Islamic Studies

ISLAMIC ECONOMIC SYSTEM

National University of Modern Languages Islamabad

 Introduction

What is Economics
There's no one universally accepted answer to the question "What is economics?" Various
definitions are:

The Economist's Dictionary of Economics defines economics as:

"The study of the production, distribution and consumption of wealth in human

society."

Saint Michael's College answers the question "What is Economics?" with:

"Most simply put, economics is the study of making choices."

Indiana University - Purdue University defines its as:

"Economics is a social science that studies human behaviour. Economics has

a unique method for analyzing and predicting individual behaviour as well as
the effects of institutions such as firms and governments, or clubs and
religions."

Lastly Wikipedia defines economics as:

"Economics is a social science that studies human behaviour as a relationship

between ends and scarce means which have alternative uses. That is,
economics is the study of the trade-offs involved when choosing between
alternate sets of decisions."

Islam is a religion that provides a set of rules for life. We therefore call it a ‘Complete code of
life. A code of life or system of life covers all aspect of life of a human being. Therefore, Islam
is not set of scattered teachings or rituals for worships only, instead it is a complete set of
rules which are interdependent. A successful Muslim is not a person who excels in one aspect
of life. An important factor in Islamic teachings that must be taken care of is that rules are set
in coherence with each other. One significant sign of completeness of Islamic teachings is
that the rules are interdependent. A social or political rule is not in conflict with other guidelines
of worship or economic relationships;
 Islam – a complete code of life

ISLAM

Aqaa'id Aa'maal Akhlaaq

(Faith and Beliefs) (Practices and Activities) (Ethics and Moralities)

I'badaat Mua'mlaat
(Worships – Man to God relations) (Dealings – Man to Man relations)

Political Activities Economic Activities Social Activities

Industry and Trade Finance and economics

A perfect combination is required by Islam

Human life and survival of human being

Existence is the basic problem of humans in this worldly life (Islamic viewpoint is different,
will discuss latter) Existence of human being is dependent on collection of resources of
survival or life; Among resources of survival there are four types of requirement of human
being;

1. Basic needs ‫ ﺿﺮﻭﺭﺕ‬:

Basic needs are meant for requirement which an every human as a member
of group of living things needs to live his life. Food, shelter and clothes are
example of this type;

2. Convenience ‫ ﺳﮩﻮﻟﺕ‬:
The fulfillment of basic needs in convenient manners. Food for
survival need not be a cooked food or healthy one, anything that
provides support to humans to live is food. But as a matter of natural
requirement humans require convenience in their basic needs;

3. Comfort ‫ﺭﺍﺣﺖ‬:
A convenient way of life may not be a comfortable way also.
Food for example in good environment with some varieties and pleasant
 atmosphere is a comfortable food and also finely stitched clothes made of good
fabric is another example of comfort;

4. Luxuries ‫ ﺗﻌﻴﺶ‬:

A life style that is over the general standards of comfortable life of a society is a
luxury life style. Food with multiple choices, clothes of famous brands, expensive
daily-life things etc. etc.
These are four targets every human makes his all efforts to go higher and higher to top of the
pyramid. This is what conventional economic theory call 'scarcity of the resources' and 'needs
and wants are unlimited. The fulfilment of basic needs in convenient manners. Food for survival
need not be a cooked food or healthy one, anything that provides support to humans to live is
food. But as a matter of natural requirement humans require convenience in their basic needs.

Islamic concept of human life & economics

Islamic viewpoint about worldly life is different from the views of those who do not get
enlightenment from Islam. Economic activities are very important part of human life that provide
resources for existence of human being. Allamah Ibn-e-Khuldoon, a great Islamic historian and
sociologist, has mentioned economics in his famous book 'Muqaddamah Ibn-e-Khuldoon' as one
of the major factors in composition of human society and human behaviours. Therefore,
economics is not something paid no or very low attention by Islam. Books of Fiqh are full of
discussions on trade, financial dealings and exchange transactions. The Objectives of Shari'ah
as mentioned by scholars of Islam are safeguarding and protection of religion, life, property,
wisdom and self- respect or honourBut economic affairs are not 'the basic objectives' of human
being. All systems made under the guidance of Islam should not be conflicting with any of these
objectives;

Religion Property (Wealth)

Systems of Life
(Polictical,
Economic Self respect
and Social
Intellect (A'ql)

Life
 Basic Economic problems
1- What to Produce? That is , Determination of Priorities

As we know that human wants are unlimited but the resources are scares, so the problem of
making choice between alternatives arises. Which want has to be satisfied first and which has to
be deferred is the problem of making choice. For example, I have got $50 to purchase flour or
cloth, fruits or vegetables or simply spend my $50 on dining out. So, I have got these five options
available and choose the one among these five is called “Determination of Priorities”.

