Riba

The categorisation of riba into two broad classes of al nasi'a and al-fadl was actually an attempt to bring all economic activity under social and moral control. The Problem Which the jurists faced in their respective social milieu was both economic and ethical: it pertained to the actual economic reality of their epochs. With the social and economic developments the sphere of buying and selling increased along with the practices of borrowing and lending. These spheres of loans and exchanges also overlap. There are many loan transactions which border on sales. Therefore, it is reasonable to hold that if the ban on riba is interpreted and applied only on money-lender's loans, so argued the Jurists and Traditionists, a large part of economic activity would then remain out, of social control and thus open to exploitation of economically weaker individuals and groups by those powerful individuals and groups who controlled commercial capital, all natural resources and means of production.

It is now pertinent to analyse and explain the riba-Hadiths, which are, besides the riba verses of the Qur’an, the other important source from which the early Muslim scholars inferred the rules of the prohibition of riba in all areas of exchanges and sales. The most famous riba-Hadith is the following:

Abu Sa'id al-Khudri relates on his authority that to holy Prophet had said that gold must be exchanged/sold for gold, like for like, from hand to hand, (yadan bi-yadin). Any increase, fadl, in one commodity over the 'other' is riba, Silver must be exchanged for silver, like for like, from hand to hand, and any increase is riba. Salt be exchanged. for salt, like for like, from hand to hand, any increase is riba. Barley be exchanged for barley, like for like. from hand to hand, any increase is riba. Dates be exchanged for dates, like for like, from hand to hand, any increase is riba.

It is important to note that the subjects of such riba-Hadiths are the essential commodities of basic needs which were in common use during the early period of Islam. Dates, barley and wheat formed the staple food of the people. In the barter trade these commodities were widely exchanged. These traditions also suggest that charging of riba in exchanges of foodstuffs and precious metals was wide-spread in pre-Islamic times. This riba-system had permeated deeply into the pores of the pre-Islamic society. It was a total system comprising all forms of riba al-nasi'a and riba al-fadl When commodities were sold on credit, for a time interval, they tended to be transformed into loans of commodities similar to the money-loans for a certain rate of interest. The commodity whose current price in cash was ten dirhams was sold for a higher price, say twenty dirhams if the price was paid after one year. This is tantamount to a loan of ten dirhams at the interest rate, of 100%. It must be borne in mind that under these economic conditions, dirhams of silver and dinars of gold were not only media of exchange but also commodities themselves, bought and sold like other commodities. They are, therefore covered by the Hadiths, of riba al-fadl.

Now it is not any more difficult to understand why riba al-fadl was so categorically prohibited by the to holy Prophet when he enjoined upon Me Muslims to exchange commodities for commodities of equal values, without an increase in one over the value of another and without any delay or time interval. Sale of grains for a sum of money (gold) or for anything else, or sale of gold for gold, or sale of grains for grains, are all sales and exchanges of one value for another value involving grains and gold, i.e., two mutually exchangeable commodities. Loans of these commodities for increases in them or direct exchanges of these commodities are in essence not different transactions. In loans, time separates sale and payment of price, but in a direct exchange, sale and payment of price are immediate, from hand to hand.

There are numerous such Ahadith recorded in the Hadith treatises on various types of commodities, grains, meats, fruits, and precious metals. For example:

From such riba Hadiths, Ibn Hajar concludes that riba al-fadl was prohibited like riba al-nasi’a by the holy Prophet himself; and further that these traditions of commodity riba in exchanges are unanimously agreed upon by the scholars, They prove that riba is created in exchanges of commodities in which any increase is paid whether by measuring the commodity (Kayl) or merely by weighing it (wazn).

We shall now closely examine the riba-Hadith (related by Abu Sa’id al-Khudri and other famous Companions, that gold must be exchanged for gold, like for like") with reference to its tafsir (explanation), hukm( (legal rule), and ma'na (idea, reason or meaning) relating to the parallel cases of positive law (far'), i.e., application of the rule of prohibition of riba on the practical and actual cases of the economic system.

As regards explanation of the riba-Hadith, it has been said that the preposition 'bi’ (meaning 'with') pre-fixed to the six commodities conjoins equivalent returns and recompenses of commodities in immediate exchange., and it necessarily implies equivalent quantities, weights and measures. Similarly, according to the Jurists, the expression from hand to hand ", yadan biyadin means substance for substance, commodity for commodity, readily specified and assigned in the exchange (without any time interval).

