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Scholarly Interpretations & Rulings on Riba

Islamic scholars have discussed and debated the concept of riba (usury or interest) extensively, with differing views on its application in various financial transactions. Below are the key interpretations and rulings of prominent scholars regarding riba, including the differences in opinion on its application to sales and debts.

1. Ibn Abbas (RA) vs. Abu Said Al-Khudri (RA) – Difference in Opinion on Riba in Sales vs. Debts​

Ibn Abbas (RA) and Abu Said Al-Khudri (RA) had differing views on whether riba applies only to debts or also to sales and exchanges.

1.Explanation​

  • Ibn Abbas (RA), a prominent companion and scholar, interpreted riba as applicable to both debts and sales, especially in transactions involving items like gold, silver, dates, and other measured or weighed commodities.
    • He believed that if there was an unequal exchange or if goods were exchanged in a delayed transaction, it would constitute riba, even in sales. For example, if one person gave gold for gold but in unequal amounts, or if there was a delay in payment, that transaction would be considered riba.
    • This view stems from his understanding of the Quranic verses and hadiths that mention riba, extending the prohibition to all forms of trade where there is inequality or delay.
  • On the other hand, Abu Said Al-Khudri (RA), another prominent companion, believed that riba primarily applied to debts (loans), not to regular sales or exchanges of goods.
    • He took a more restrictive view, maintaining that riba in trade (such as exchanging goods) would only apply if money or commodities were exchanged in unequal amounts or if there was deferred payment. However, if goods were exchanged fairly (equal amounts and immediate payment), it would not be considered riba.
    • Abu Said's view suggests a more liberal interpretation, where regular trade exchanges, provided there is no delay or inequality, do not fall under the prohibition of riba.
  • This difference in opinion demonstrates that riba was understood and applied differently by early scholars, and it highlights the nuances in interpreting the texts regarding transactions and commercial dealings.
  • Key takeaway: The difference in opinions between Ibn Abbas and Abu Said demonstrates that riba can be seen as both a financial exploitation in debt and trade, with scholars emphasizing equal exchange and immediate payment as key factors in avoiding riba.

2. Jumhoor (Majority Scholars) – Riba Applies to Unequal Exchanges of Gold, Silver, and Other Weighed/Measured Commodities​

The majority of scholars (Jumhoor) agree that riba applies to any unequal exchange of gold, silver, and other weighed or measured commodities, even in trade.

2.Explanation​

  • The Jumhoor (majority) of scholars, including those from the Hanafi, Maliki, Shafi'i, and Hanbali schools, hold that riba applies to exchanges of gold, silver, and other measured or weighed commodities where there is inequality in the amounts or if the exchange involves a deferred payment.
    • The basis for this ruling is rooted in the Quran and the hadiths, where the Prophet ﷺ specifically mentioned that riba occurs in transactions involving like for like (e.g., gold for gold, dates for dates). These transactions must meet the criteria of equal amounts and immediate payment to be valid.
    • If there is any discrepancy in the quantity or quality of the goods being exchanged, or if one of the parties is required to pay later (i.e., delayed payment), then the transaction would be considered riba and thus prohibited.
    • Scholars emphasize that riba is not restricted to loans or debts alone but extends to trade involving items that are measured or weighed, such as gold, silver, wheat, and dates. The prohibition is in place to prevent exploitation and ensure fairness in all financial dealings.
  • This interpretation is consistent with the understanding that the underlying principle behind riba is the exploitation that occurs when one party is at a financial disadvantage due to unequal transactions or the time value of money.
  • Key takeaway: The majority of scholars argue that riba applies to all unequal exchanges, not just in loans, but also in commercial transactions involving valuable commodities that are measured or weighed.

3. Al-Aini's Commentary – Explains Differing Scholarly Opinions, Highlighting that Most Scholars Prohibit All Forms of Riba​

Al-Aini, a famous scholar, provided a detailed commentary on the differing scholarly opinions and clarified that most scholars prohibit all forms of riba, whether in debts or sales.

3.Explanation​

  • Al-Aini, a prominent scholar of the Hanafi school, in his commentary on riba, emphasized the uniform prohibition of all forms of riba, regardless of whether it occurs in loans or sales.
    • He elaborates on the different scholarly views on riba, noting that while there were some disagreements among the early scholars regarding whether riba applies to debts only or extends to sales, the consensus among the majority of scholars is that all forms of riba are prohibited.
    • Al-Aini points out that while Ibn Abbas (RA) extended the prohibition of riba to certain types of traded goods (e.g., gold and silver), the consensus view is that riba encompasses both usury in lending and unfair exchanges in trade, which are both seen as exploitative practices.
    • He further clarifies that the prohibition of riba in sales is crucial to prevent financial exploitation and to ensure that transactions are fair and just for all parties involved.
    • Al-Aini's commentary thus reinforces the view that riba is not limited to loans but extends to any financial exchange that involves inequality or unjust enrichment.
  • Key takeaway: Al-Aini's commentary confirms the majority scholarly view that all forms of riba are prohibited, including both interest-based loans and unfair trade transactions involving measured commodities.

Conclusion​

Scholarly interpretations on riba highlight the complexity of its application in different financial transactions. Key points include:

  • Ibn Abbas (RA) extended the concept of riba to sales, emphasizing unequal exchanges in commodities like gold and silver.
  • Abu Said Al-Khudri (RA) focused on riba as being primarily linked to debts, not sales, offering a more restricted view.
  • The Jumhoor (majority) of scholars emphasize the prohibition of riba in all transactions involving measured or weighed commodities, especially when there is inequality or deferred payment.
  • Al-Aini and other scholars highlight that the consensus among the majority is to prohibit all forms of riba, whether in loans or sales, to protect against exploitation and ensure equity in financial dealings.

These interpretations guide modern Islamic finance, advocating for just and fair financial systems free from exploitation and interest-based transactions.