The problem of determination of priorities is not restricted to the micro level (humans only) but
also encompasses the Macro level (The whole nation). Every country has got limited amount of
resources for example, human resource, mineral resource, and monetary resource. Alternatively,
the requirements and want of the whole nation is almost near to infinite. Now to determine what
to produce by utilizing these limited resources and which product should be given preference over
the others is called the problem of “Determination of Priorities”.

2- How to produce? Allocation of Resources.

The second problem is the allocation of resources (land, labor and capital). What and how much
of the resource is allocated to produce what and in how much quantity of the products. For
Example, we have got land available to us, now how many acres of land should be allocated for
the cultivation of wheat, and how many acres of land should be allocated for cotton production.
Similarly, we have got the capability to develop production units (factories). Now how many
factories should be leather producing factories, and how many of cement producing or food and
beverage factories. This problem of allocation of different resources for the production of different
product is called the problem of “Allocation of Resources”.

3- For Whom to Produce? That is Distribution of Income

The third problem is “Distribution of Income”. That is, how and on what basis to distribute
production or income among the different units of society which was generated after utilization of
above mentioned resources. This problem is called the problem of “Distribution of Income in
Economics”.

The last problem the countries face is problem of development.

4- Development

Fourth problem is “Development” i.e. How to improve our economic conditions? So that the
resulted production will be of high degree in terms of quality and quantity. How to innovate new
things, improve technology and develop new products so that society as a whole gets the benefit
and achieve higher income levels and opportunities to improve their economic well being. This
problem in economics is called the problem of “Development”..

To solve these economic problems the market economy suggest the following,

Solutions prescribed by the Market Economy /Capitalism.

First, understand philosophy of market economy on the basis of which it claims to resolve the four
basic economic problems.

Market economy or capitalism suggest that the one and only solution to these problems is to get
every individual free for business and commercial activities and to give him right to choose any
method of making maximum profits as he thinks best. By giving this liberty to the individuals, these
economic problems would be resolved themselves. Because if everyone intends to make
maximum profits then he will work that is most wanted by the society and this way aforementioned
problems would be resolved automatically. But the question arises here as to how these economic
problems be solved themselves? To answer this question, some explanation is required.

1. Factually, this universe is made on different natural principles and laws that results the
same every time they are applied. One of these laws is the “Law of Supply and Demand”.
Supply is the quantity of goods and services that the seller is willing and able to sell in
the market whereas demand is the quantity of goods and services that the buyer is
willing and able to buy from the market. The law of supply and demand says that
whenever there is an excess of supply over demand, price will go down and wherever
there is shortage of supply compare to demand, price will rise. For instance, in extremely
hot and sunny weather, there are more people who demand ice that is demand for ice
increases. If supply of ice remains the same, price of ice would get increased.
Nevertheless, price will not increase if percentage increase in supply is exactly the same
as percentage increase in demand. Likewise, in winter season, demand for ice goes
down and keeping supply constant, price of ice will go down. This law is known as law
of Supply and Demand.
2. Philosophy of market economy says that this basic natural law of supply and demand
helps farmers determine what to produce. This law also helps industrialists,
manufacturers, and sellers determine what to sell in the market place and in what
quantity. This way aforementioned basic economic issues would be resolved easily.