The sentence "al-fadl riba"' an increase is riba, may either mean an increase in the quantity of a commodity in an immediate exchange. or it may mean an increase (in money or commodity), as in a nasi'a (credit) loan. Both these senses (of an increase in direct exchanges and credit loans) are implied in this sentence. Furthermore, in this Hadith, riba is an increase (fadl) without any counter value or equivalent return………

As regards hukm, says Sarakhsi, there are two Shar`i rules of law in this Hadith: first: hurma al-nasi'a, the prohibition of transacting those commodities on nasi'a (credit, loan) for similar species of commodities. This fundamental rule is unanimously agreed upon (by the Jurists). Second, hurma al-fadl, the prohibition of giving an increase in the quantity of one commodity in exchange for another.

This was the opinion of the majority of the holy Prophet's Companions except what has been reported by 'Uthman al-Batti who says that 'Abd Allah ibn 'Abbas had allowed increase in the exchanges of those commodities provided they were not loaned on the basis of nasi` In his later life, however, Ibn 'Abbas had retracted from this opinion.

It has also been reported that 'Abd Allah ibn ‘Umar had also allowed some forms of riba al-fadl but had revoked it when he came to know that it was abolished like riba al-nasi'a. Ibn 'Abbas, during a part of his life did not consider that in bullion exchanges (sarf) there was any fadl involved," says Ibn Hajar, "as long as exchange of one precious metal for another was from hand to hand, from one substance to another. And he used to think that riba was in those commodities which were sold on credit or loans (nasi’a). Then he met Abu Sa'id Al-Khudri and discussed the matter with him and the riba-Hadith related by al-Khudri. Ibn 'Abbas then revoked his opinion about riba al-fadl and strongly clung to its prohibition."

Bukhari and Muslim record that Abu Salih related that he had heard Abu Sa'id al-Khudri saying:

Relating to this Hadith there are some other traditions in variant versions. For example:

(a) Ibn 'Abbas was heard saying that Usama ibn Zayd had told him that the holy Prophet said that riba was (rather) in nasi’a, innama al-riba fi al-nasi'a.

(b) Ibn 'Abbas relates from Usama ibn Zayd who said that the holy Prophet had said: There is no riba in those (commodity) exchanges which are from hand to hand, yadan biyadin."

(c) 'Ata’ ibn Abi Rabah relates that Abu Said al-Khudri after meeting Ibn 'Abbas had asked him whether he had for his opinion about sarf, anything in the Prophetic Hadith or in the Qur’an. Ibn 'Abbas had replied that he had not found any evidence in the Qur’an and the Hadith (for riba al-fadl). He added that as regarded the sayings of the holy Prophet, Abu Sa'id was more knowledgeable than he. And as regarded the Qur’an, he (Ibn 'Abbas) was not aware of any evidence in it. He told Abu Sa'id that Usama ibn Zayd had told him that the Prophet had said: Beware riba' was (rather) in nasi'a, ala innama al-riba fi al-nasi’a.

The Jurists and Traditionists hold that the theory that only riba al-nasi’a was prohibited in the early period of Islam cannot be tenable.¹⁸A The fact is that the full narration of the sarf-tradition reported by Usama ibn Zayd has not been preserved or reported, only a part of this genuine Hadith is contained in. these traditions. The full version suggests that, the holy Prophet was asked about the barter (mubadala) of wheat for barley, and gold for silver. He had replied that there was no riba (involved in such barters) except in nasi'a. It appears that the reporter (al-rawi), heard the reply of the holy Prophet, and either he did not hear the preceding question or did not transmit it. Moreover the question pertained to commodities of different types and species which are not subject to riba al-fadl but only to riba al-nasi'a for example, when gold is sold for silver or wheat for barley on nasi'a.

