Free «Why Riba is Prohibited in Islam» Essay Sample


The objective of this research paper is to explore the concepts of Riba and also find out the reasons for its prohibition in Islam.  The Riba defined as any surplus amount paid by borrower to the lender of the money is called interest (Ahmed, 1984, p.20). In other definition the interest is defined as a sum of loan given to the borrower for a certain time period along with stipulated excess sum of money in addition to the real sum (Abu Saud, 1983. p.64). The interest refers to the price being paid as lease or rental for using the money borrowed (Samuelson, 1976, p.50)  

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In recent context, all most every business organization is transacting with interest especially Muslims all over the world extensively accepted it as either being ignorant or unaware of the fact or do not anticipate any trouble to dealing with it.  Regardless of the reality that Muslims scholars consider dealing with riba as foremost sin because our Prophet (S.A.W) clearly stated in a hadith cited by Imam Muslim and Bukhari “use of riba is devastating sin which only lead to destruction.  When look at the historical prospective, initially riba was forbidden in the earliest books of Torah, Bible and Qur’an.  Muslim evidently distinguish between Halal and Haram,  so from Shariah stand point the riba provide a surety against  borrowed money along with the additional stipulated amount whether borrower made profit or loss, therefore, interest(riba) is Haram.

Islam provides an absolute code of conduct and guidance for life which include comprehensive way of doing things regarding economics, social and political. An idealistic Muslim society promises to provide an equitable and justice in economic, social and political system which was practiced during the time of al-Khilafah al-Rashidah. Thus, in Holy Qur’an it is categorically stated and taught Muslims not to obtain each other’s wealth dishonestly (Al-Qur’an 2:188, 4:29). 

As in Holy Qur’an it is clearly stated that riba is Haram because dealing with interest create an injustice in the socio economic system and disparity among the society; the richer become more and more richer whereas poorer become more and more poorer by dealing with riba. There is absolute harmony amongst the entire Islamic schools of thought concerning the prevention of interest. As Qur’an is the undoubted foundation of direction for the entire Muslims so there is comprehensive common conformity on the certainty dealing with interest is banned. Whereas, the current economic and banking system is interest based which deal with the predetermined payment named as interest that is foremost difference with the Islam standards. Islam guides the fair type of dealing, while interest being paid on borrowed amount which is acquired for productive rationales is also forbidden because it also lead to injustice (Ahmed, 1984, p.20).

Most of the people confuse term riba with trade although there is slight difference between riba and trade and this distinction has been clearly stated in Qur’an. The dealing of riba involves money not sales and that money to be used by the borrower on self governing, whereas in the trade activity certain exchange takes place such as money against goods, goods against goods etc.  In the concept of money leading there is no exchange of goods apart from money is lent only for an enlargement in itself. Thus, Qur’an clearly refuses the concept of money leading which is being mixed with riba (Al Mun’im Mahmud, op. cit. p.125).

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This concept is further elaborated by Abu al A`la al Mawdudi to understand the difference between the riba and trade. The trade is based on the equality, where a transaction take place and sellers gets the profit and purchase gets the products or services equivalent to the value of money being paid.  Whereas in riba both parties are not on equal footings, so the lender only gets the money back with enhancement and borrower only can use that money for specific period with out assure of profit. In trade, the seller can demand the profit only once for all and in interest the borrower has to pay till the actual not return to lender. In order to further understand the difference in trade money being paid for products only once and the possession is intact with the buyer as even in the case of rent a house, property, machine or etc, whereas in interest lender can spend the money but return the same with the surplus as interest (A`la al Mawdudi, Vol. p.p. 201-205).

Allah (Swt) has clearly stated the outcome and upshots of riba in numerous verses of the Holy Qur’an. In the Qur’an Allah (swt) says: “Individuals who consume riba will not situate apart from as positions one whom the malevolence one by his handle hath ambitious to insanity. As they state: ‘Trade is similar to riba.’ nevertheless Allah hath allowed trade and prohibited riba. Individuals who following getting path as of their Lord, discontinue, shall be forgiven for the precedent; their state of affair is for Allah (to decide). Except individuals who reiterate (the breach) are acquaintances of the flames, they will stand within (everlastingly)” (2:275)

As far as recent concept of interest in today’s organization is concerned, it becomes the life blood of the businesses with respect to current financial market, although numerous countries in Muslim world has tried to articulate the traditional concept of riba with the modern form of interest but failed to do. Riba is criticized and forbidden by every possible way and there is no other option and suggestion about its illicit (Ali, 1992, p.115).

 There are two types of riba based on its probation in the Sunnah such as riba al nasiah and riba al fadl. As far as riba al nasish is concerned, this is from Anas bin Malik: The Prophet (SAW) stated: “Man should not acknowledge any presents from the person he lend the money as loan” (Mishkat). Based on Sunnah the riba is prohibited to the extent that person should not even accept any kind of favor in the form of any gifts, food and ride etc. if he grant the loan unless both lender and borrow has been in binding and comfortable of exchange errand previously. As far as riba al fadl is concerned with respect to Sunnah, it is based on the exchange of goods and products of same value for instance wheat for wheat, salt for salt, food for food of similar quantity or weight.

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The riba explained in hadith as the described by Jabir: The Prophet (SAW), the lender, borrower and the recorder of interest and also the two witnesses to the deal, they all are in trouble and victim of sin. In order to understand the best possibly the riba is strictly prohibited in any form, as mentioned by Abu Hurayrah (ra) that the Prophet (saw) stated: “”Allah would not permit four people to go into heaven or to feel its sanctify: the person who deal, take and record riba, drink wine, unlawfully grab property of orphan’s and disobey his parents (Capra, 1992, pp.380-381).


The methodology respecting this research paper refers to the collection of data and information through secondary research. The secondary source such as books from the library, articles, journals, magazines and interest was consulted in order to complete the paper in efficient manner.


The above discussion respecting prohibition of riba depicts that the riba is clearly and strictly prohibited in Islam.  This prohibition is certified with the help of verses in Holy Book Quran, Sunnah and hidth. 

The analysis clearly depicts that current practices being used by banking on providing the loan and charge interest is evidently prohibited as far as Islamic Law is concerned. As discussed above riba is not pure as trade, however, in trade the products and service being exchanged against some prices, whereas, riba is single ended benefit which creates injustice and inequality.  It has also been analyzed in this research paper that any form of interest either it’s on deposits, loans, or any other kind is thoroughly forbidden according to Islamic Law.  The analysis also pointed out that the interest based system creates a disparity among the society which is against the Islamic standards and norms, because interest provide opportunity for richer to become more richer and poor become more poor. The provision of quality and equitable social, economic and political system is the basic ingredients of Islam law which is based on interest free and equitable society. It is also found in this paper that even exchange of gift or obtain any favor against the money lent is also described as interest. The interest is prohibited to the extent that modern economic and financial system unable to justify the legality of interest and interest free system.     


To conclude this research paper, in this study the analysis being done on the prohibition of riba in Islam. Interest is the modern form of riba usury which is strictly prohibited in Islam that is hindrance to develop an equitable and justice among the society. This study analysis the scope of prohibited form of interest and also it helped to differentiate from interest as the most of the people are mixing the both concepts. The interest free economic provide any opportunity to create equitable and justice in the society.

To summing up, although it is very difficult for the people and the organizations to get rid of interest based system, but being a Muslim it is our duty to prohibit the interest and interest based system because it is punishment for our present and later life after life.

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