3. Supply and demand analysis answers the basic question of determination of priorities in
a way that the seller will bring the commodity to the market that is most demanded by
people so that he can receive higher prices. Likewise, farmers and industrialist will
produce and sell the product which is in high demand. Because if they bring less
demanded commodity in the market they will receive less price. Resultantly, although
everyone acts for his own self interest, supply and demand forces bound them to fulfill
supply and demand of the society. Producers will keep on producing and selling
commodity in the market as long as there is excess demand over supply and stop
bringing the product in the market when supply equates demand. That’s why there is
always a production of that product which is demanded by the society. Moreover,
quantity of produced goods would be as same as needed by the society.
4. Allocation of Resources

Allocation of resources is a function of determination of priorities; one allocates his

resources according to the set priorities. So, supply and demand forces also allocate the
resources like determination of priorities. Resultantly, people allocate their resources
e.g. land, labor, capital to the production and selling of those products which are high
in demand for high profits. So, supply and demand automatically solve the issue of
allocation of resources.

5. The third problem is of distribution of income. According to the market economy, income
should be distributed among the factors of production which are as follows.
 Land
 Labor
 Capital
 Entrepreneur

Entrepreneur or entrepreneurship is a person or organization that intends to establish,

produce something and arrange to manage the other three factors of production and takes
risk in the business. According to the market economy, rent is the compensation of land
owner or land provider, wage is the compensation of labor, interest is the compensation
of capital provider and profit (if any) will be given to the entrepreneur.

Question arises as to what amount of compensation is given to land owner as rent, to

labor as wages, and to capital supplier as interest and who will determine this.

The answer lies with supply and demand forces, the factor which is highly demanded will
be given more compensation.

Suppose Zaid wants to start manufacturing of cloths, as he is responsible for arranging

and managing other three factors of production and undertake to bear risk of loss. He is
called entrepreneur in economics. Firstly, he required a piece of land to build factory, if he
 doesn’t own the piece of land then he has to take it on rent. Amount of rent is again
determined by the market force of supply and demand. If people who want to rent out are
more than the people who want to acquire rented property, rent amount may be low.
Conversely, is true for high rent amount.

Secondly, Zaid requires laborers to work for him in the factory. Compensation of laborers
is also determined by the market forces of supply and demand. If more laborers are willing
to work than demanded, wages may be low and opposite is true for high wage. Similarly,
to purchase capital equipment and/or machineries Zaid requires funds. The price of money
(funds) needed by Zaid is also determined by the supply and demand forces. If there are
more lenders than borrowers, the price of money i.e. interest rate may be low and
conversely is true for high interest rate. After the land, labor and capital suppliers are paid,
the residual is for the entrepreneur to enjoy.

In this way, problem of distribution of income is also resolved by the market forces of
supply and demand.

6. Development is the fourth economic problem. Every economy needs to grow and
develop its production opportunities. According to the market economy, if every individual
is absolutely free to undertake any economic activity for making profits then people will
produce innovative and quality products to increase their profitability and the objective of
development can be accomplished.

Islamic Principles of Economics that resolves the basics

economic problems.

Now, I want to discuss the principles of Islam regarding four basics economic problems.
It should be clear and understood in the very beginning that Islam is not an economic
 system. Rather, it is a “Deen”. The principle of which pertains to each and every course of
business. One of them is an Economy. So, there is no particular philosophy or rule written
in Quran and Hadith. There is no direct discussion about allocation of resources,
distribution of income, determination of priorities and development in Islamic Fiqh. But,
Islam has given some principles regarding economy like other spheres of life. Out of these
principles, we do able to understand the point of view given by Islam regarding these
economic problems.

After reading and analyzing principles of Islam regarding economy, one can understand
that Islam allows market forces of supply and demand.

Under mentioned is the meaning of verse number 32 of Surah

“We have divided the economy among them and made some of them superior on
some others so that they can help each other in doing their work.

Therefore, it is very much clear that the one who provides his services is supply and the
one who takes it is demand. Through interaction of supply and demand, an equitable
economy can be established.

At the time of Hazrat Muhammad (S.A.W) when rural people used to take their produce to
the city in order to sell it, some urban people used to say to the rural person that don’t sell
your produce in the city on your own. Sell your produce to me first and then I will sell the
produce in the city when the appropriate time comes so that higher prices may be
received.

Hazrat Muhammad (S.A.W) said, the meaning of which is as follows.