The sentence innama al-riba fi al-nasi'a, i.e., riba is in nasi'a form has been explained by some Muslim scholars to mean that riba is of many types, forms and contents but its perfect form, or form par excellence is riba al-nasi’a "And in the Hadith recorded in the Sahihs of Bukhari and Muslim," says Ibn Qayyim, (d. 751/1350-1), "it has been related by Usama Ibn Zayd that the holy Prophet had said that (reflect) riba was in nasi’a, innama al-riba fi al-nasi’a. This has been expressed to imply a sense of perfection that is, the Perfect riba is in nasi'a. There is a saying of 'Abd Allah ibn Mas’ud Innama al-‘Alimu alladhi yahsha Allah the perfect scholars one who fears God, This sense is, also found in the Qur'anic verse (VIII: 2-4) where Innama al-Mu’minun means `the perfect believers'.

"La riba illa fi al-nasi'a, there is no riba except, in al-nasi'a, says ibn Hajar may mean that the most reprehensible and the most heinous form of riba which deserves severest punishment, is riba al-nasi’a as the Arabs say there is no scholar in the land beside Zayd, but Zaid’s existence does not deny the existence of other scholar in the land. The intention is not to deny the existence of all other forms and types of riba but only to suggest that riba al-nasi’a was the most perfect, (akmal) form of riba: there were besides it other forms of riba. Therefore the apparent negation of the prohibition of riba al-fadl in the Hadith of Usama carries an incomplete and ambiguous sense and cannot have any preference over the Hadith of Abu Sai'd al-Khudri ('Dinar or gold be exchanged for dinar or gold and dirham or silver, for dirham.....') which is unequivocally established by an explicit text, and consequently the Hadith of Usama must be taken to mean that riba al-nasi'a is the grossest form of riba (al-riba al-akbar).therefore, comprehends all loan and exchange transactions of commodities which involve any unjustified, increase in the commodity loaned or exchanged. Riba al-nasi’a and riba al-fadl have thus both been interdicted in the economic ethics of Islam.

Riba,

Actually, economic life is never static, it is subject to constant flux and change. As modes and methods of production gradually change in every epoch, overall economic conditions also change in a simple pastoral economy barter trade, in general, prevails. In complex economies of agriculture, of simple handicraft where peasants, serfs and slaves land and artisans produced commodities, trade in commodities and instruments of production and land developed alongside a money economy. After the territorial expansion of Islam in the neighbouring Byzantium and Sasanian lands in the early decades of the 7th century A.D., fertile agricultural lands came to form an important part of the Islamic Empire. This also brought with it the whole economic matrix where theories and practices regarding riba in various economic spheres had developed. There is a genre of riba-Hadiths which warn the outgoing Muslims against the riba-practices prevalent in the lands of Syria. Egypt and Mesopotamia.

'Umar ibn al-Khattab has been reported to have said that the people were confused as to the different forms of riba. He told them that some forms of riba which were common in the agricultural districts of Egypt were well-known: advancing of loans in: the form of young animals to be repaid after some time in the shape of older animals, or the sale of green crops/raw fruits for grains or ripe fruits, or the sale of gold on credit to be repaid in silver.

The broad categorisation of, riba into riba al-nasi'a and riba al-fadl with their actual contents, and forms of money, products, and commodities of a given mode of production, are actually the reflection of the real economic conditions. In interest-bearing capital of nasi'a form, the self-generating thing, money (or any Commodity in natural economy) begets money and appears in its pure form. In this pure form of money nasi'a, interest-bearing capital existed throughout history, as Aristotle has clearly described it. It appears to our Jurists as clear, unambiguous, definite and crystallised form of riba. Riba al-nasi’a creates profit or increase whether it is borrowed by a producer or a consumer, used by them or not. This gives, it an independent position, a definite, distinct and manifest stature, different from that of riba al-fadl.

On the contrary, the category of riba al-fadl pertained to an economic sphere which comprised variegated and diversified systems of economic exchanges, sales and barters and agricultural transactions depending on the nature and states of general economic conditions. Sales practised in the commercial and agriculturally less developed milieu of the Hijaz were different from the complex agricultural practices of Syria, Egypt and Persia. Furthermore, the economic activity of urban areas tended to be more complicated and involved speculations, monopolies and money dealings.

Under such conditions no uniformly generalised, simple and definite law or theory on the pattern of riba al-nasi’a could be formulated and developed in the case of riba al-fadl - hence the vagueness, controversies, contradictions, conflicts and discrepancies in the discussions of riba al-fadl.

