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The weekly word: riba

January 11, 2010

Charging interest—or “riba”—on loans is outlawed by Islam.  More than anything else, it is the prohibition on riba that has metastasized into the modern international movement to create and sell sharia financial products.

But what is riba, really?  Standard reference materials such as the various dictionaries published by Oxford have blandly and misleadingly equated riba to usury.  Usury means exorbitant interest.  But riba is much broader than that—it encompasses all forms of interest, not just the exorbitant sort.

The most expressive definition, and the one that I’m adding to Money Jihad’s glossary, comes to us from Ahmed Ali, a Muslim translator of the Koran.  The following is an excerpt from his explanatory footnote on riba (p. 50 in the paperback volume) defining riba as:

Multiplying, increase, swell, expand (beyond the natural or original size), as in 22:5; excess such as surplus that comes to the surface like scum, as in 13:17; rabiyum, increased hold that over powers, as in 69:10; arba, more than the other; as in 16:92: Taj Muhit.  All this points to unnatural or artificial increase.  It is first mentioned in Makki Surah, 30:39, as lending money on interest to increase one’s capital through other’s wealth; and is explained at 2:275 as the opposite of trade, and at 3:130 as doubling and redoubling.  By suffocating a person’s freedom of action and independence—another meaning of riba being asthma—it results in oppression, and is condemned in the strongest possible terms and forbidden.

Scum.  Asthma.  This definition is much more helpful in conveying the contempt Islam holds for interest, and explaining why Islamic bankers have taken such great pains to develop financial products that will produce yields without involving interest.

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