“Let people be free so that Allah gives some of them food through some other
people”

So, Hazrat Muhammad (S.A.W) restricted the presence of the third person between buyer
and seller so that the true equilibrium of supply and demand is established. Logically
speaking , if the rural individual sells the products on his own , he will sell it without storing
it. He will have to go back to his village. But, if some urban person purchase the product
and then sell it, there is higher probability that he will wait for the time at which he draws
maximum price. He will store the goods and create temporary shortage in the market. This
disturbs the basic of market forces of supply and demand.

When the question of setting market prices was asked from Hazrat Muhammad
(S.AW). (He replied, the meaning of which is as follows.)

“Undoubted , Allah is the one who sets market prices. He who reduces supply and
expand it. And He is the best provider.”

Accepting that Allah Tah’la sets prices is the implied acceptance that Allah Tah’la has set
the natural principles of supply and demand which determines the market prices. Setting
artificial prices without taking natural markets forces into account is disliked.

It is very much clear from the aforementioned sayings of Quraan o Sunnah, that Islam
accepts the market forces of supply and demand. Similarly, right of profit motive is also
acceptable. In Capitalism, there is an absolute and unconditional right given for private
profit and market forces. This is the reason why already discussed economic problems
are created.

Contrarily, Islam while accepting the right of profit motive and principles of market forces,
does not permit someone to harm the entire society and the system. Islam imposes certain
conditions and stipulations on these rights so that economic and social evils of the society
are eliminated.

Following are the conditions imposed on the profit motive.

Devine restrictions

Islam imposes certain conditions on the economy which can be implemented irrespective
of the society and time. For instance; Interest , Gambling , etc are strictly prohibited in the
Muslim economy. These thing usually creates monopolies and creates disturbances in the
society. Similarly, the things which are responsible for hurting ethical and moral values are
also prohibited.

It should be very much clear that these prohibitions are from Allah for all mankind. Islam
does not let it on humans to decide whether this is beneficial or not. Had these decision
been made by humans, there would have been disagreements among different people
based on personal traits and geographical locations. One thing which is true for one
person or place may not be true for another person or place. That’s why , Allah Tah’la
knows that these restrictions are necessary for all the people irrespective of place that’s
why Allah made it concrete through Wahee. So that a man based on his own logic will not
let the society and economy disturb.

So it is very much clear that these conditions and stipulations imposed by Quraan o
Sunnah are practicable whether the rationale of the stipulated principles are understood
by the people or not.

As discussed previously, some of the capitalists nations have imposed certain laws and
regulations on the market structure but these stipulations are not enough and lacks with
what is actually prohibited by Quraan and Sunnah. For instance, interest , gambling etc
are legally allowed in western nations that creates economic disturbances.

State Restrictions

In Sharia point of view, it is allowed for the Government to restrict trade of the
goods which are not haram and comes in the category of Mubah but for the given point in
time it create social ills. For instance, govt can restrict the trade of melon if cholera exist
in the society. So, buying and selling of melon is prohibited in sharia point of view till the
restriction of the govt prevails. Exclusive material on this particular subject matter”Sadd e
Zaraae” has been written and booked by sharia’ scholars.

By this principle , Govt can impose rules and regulations for the welfare of the Economy
or save the economy and society from illness. Once Hazrat Umer (R.A) saw that one seller
is selling the products below the market price. Hazrat Umer (R.A) said, (the meaning of
which is as follows)

“Whether increase the prices or leave the market”

The reason of the above statement is not written in the books. But the reason why
Hazrat Umer (R.A) restricted that person to sell the product below the market price may
be he thinks that low selling price causes harm to other seller at large. Or may be he was
at the point of view that low selling price results in excessive consumption or storage by
the consumers. Basic shariah’ principle permits the seller to sell the product at
whatever prices. Selling on the low price in the above case is permissible by shariah’
but Hazrat Umer (R.A) restricted that person because of the societal issue at large.

Following is the meaning of the verse which permits the Govt to impose the
conditions of this type.

O’ believer, obey Allah, and obey prophet, and who has authority over you.
 In the above mentioned translation of the Aayat, there is a difference between
obedience of Allah and his Prophet and the people of Authority. Only those orders of the
authority should be obeyed which are inconformity of the Quraan o Sunnah.

