Riba

Just following up on today's Friday sermon at the Uniten Mosque. Well, i guess the whole of Selangor should have the same or similar sermon on riba' or usury/interest. This is a serious topic that i think Malaysian muslims in general take for granted. To me i think that interest fuels greed and also causes the prices of certain things to be expensive. Take for example in Malaysia, prices of cars are really, really expensive. The average income earner would never be able to buy a brand new car without taking out a loan. Students for that matter wouldn't be able to buy brand new cars like some do these days. The only reason people are able to afford cars these days, if you're not rich that is is by taking out a loan. Sure, there is Islamic loans but the fact of the matter is the way it is calculated is still based on conventional ways. Thats how banks work and that's how the world economy works. It works on interest. Another is property. As a home owner, i know how much the price of property has surged recently. The property I bought 4 years ago is now worth 75% more than what I bought it for. That's almost double in value. Good for me but the trend is that property in KL is now is roughly 85 times the monthly salary of a newly employed entry level Petronas executive. Ofcourse there is the role of the basic supply and demand but these days people make money out of property and it has no longer just a place to stay - it's an instrument to make money. If not so many people were able to take up loans and buy property then i think property prices won't go up so drastically. I don't know. Anyways, for an in depth explanation on Riba' please read the summary below and for a much more in depth insight please download the full article at the link at the bottom of the post.

Riba in Islam

Riba[1] is considered amongst Seven Heinous Sins (Al-Saba al-Mubiqat - السَبعَ الموبِقاتِ),  namely[2],
  • i) Shirk,
  • ii) Magic,
  • iii) Suicide,
  • iv) consuming Riba,
  • v) unlawfully taking orphan's money,
  • vi) fleeing from battlefield and
  • vii) accusing chaste believing women.
Allah swt states in Quran:
يَا أَيُّهَا الَّذِينَ آمَنُواْ لاَ تَأْكُلُواْ الرِّبَا أَضْعَافًا مُّضَاعَفَةً وَاتَّقُواْ اللّهَ لَعَلَّكُمْ تُفْلِحُونَ
 3:130 O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.
وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
2:175 Allah has permitted trade and has forbidden interest
The Prophet Mohammad, may Allah's mercy and peace be upon` him, said in his farewell sermon: "God has forbidden you to take Riba, therefore all riba obligation shall henceforth be waived. Your capital, however, is yours to keep. You will neither inflict nor suffer inequity. God has judged that there shall be no riba and that all the riba due to `Abbas ibn `Abd al Muttalib shall henceforth be waived."[3]
Quran explicitly prohibits Riba, and since Quran is an undisputed source of guidance, all Muslims unanimously agrees on prohibition of Riba. There is no difference of opinion among any school of thought on prohibition of Riba in Islamic Shariah.
Example of Various Types of Riba
EXAMPLE OF RIBA
Allah swt mentions that the person who deals with Riba (ربا) will stand (on judgment day) as one who is being beaten by Satan into insanity[4]. Here Allah swt made it clear that "trade" and "riba" are not same, and that He forbade "riba" and allowed "trade"[5]. He further stated that whoever accepts guidance of Allah must immediately stop dealing in Riba, and those who return to Riba after Allah's guidance has reached are dwellers of fire, because Allah swt destroys "Riba" and He swt reward those who gives Charity.
Prophet Mohammad (pbuh) cursed the one who deals with Riba. From Jabir (ra): The Prophet (pbuh) cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." [Sahih al-Muslim, Sahih Al-Bukhari, Tirmidhi, Ibn Majah, Bahiqi and Musnad Ahmad]
Islamic Shariah considers Riba as tool of oppression and a mean to unjustly take others money[6] by exploiting their needs and circumstances. Hence it forbid Riba base system altogether and it promotes Charity as an alternative. Therefore,, Prophet Mohammad (pbuh) said: "God has judged that there shall be no riba" [Last Sermon].
Islamic Shariah also consider Riba as a medium for hoarding money by elite and powerful, and it warns against those who accumulate wealth with this unjust way. Alternatively, Islam on one hand distributes wealth by implementation of Charity, Zakat and Laws of Inheritance, and on other hand, vigorously encourages spending of money to help the needy.
The crimes of dealing in Riba are so serious that Allah swt has declared war against those who deal in Riba[7]. The Prophet (pbuh) has cursed anyone who deals with Riba, the one who takes it, one who pays it and one who records it, they are all "equal"[8].
Muslims around the world traditionally avoid eating pork and alcohol, whereas, Riba is considered much worse than that. The Prophet (pbuh) declared consumption of Riba worse than adultery: worse than "to a man committing adultery with his own mother"[9].
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