Muslim Knowledge Guide China: Is Riba the Same as Interest in Islamic Finance or Is There No Consensus

Reposted from the web

Summary: This Muslim knowledge guide translates and reviews Dr. Mohammad Omar Farooq's discussion of whether riba is the same as interest, why Islamic finance scholars disagree, and why the article argues that there is no true consensus equating all interest with riba.

This is one of a series of articles where I translate foreign scholars' questions about so-called Islamic finance. I will share more works from time to time. These articles show that scholars have never reached a consensus on whether interest is the same as usury. The discussions are deep and thought-provoking.

This is a repost of an old article. The original was deleted, so I have edited the content.: The Riba-Interest Equivalence: Is there a consensus?

Author: Dr. Mohammad Omar Farooq is an associate professor of economics and finance at the University of Bahrain and teaches in the Islamic banking department. He served as the director of the Islamic finance center at the Bahrain Institute of Banking and Finance. Before that, he lived in the United States for 20 years, worked as a postdoctoral researcher at the University of California, Berkeley, and taught at Upper Iowa University. He is also a member of the technical working group for the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Main text:

One academic view defines usury as any profit made without a transfer of value. This includes not only interest but also transactions involving speculation, capital gains, monopolies, hoarding, and rent-free land.

Islamic banking is different from traditional interest-based banking. It is based on the Islamic claim that interest is forbidden. Of course, usury is clearly and indisputably forbidden.

There is absolutely no dispute regarding certain types of forbidden usury. Since this article does not need to explain every relevant Islamic term in detail, I will note here that interest is classified as either Riba al-nasia (interest on deferred payments) or Riba al-fadl (interest related to the exchange of goods, especially in barter trade). The latter was added mainly based on the Hadith.

In modern jurisprudence, the scope of Riba has expanded to include all forms of interest, such as high or low rates, nominal or real, and simple or compound. Riba al-fadl has also been extended to more than six types of goods based on qiyas (analogical deduction).

However, Ibn Abbas, a main companion of the Prophet and an early Islamic jurist, along with a few other companions like Usama ibn Zayd, Abdullah ibn Masud, Urwa ibn al-Zubayr, and Zayd ibn Arqam, believed the only illegal riba was riba al-jahiliyyah, which is a form of riba an-nasia [Saleh, p. 27]. The orthodox position popular today is the opposite of this record.

What is usury and what is its scope? Are interest and usury exactly the same, or is one stricter? Another word is riba. Is bank interest specifically usury? Traditional texts from the same school of thought equate riba with interest in general [Ahmed, p. 28], using the two terms interchangeably. When explaining why usury is forbidden, the literature addresses the reasons for forbidding interest, assuming the two are exactly the same.

Advocates of the Islamic banking and finance movement often claim there is a consensus that usury is the same as interest. In this article, we examine the truth and validity of this claim. In other words, the subject of this article is not whether interest is forbidden, but whether a consensus exists that usury is equal to interest.

Consensus—is the claim that interest equals usury true?

The question of whether interest is usury is important beyond just academic discussion or debate. In fact, there is a tendency to claim the debate is already over, or that there is no room for further argument. Here are some examples.

The general consensus among scholars is clearly that there is no difference between riba and interest. [Muhammad Arif]

Islamic law does not allow usury, and economists now generally believe that riba is not limited to usury but also includes interest. [Chiara Segrado, "Islamic Microfinance and Socially Responsible Investments", August 2005]

The famous scholar Dr. Yusuf al-Qaradawi believes the issue of banning interest is settled. He says there is no rule that allows any reformer to reinterpret it or find an excuse to claim otherwise. He points out that this is a matter that has passed the test of consensus among the Ummah, both today and in the past. [Syed Tanveer Ahmed. Attempts to defend interest are in vain,]

Jurists and economic experts agree that interest is the same as what is called usury in Islamic law, and it is strongly condemned. [Mabid Ali al-Jarhi and Munawar Iqbal. Islamic Banking: Answers to Some Common Questions, Islamic Development Bank, Occasional Paper No. 4, 2001.

Historically, all schools of thought have consistently recognized that riba and interest are the same. Based on this consensus, the Islamic Fiqh Academy of the Organization of Islamic Cooperation (OIC) recently issued a ruling in its Resolution No. 10 (10/2) supporting the historical consensus on the prohibition of interest. [Iqbal and Molyneux, page 9; IFC/2000]

Riba (usury), or bank interest if you prefer, is forbidden by the texts of the Quran and Sunnah. This is the conclusion reached by all jurists. [Nyazee, page 1]

Scholars established an academic consensus that both types of riba are not allowed, which ended any debate. [Zuhayli, Abdulkader Thomas, page 29]

The ban on riba al-nasia basically means Islamic law does not allow a predetermined positive return on a loan as a reward for waiting. In this sense, according to the consensus of all jurists, usury has the same meaning and significance as the modern concept of interest. It makes no difference whether a loan is for personal consumption or business purposes, or whether the loan is provided or accepted by a commercial bank.