It should be clear that this is not an absolute right of the Govt to impose such
restrictions without any limits. Rather, restrictions should be in line with certain principles
laid down by shariah. The details of these principles are not laid down here but two points
are taken into consideration here for the purpose of discussion. Firstly, the condition or
law or principle made by the Govt is only implemented when it is not contrary to the Shaira
rules. Secondly, Govt can impose such orders only when there is a collective problem of
the society as a whole. A well renowned fiqh book says the following statement in the
particular matter.

Government Authority on the people are subject to the need

So, if the Govt imposes certain law in the absence of societal needs , that law is
prohibited and one can terminate this in the court of law.

Moral Restrictions

As discussed earlier, that Islam is a Deen not a an economic system. Islam teaches
in all sphere of life including economics. Islamic teaching regarding economics clearly
shows that material well being is not an end. Quraan o sunnah emphasized that the worldly
life is a short term life and the life hereafter is immortal that never ends. Humans should
devote their energies for making this world as a means to achieve a good end. i.e. the life
hereafter. So, making more and more money is not a success. Rather, success lies in the
work beneficial for the life hereafter. The way to achieve this end is the work done in this
world most liked by Allah Tahla’. When this thinking is developed in human mind, then he
will not consider only material things to make money but he will also consider the acts
done for the benefit of the life comes hereafter. There are certain situations the mandatory
 orders of which are not exclusively given by the Allah Tahla’ but benefits of such acts are
disclosed. In relation to it, human can impose certain restrictions to himself.

One of the simple examples of such situations is as follows. If a person has an option to
develop and construct an amusement park which is more profitable than the projects of
constructing homes for poor people having low profits. Then, a person of secular mind
would choose the project of amusement park while a person having religious mind will opt
for the home construction project for poor people because he considers the benefits of the
life hereafter.

In the aforementioned situations , Shariah allows either projects but the one who has fear
of Allah and belief on the day of judgment imposed moral restrictions on himself. This
moral restrictions helps determining better allocation of resources and better distribution
of income. This was the simple example, if belief on the day of judgment is strong then it
leads to prosperous economic conditions.

I am not opposing the fact that un Islamic societies have moral values which have positive
effects on the economy, but as they are lacking in the faith of the day of judgment, thus
entire benefits of moral values are not achieved. Contrary to it, Islam with its full
implementation has much more positive economic effects. So moral restriction in Islam
pertaining to the economy is not weak rather, it has much more value.

Islamic Concept of Riba

The word "Riba", in Arabic language, literally means an "increment' or addition". In Islamic Fiqh the term
riba has a special meaning. Riba is an unjustified increment in borrowing or lending money, paid in kind
or in money above the amount of loan, as a condition imposed by the lender or voluntarily by the
borrower. Riba defined in this way is called in Fiqh riba al-duyun (debt usury). Riba also is an unjustified
increment gained by the seller or the buyer if they exchanged goods of the same kind in different
quantities. This is called "riba al-fadl" or "riba-al-buyu" (trade usury).

The Prophet (p.b.u.h.) exposed to his companions, also, this form of riba known as "riba al-buyu". He
warned them that barter exchange of commodities of the same kind will be leading to riba. He (p.b.u.h.)
advised all traders to use money for the exchange of such goods to avoid riba. In Islamic literature this
kind of riba is also described as riba al-khafi, i.e. disguised or implicit riba, in contrast to "riba al-duyun"
which is considered "Jali" i.e., explicit or clear.
Riba prohibition in Quran is mentioned in three distinct passages. To consider the chronological order of
the Quranic revelation, Allah, firstly, gave a warning (Sura 30:39) that riba earnings will be wiped out
while persons giving charity will be rewarded more than they have spent. Secondly, believers have been
ordered, and warned never to take riba at compound rates (Sura 3:130). Thirdly riba in all forms was
utterly condemned, and those cared not for its prohibition were threatened a holy war to be waged
against them by Allah and his Messenger (Sura 2:275-279). It was made clear that riba transaction is
different than trade and that it is the Will of Allah to prohibit riba irrespective of any reasons which may be
given for its support. Prohibition of riba in Quran is undoubtedly quite strict and decisive. Sunna explains
different forms of riba and puts more emphasis on its prohibition. The Prophet (p.b.u.h.) in his hadith
warned that riba is more sinful than committing adultery repeatedly.

