِذَا اخْتَلَفَتْ هَذِهِ الأَصْنَافُ، فَبِيْعُوْا كَيْفَ شِئْتُمْ يَدًا بِيَدٍ، فَمَنْ زَادَ أَوِ ازْدَادَ فَقَدْ أَرْبَى.”
“When gold is [paid for] by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt; [it should be] like for like and equal for equal. If these types differ, then sell as you wish if the exchange is made hand to hand (simultaneously).” (In the narration of Abu Sa‘eed al-Khudri, “The person who offers an increase, or asks for one, has in fact dealt in usury.”)
2- In loans: increasing the payment in exchange for deferment. This is called Riba an-Nasee’ah (deferment). “Every loan that results in benefit is riba.” This statement was reported from the Prophet with controversial authenticity, but it is an agreed upon legal maxim.
In investments, the capital cannot be immunized against loss. This makes it a loan. If it is a loan, there can’t be any profit.
The Prophet (blessings and peace be upon him) said,
الخَرَاجُ بالضَمَانِ.
“The Profit follows liability” Reported as part of a hadeeth, by the five collectors, and authenticated by at-Tirmidhi and al-Hakim, with whom ad-Dhahabi concurred.
No investment in Islam may guarantee profit on capital without liability. This is riba.
Currency is considered usurious, according to the vast majority of scholars, even though it is not made of gold or silver and is not tied to their value because it is considered the standard price for goods. Interest accrued on bank deposits is, therefore, considered Riba an-Nasee’ah (deferment). This is the position of the vast majority of contemporary scholars.
Allah knows best.