Discussions about economics and finance are full of this kind of pious and absolutist language. However, the reality is not like this, and claiming a consensus exists is a common practice among scholars. The concept of consensus or unanimous agreement can only be viewed from a factual level, regardless of whether this consensus exists or has existed. The use of the word consensus itself inspires awe in believers because, according to the principles of jurisprudence, the concept of consensus carries the idea of religious infallibility and is therefore binding; opposing it might lead to being cast out by the orthodox.

While a detailed explanation of the concept of consensus in legal discourse is not the focus of this article and cannot be covered here, the question of whether there is a consensus on equating usury with interest—which would mean Islam forbids interest—requires a basic understanding of consensus. On one hand, ordinary Muslims easily misunderstand these issues and get misled. On the other hand, if we do not recognize and address the reality of the nature and problems of the concept of consensus from the start, then other pious scholars or even experts might distort these issues. To fully explain the doctrine of consensus, I encourage readers to read my book, Towards Our Reformation: From Legalism to Value-Oriented Law and Jurisprudence, published by the International Institute of Islamic Thought in 2011, specifically the chapter titled The Doctrine of Consensus: Is There a Consensus? This chapter covers the doctrine of consensus.

When it comes to consensus, people run into doctrinal problems right from the start. There is no consensus on the definition of consensus. Some define it as the consensus of the companions of the Prophet. Others define it as the consensus of scholars. Still others define it as the consensus of the entire world. Some believe consensus is reached through active participation, while others think silence in the face of any dissenting voice is acceptable. While some think consensus is binding on contemporary people, others believe that once a consensus is achieved, it is inviolable and binding forever.

By the 3rd and 4th centuries of the Hijri calendar, several orthodox schools of thought emerged, and each school had a broad consensus within itself. However, the existence of multiple schools of jurisprudence is not evidence of consensus, but rather evidence of a lack of consensus.

If you flip through The Hedaya (translated by Charles Hamilton, Darul Ishaat, Karachi, 1989), one of the main texts of Hanafi law, you can pick almost any topic at random. You can then see if the three elders of the Hanafi school—Imam Abu Hanifa and his two students, Imam Abu Yusuf and Imam Muhammad—agree on most of the issues covered in the book. The reality is that no matter which definition you choose—the consensus of the companions, the scholars, or the entire Ummah—there are not actually many topics or issues where a consensus exists.

This is not to suggest or assert that consensus has not played a vital role in history, or that it has no role at all. Instead, this is to help people clearly realize that one neither needs nor should claim the sanctity of a concept when that concept simply does not have such recognized sanctity. as explained in the chapter on consensus [Farooq, 2010], except for a few broad and basic issues, there is almost nothing that can reach a consensus. Therefore, one needs to be cautious when accepting any claim that there is a consensus on something.

In fact, it is reported that Imam Hanbali, the founder of one of the four orthodox schools, made a cautionary assertion: Anyone who claims there is a consensus is a liar.

The position that this interest is riba is a general, orthodox stance. However, any claim of consensus regarding the equivalence of riba and interest should be treated with great caution. This is especially true because even the orthodox position cannot clarify any workable and agreed-upon definition of usury.

This may surprise many people, but as a prominent contemporary Pakistani orthodox jurist and scholar wrote: Despite the rampant activities in Islamic banking and finance, and despite the general agreement on the prohibition of usury, there is no agreement on the exact meaning of usury. For example, the Supreme Court of Pakistan issued a questionnaire in 1992, and the very first question was: What is the meaning of riba?

One would have thought that the Islamic Fiqh Academy or other religious groups would have formulated a definition for guidance, especially for investors. Although the academy's rulings are not binding on anyone and are only suggestions, a definition could have been refined through discussion for the benefit of all to suit modern transactions. A clear statement on the meaning of riba in the form of a definition would be very helpful, even for banks, especially Western banks. Unfortunately, no such definition was formulated. [Nyazee, 2000, p. 2]

Nyazee explained further: this might sound like an exaggeration, but it is not. Many scholars today insist that riba is not what we call interest in modern terms. However, most modern scholars insist that interest is forbidden. Even these scholars are not entirely sure which transactions riba covers. This uncertainty comes from the ambiguity surrounding riba and its rules.