The "riba" system was formally introduced in Islamic countries during the 19th and 20th Centuries through
two channels; (i) secular legislations which have endorsed the Western definition of usury, (ii) the modern
banking system whose activities are interest based. These two channels were opened during the era of
Western colonial rule to the Islamic world. Besides, the riba system has increasingly gained strength in
the Islamic world because of the serious economic dependence on the Western world on one hand and
secular education which neglected the teachings of Islam.

Riba – Prohbition in the Holy Quran

ً‫عذَابا ً أَلِيما‬
َ ‫اس بِالبَاطِ ِل َوأ َ ْعت َ ْدنَا لِلكَاف ِِرينَ مِ ْن ُه ْم‬
ِ َّ‫ع ْنهُ َوأ َ ْكل ِِه ْم أ َ ْم َوا َل الن‬ ِ ‫َوأ َ ْخ ِذ ِه ُم‬
َ ْ‫الربَا َوقَ ْد نُهُوا‬
“That they [Jews] took riba, though they were forbidden and that they devoured men’s
substance wrongfully – We have prepared for those among men who reject faith a grievous
punishment.” (Quran 4:161)
‫الربَا َوأ َ َح َّل ّللاُ البَ ْي َع َوح ََّر َم‬
ِ ‫طانُ ِمنَ ال َم ِس ذَ ِلكَ بِأ َنَّ ُه ْم قَالُواْ إِنَّ َما البَ ْي ُع مِ ثْ ُل‬ َ ‫ش ْي‬ ِ َ‫الَّ ِذينَ يَأ ْ ُكلُون‬
ُ َّ‫الربَا ال َ يَقُو ُمونَ إِال َّ َك َما يَقُو ُم الَّذِي يَت َ َخب‬
َّ ‫طهُ ال‬
َ‫َاب النَّ ِار ُه ْم فِيهَا َخا ِلدُون‬
ُ ‫صح‬ ْ َ ‫ّللا َو َم ْن عَا َد فَأ ُ ْولَـئِكَ أ‬ ِ ‫ف َوأ َ ْم ُرهُ إِلَى‬ َ ‫َى فَلَهُ َما‬
َ َ‫سل‬ َ ‫ظة ِمن َّر ِب ِه فَانتَه‬ ٌ َ ‫الربَا فَ َمن جَاءهُ َم ْو ِع‬
ِ
“Those who charge riba are in the same position as those controlled by the devil's influence.
This is because they claim that riba is the same as trade. However, Allah permits trade, and
prohibits riba. Thus, whoever heeds this commandment from his Lord, and refrains from riba, he
may keep his past earnings, and his judgment rests with Allah. As for those who persist in riba,
they incur Hell, wherein they abide forever.” (Quran 2:275)
ٍ ‫ب كُ َّل َكفَّ ٍار أَث‬
. ‫ِيم‬ ِ ‫ص َدقَا‬
ُّ ِ‫ت َوّللاُ الَ يُح‬ َّ ‫الربَا َويُ ْر ِبي ال‬
ِ ُ‫ق ّللا‬
ُ ‫يَ ْم َح‬
. َ‫علَي ِْه ْم َوالَ ُه ْم يَحْ َزنُون‬ ٌ ‫الزكَاةَ لَ ُه ْم أَجْ ُر ُه ْم عِن َد َربِ ِه ْم َوال َ َخ ْو‬
َ ‫ف‬ َّ ‫ت َوأَقَا ُمواْ ال‬
َّ ْ‫صالَةَ َوآت َ ُوا‬ ِ ‫إِنَّ الَّ ِذينَ آ َمنُواْ َوعَمِ لُواْ الصَّا ِلحَا‬
. َ‫الربَا ِإن كُنت ُم ُّمؤْ مِ ِنين‬
ِ َ‫ي مِ ن‬ َ ْ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُواْ اتَّقُوا‬
َ ‫ّللا َوذَ ُرواْ َما َب ِق‬
. َ‫ُوس أ َ ْم َوا ِل ُك ْم ال َ ت َ ْظ ِل ُمونَ َوال َ ت ُ ْظلَ ُمون‬
ُ ‫سو ِل ِه َوإِن ت ُ ْبت ُ ْم فَلَ ُك ْم ُرؤ‬ ٍ ‫فَ ِإن لَّ ْم ت َ ْفعَلُواْ فَأْذَنُواْ بِح َْر‬
ِ َ‫ب ِمن‬
ُ ‫ّللا َو َر‬
َ َ ‫س َر ٍة َوأَن ت‬
