RIBA – A Challenge for Modern Muslims

RIBA – A Challenge for Modern Muslims
Riba, in Islamic terminology, is an impermissible (Haram) gain derived from lending of wealth.
In this book, I have attempted to define Riba, primarily in light of the verses of the Holy Quran
(divine scripture of Muslims), for easy understanding of the followers of Islam. Accordingly, I
have arrived into a conclusion that a gain derived from noncommercial lending is Riba and that
from commercial lending is not Riba. Besides, I have also shown that this definition conforms
with the basic principles of Islam (removing injustice and falsehood) and its desired financial
ecosystem. However, this definition apparently contradicts the common understanding of Riba,
based on which modern-day Islamic finance is founded. Most of the current Islamic finance
scholars define Riba as any gain derived at a ‘prefixed’ rate from any lending, be it commercial
or noncommercial. In order to give this functional definition a theoretical or philosophical basis,
they suggest that Islam does not support debt-based participation in a commercial deal; it has to
be equity-based only. Therefore, ‘prefixing’ of gain is prohibited in Islam altogether. In this
book, I have put forward multiple arguments, primarily based on Quranic verses, in order to
show why this ‘prefixing’ centered definition of Riba is contradictory with the tenets of Islam, as
well as our common sense.