Islamic Banking
Riba, Interest and Six Hadiths: Do We Have a Definition or a Conundrum?
Dr. Mohammad Omar Farooq
Associate Professor of Economics and Finance Upper Iowa University
June 2006 [Draft; Feedback welcome] [pic]The Readers are highly encouraged to read another of my essays "Islamic Law and the Use and Abuse of Hadith" before this one to better follow and appreciate this essay. NOTE for fellow Muslims: Because this topic involves what is haram (prohibited) and halal (permissible) in Islam, every Muslim MUST do his/her own due diligence and conscientiously reach own position/decision in regard to personal practice. In doing so regarding this matter or any other aspect of life, Muslims should seek guidance from the Qur 'an and the Prophetic legacy. Each hadith is properly referenced, but for internal reference within this essay, in the sequence presented, each hadith is numbered with # H-. Some of the references in this essay are from secondary sources. As the draft takes it final shape, original sources would be gradually cited and replace the secondary source citations. [pic] "There is nothing prohibited except that which God prohibits ... To declare something permitted prohibited is like declaring something prohibited permitted." Ibn Qayyim[1] [pic]
I. Introduction The Qur 'an categorically prohibits riba. However, since there is no unanimity about the definition or scope of this prohibition, we will use the original term riba throughout this essay. In the Qur 'an it is specified: Those who devour riba will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: "Trade is like riba but Allah hath permitted trade and forbidden riba. Those who after receiving direction from their Lord desist shall be pardoned for the past; their
Dr. Mohammad Omar Farooq
Associate Professor of Economics and Finance Upper Iowa University
June 2006 [Draft; Feedback welcome] [pic]The Readers are highly encouraged to read another of my essays "Islamic Law and the Use and Abuse of Hadith" before this one to better follow and appreciate this essay. NOTE for fellow Muslims: Because this topic involves what is haram (prohibited) and halal (permissible) in Islam, every Muslim MUST do his/her own due diligence and conscientiously reach own position/decision in regard to personal practice. In doing so regarding this matter or any other aspect of life, Muslims should seek guidance from the Qur 'an and the Prophetic legacy. Each hadith is properly referenced, but for internal reference within this essay, in the sequence presented, each hadith is numbered with # H-. Some of the references in this essay are from secondary sources. As the draft takes it final shape, original sources would be gradually cited and replace the secondary source citations. [pic] "There is nothing prohibited except that which God prohibits ... To declare something permitted prohibited is like declaring something prohibited permitted." Ibn Qayyim[1] [pic]
I. Introduction The Qur 'an categorically prohibits riba. However, since there is no unanimity about the definition or scope of this prohibition, we will use the original term riba throughout this essay. In the Qur 'an it is specified: Those who devour riba will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: "Trade is like riba but Allah hath permitted trade and forbidden riba. Those who after receiving direction from their Lord desist shall be pardoned for the past; their
Bibliography: Mohammad Omar Farooq_2. "Exploitation, Profit and The Riba-Interest Reductionism", Annual Conference of Eastern Economic Association (EEA) 2007, New York, New York February 23-26, 2007. Ahmad Hasan. Analogical Reasoning in Islamic Jurisprudence: A Study of the Juridical Principle of Qiyas [Islamabad, Pakistan: Islamic Research Institute, 1986] Muhammad Mazhar Iqbal Mohammad Hashim Kamali. Principles of Islamic Jurisprudence [Cambridge, UK: Islamic Texts Society, 2003] Ibn Majah Imran Ahsan Khan NYAZEE. The Concept of Riba and Islamic Banking [Online document, 2000] Mohammed Obaidullah Mohammad Nejatullah Siddiqi. Riba, Bank Interest, and The Rationale of Its Prohibition [Islamic Development Bank, Visiting Scholars Research Series, 2004] Iqbal Ahmad Khan Suhail Supreme Court of Pakistan. The Text of the Historic Judgment on Interest [1999; exact date: 14 Ramadan, 1420] Abdulkader Thomas (ed.) Frank Vogel and Samuel Hayes, III. Islamic Law and Finance: Religion, Risk and Return [The Hague: Kluwer Law International, 1998] M ----------------------- [1] Quoted in Abdulkader Thomas (ed.) Interest in Islamic Economics: Understanding Riba [Routledge, 2006, p