| Answer: The Ribā that the Qur’ān has prohibited refers to
the gain which the lender demands at a predetermined rate from the borrower on
the loan that he gives him for a specific period of time.
Explanation
1. The key word here is ‘loan.’ Whenever the relationship
between the two parties involved in a transaction is that of a lender and a
borrower, the gain at a predetermined rate which the lender makes a condition
for the loan he gives for a specific period of time would fall within the ambit
of Ribā.
Example
Prior to Companies Ordinance 1984, one of the modes used
for financing was debentures. The relationship between a debenture holder and a
company is that of a creditor and a debtor, or, in other words, that of a lender
and a borrower. Therefore, ceteris paribus (especially taking inflation as zero
for the purposes of this illustration), the predetermined gain that the
debenture holder is entitled to on his loan is Ribā.
On the other hand, the relationship between a shareholder
with his company is that of an equity holder, and the gain that accrues to him
out of the profits is not Ribā.
2. If the nature of the transaction is such that the asset
given for a period of time is to be ‘used’ by the receiver but, by the nature of
the transaction, cannot be ‘used up’ by him, the predetermined gain demanded by
the giver would be categorised as rent not as Ribā. (For details of this point,
see Appendix 1)
3. It is of great importance to remember that the Qur’ān
did not coin a new term when it prohibited Ribā, just as it did not coin any new
terms as Khamr (ÎãÑ) or Maysar (ãíÓÑ) when it prohibited liquor and gambling.
Everyone who knew the Arabic of the direct addressees of the Qur’ān knew what
these words meant. Therefore, the Qur’ān did not have to say anything as ‘You
are forbidden khamr, which refers to such and such drink’ or ‘You are forbidden
Maysar, which refers to ...’ In other words, the Qur’ān did not have to define
these terms as these were not any new terms introduced into the lexicon for the
first time by the Qur’ān. The meanings of these words were well-known to those
who understood the language. Nor did the Qur’ān use them in any specific
connotation. For example, khudi in Urdu refers to ego, vanity, pride, etc. But
Iqbal has used it in a special sense. He has given it a certain emotive meaning,
a certain connotation. This is clear from the context and the way in which Iqbal
has used the word.
It follows from this assertion that when a general word is
used in a book, usage in the lexicon of the language is the basis for
determining its meaning. That is to say, how and in what sense the native
speakers of the language used the word. If any person believes that such word
was used as a new term or in a special sense, then the onus of proof is on him.
For example, if someone says that the Khamr that the Qur’ān prohibited referred
to a new kind of a liquor, previously unknown to the Arabs at that time, and the
word was used as a new term to describe that particular form of liquor, or he
says that the Khamr that the Qur’ān prohibited referred to that Khamr which was
taken excessively and which, therefore, lead to inebriation, then it is he who
has to prove in relation to the context and use of the word in the Qur’ān that
this peculiar sense emanates out of the word.
Since the Qur’ān has not used Ribā as any new term or as a
word with some new connotation, the basis for determining its meaning should be
usage. In Qur’ānic Arabic, the word Ribā is used in the sense already explained
above as well as in the sense of increase’.
These meanings of the word have remained unchanged.
It is clear from the Qur’ān itself that when it speaks of
prohibition of Ribā, it refers to Ribā in the first sense because if it had
included the meaning of ‘increase’ as well, it would have entailed prohibition
of any increase including that which a person gains as profit in a trade, which
profit the Qur’ān has clearly allowed (2:275)
4. Of late, some scholars have tried to show that the
Qur’ān uses the word Ribā in a specific sense, that is in the sense of
exploitative interest, or usury, whereby the debtor is put in straitened
circumstances. In their opinion, Ribā does not refer to interest at a mutually
acceptable rate whereby both the parties benefit, as in the case of commercial
and bank loans. This view is erroneous as is discussed in detail in the answer
to the second question.
5. The Sunnah refers to those religious traditions of the
Prophet Abraham to which the Prophet (sws) gave sanction in his followers after
he had revived and reformed them and had made certain additions to them, for
example circumcision of the male child, Rak‘āt of the obligatory prayers, etc.
In other words, the Sunnah relates to religious rituals
and customs. Defining terms is not within its purview as such. Just as the
Sunnah does not ‘define’ Khamr or Maysar, It does not define Ribā. Just as the
Prophet (sws) prohibited liquor of different kinds, he prohibited deals of
different kinds which contained or could contain Ribā. These prohibitions were
not definitions on his part, rather they were the application of the Divine law
wherever that application was required. For instance, the Prophet (sws) directed
his followers to guard themselves against Ribā and also against the possibility
of involvement in Ribā even while borrowing in barter (see Appendix 2).
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