Growth of a certain increase in the form of interest (whether in the shape of money, gold, grains or cattle) was sure to return with the loaned capital or commodity in riba al-nasi'a but there was no such certainty, clarity or pre-determination in the sales/exchanges of riba al-fadl the general characteristic of which was out-bargaining, out-manoeuvring, cheating and deceiving in order to obtain exorbitant profits. As the forms of this type of riba were not clearly identified or distinctly recognised in a certain manner, even some Companions and Successors differed on their interpretations. This seems to be the main cause which had forced many pious Muslims, like 'Umar ibn al-Khattab, to refrain from undertaking any doubtful economic transaction which directly or indirectly related to any form of riba. ‘Abd Allah ibn Mas'ud is reported to have said that the holy Prophet had broadly classified riba into seventy-three main forms which comprehended all speculative sales, lease of land for a share of its produce, control of production and supplies of commodities for monopoly prices etc. Some mistook the Hadith innama alriba fi al-nasi’a to mean that riba was rather in loans and credits and not in exchanges sales.

It seems that the categorisation of extensive and complex spheres of economic life (in trade, manufacture and agriculture) by the Fuqaha` as riba al-fadl really constituted an effort to legally and morally bring all speculative and usurious transactions under the rubric of riba prohibition. For them, the Qur’anic definition of riba, in the general economic sense, is the starting point, the general principle, the fundamental truth and the essential criterion which covers all economic values, commodities and goods created in the production process and, exchange. The Jurists' problem was that if the interpretation, and in consequence, the application of the Qur'anic definition of riba was merely limited and restricted to the historically well-known form of interest/usury-bearing capital loans, then a major part, of economic life which is subject to constant developments, like commerce, trade, agriculture, manufacturing, many usurious sales which are worse than usury and interest, and exorbitant profits' of merchants, landlords, manufactures and middlemen, will remain uncontrolled and unchecked. This will ultimately neutralise the ban on riba al-nasi’a which itself forms a part of the total ban on riba.

The early Muslim scholars have made great efforts to specify all illicit ribawi transactions in loan and exchanges The famous traditionist Abu Bakr Ahmad ibn 'Ali al-Bayhaqi (d. 458/1065) has meticulously recorded in great detail, in his book, al-Sunan al-Kubra more than forty chapters on different categories, forms, types and nuances of riba transactions in the sectors of barter, trade and agriculture. Under each sub-heading he has tried to classify these riba-forms. Some of the classifications are as follows:

These classifications of various forms of riba al-fadl and riba al-nasi’a correspond, to the economic conditions of a barter economy, i.e., an underdeveloped money economy and agriculture.

It may be noted that the forms of riba al-fadl described by Bayhaqi are, in essence, based on the detailed list of riba al-fadl sales which Malik ibn Anas (d. 179/795-6) has discussed in detail (Muwatta', II, 609-686) and which has been followed by Ibn al-'Arabi (Ahkam al-Qur'an, I, 243-244). Malik's list among other things also includes the following in sales of riba al-fadl.

1. The sale of fresh fruits (still on the trees) for ripe ones.

2. Lease of land for a share of its produce-muhaqala.

3. Monopolistic hoarding of food-stuffs in order to control their supplies and thus raise prices to earn illicit profits.

4. All aleatory (gharar) sales of risk, gambling and speculation.

5. Sales which involve profits of middlemen, samasira.

6. Sale of loan-riba.

7. Sale of commodities by peasants/producers to middlemen and agents of towns and not to the direct consumers at lower prices.

These ribawi sales and exchanges extend almost to all sectors of a barter economy. Malik has also explained many such sales in which legal stratagems (hiyal, sing hila) were a adopted to circumvent the ban on riba al-fadl. Payment of inadequate and uncertain wages to a labourer also belongs to the category of riba al-fadl.

Ibn al-'Arabi follows Malik in the formulation of the categories of ribawi-sales. He says that God and His Messenger have forbidden devouring of wealth bil batil in all forms of riba, in food-stuffs, in sales of homogeneous goods for increase, in sales and in loans, in all aleatory and speculative dealings which are all covered by the Qur’anic verses on riba. Ibn al-'Arabi identifies fifty-six forms of riba al-fadl. Ibn al-'Arabi includes in these usurious exchanges, the sales of wine, of corpses of dead animals and their fats, the sale and purchase of anything under coercion, lease of land for a share of its produce, sale of water etc.

CONCLUSION