. َ‫ص َّدقُواْ َخ ْي ٌر لَّ ُك ْم إِن كُنت ُ ْم ت َ ْعلَ ُمون‬ َ ‫س َر ٍة فَنَظِ َرةٌ إِلَى َم ْي‬ ُ ‫َوإِن كَانَ ذُو‬
ْ ‫ع‬
“Allah condemns riba, and blesses charities. Allah dislikes every disbeliever, guilty. Indeed!
those who believe and do good works and establish worship and pay the poor-due, their reward
is with their Lord and there shall no fear come upon them neither shall they grieve. O you who
believe, you shall observe Allah and refrain from riba, if you are believers. If you do not, then
expect a war from Allah and His Messenger. But if you repent, you may keep your capitals,
without inflicting injustice, or incurring injustice. If the debtor is unable to pay, wait for a better
time. If you give up the loan as a charity, it would be better for you, if you only knew.” (Quran 2:
276-280)
 “O you who believe, you shall not take riba, compounded over and over. Observe Allah, that
you may succeed.” (Quran 3:130)
ْ ‫ّللا فَأ ُ ْولَئِكَ ُه ُم ال ُم‬
َ‫ض ِعفُون‬ ِ َّ‫َو َما آت َ ْيت ُم ِمن ِربا ً ِلي َْربُ َو فِي أ َ ْم َوا ِل الن‬
ِ َّ ‫اس فَالَ ي َْربُو عِن َد‬
ِ َّ َ‫ّللا َو َما آت َ ْيت ُم مِن َزكَا ٍة ت ُِري ُدونَ َوجْ ه‬
“The riba that is practiced to increase some people's wealth, does not gain anything at Allah.
But if people give to charity, seeking Allah’s pleasure, these are the ones who receive their
reward many fold.” (Quran 30:39)
“Jabir said that Muhammad (s.a.w) cursed the accepter of usury and its payer, and one who
records it, and the two witnesses, and he said: They are all equal.”
[Sahih Muslim, Book 10, Number 3881]
Riba-ul-Quran
(Increase in Return on Loan)
. َ‫الربَا إِن كُنت ُم ُّمؤْ مِ نِين‬ َ ‫يَا أَيُّهَا الَّ ِذينَ آ َمنُواْ اتَّقُواْ ّللاَ َوذَ ُرواْ َما بَ ِق‬
ِ َ‫ي مِ ن‬
. َ‫ُوس أ َ ْم َوا ِل ُك ْم ال َ ت َ ْظ ِل ُمونَ َوال َ ت ُ ْظلَ ُمون‬
ُ ‫سو ِل ِه َوإِن ت ُ ْبت ُ ْم فَلَ ُك ْم ُرؤ‬ ٍ ‫فَ ِإن لَّ ْم ت َ ْفعَلُواْ فَأْذَنُواْ بِح َْر‬
ِ َ‫ب ِمن‬
ُ ‫ّللا َو َر‬
O you who believe, you shall observe Allah and refrain from all kinds of riba, if you are
believers. If you do not, then expect a war from Allah and His Messenger. (Quran 2:277-279)
Riba-ul-Hadith
(Increase in Exchange of Specific Commodity)
“We used to do barter of two Sas of mixed dates for one Sa (of good dates). The Prophet
instructed us: It is not permissible to barter two Sas of dates for one Sa nor two Dirhams for one
Dirham (as this is a kind of usury).”
[Sahih Bukhari, Volume 3, Book 034, Number 294]
• “Gold for gold,
• silver for silver,
• wheat for wheat,
• barley for barley,
• date for date,
• salt for salt,
Must be equal on both sides and hand to hand;
Whoever pays more or demands more indulges in Riba.”
[Sahih Muslim: Book 10: Hadith 3854.The Book of Transactions]