Just as voices advocating for Islamic banking and finance grow stronger, other voices have existed in the past that challenge the relevance and overall Islamic nature of these institutions and their operations. Although only a few legal experts have provided fatwas (religious decrees), the literature on Islamic economics and finance has so far been unconvincing. It has failed to successfully clear up the doubts about the equivalence of so-called interest and usury, or perhaps not enough voices have been heard. [I'lam al-Muwaqqi'in, Part 2, page 179.]

This may be the only area in Sharia or law that involves risks worth hundreds of billions of dollars. many Sharia experts can accumulate significant worldly wealth. [See Owen Matthews, "How the West Runs Islamic Banking," Newsweek (October 31, 2005)]

While the orthodox position on the evolution of riba is not necessarily tainted by secular considerations, contemporary Islamic banking and finance (IBF) discourse does note the "debate over 'selling fatwas'... 'fatwa wars' and so on" [Warde, page 227].

The classical orthodox position centers on riba, while modern, contemporary discourse centers not only on riba but also on "riba-interest." Contemporary Sharia experts have little to say about the political tyranny or the concentration of wealth among the patrons of the IBF movement.

Different positions on riba and interest

Ibn Abbas [passed away in 687 AH]. Abdullah ibn Abbas was the cousin of the Prophet and was born two years before the Hijri calendar (622 AD). He is better known for his vast knowledge of traditions than for the controversial political role he played after the Prophet died.

Ibn Abbas and some of the Prophet's companions—Usama ibn Zayd, Abdullah ibn Masud, Urwa ibn Zubayr, Zayd ibn Arqam, and leading Meccan scholars—believed the only illegal riba was riba al-jahiliyyah (usury of the pre-Islamic period of ignorance).

The lender would ask the borrower on the due date: 'Will you pay back the debt or increase the debt?' The increased interest was usually achieved by charging accrued interest on interest that had already been calculated when the loan agreement was made. In contrast, riba al-Nasaiah and riba al-Fadl were considered legal according to the six items specified in famous hadith: gold, silver, wheat, barley, dates, and salt.

This liberal interpretation of riba relies on a hadith narrated by Ibn Abbas himself, which in his view had replaced the previous hadith. The authenticity of this final hadith about usury is generally not established, but it is interpreted in contradictory ways. It essentially says: 'There is no usury except for nasiah (nasiah is understood here as the usury of the pre-Islamic period of ignorance).' Opponents of Ibn Abbas's interpretation of this hadith argue that it places more emphasis on riba al-nasi'a rather than replacing the previous hadith. [Salih, pp. 26-27]

To better understand the position of Ibn Abbas, it is important to understand that if his position is true—and we have no reason to believe it is less authentic than other hadith or accounts about usury—then all views equating usury with interest cannot stand. This hadith can be found in Sahih al-Bukhari, Kitab al-Buyu, #2178. According to the position of Ibn Abbas reported in this hadith, there is no riba except for transactions involving deferred payments. Therefore, this position of Ibn Abbas denies the other form of riba al-Fadl. Schools of thought representing orthodox views believe all forms of interest or unreasonable deferred payments are forbidden. This general stance contradicts the position held by Ibn Abbas. Essentially, the account from Ibn Abbas suggests that only riba al-jahiliyyah, or pre-Islamic usury, is illegal. (Sahih, p. 27)

If only riba al-jahiliyyah is considered forbidden, then when a borrower cannot pay back a debt in full, the prohibition only applies if the principal amount increases or multiplies in an exploitative environment. In other words, a total ban on interest cannot be inferred from the ban on riba al-jahiliyyah, which is also called forbidden usury in the Quran. This is why the position of Ibn Abbas and other companions of the Prophet, who did not consider riba al-fadl to be forbidden, is so important. Riba al-fadl established a broader ban on riba, claiming to include all interest or specified excesses. As Nyazee reflects:

Definitions given by early jurists are now considered by many scholars to be unsuitable for modern transactions. In fact, most scholars limit this definition to the area of riba al-fadl as they understand it. [Nyazee, 2000, p. 2, fn.#7]

Given the ambiguity in the definition and understanding of usury, the position of Ibn Abbas rejecting the ban on riba al-fadl is a thorn in the side of the orthodox view. Therefore, there is a tendency to dismiss his claim by saying he changed his mind later, or by arguing he only meant to emphasize the presence of riba in transactions involving deferred payments. Fazlur Rahman discusses the position of Ibn Abbas in detail in his article "Riba and Interest" [Rahman 1964] and exposes the fallacies of those who try to explain away the variant position of Ibn Abbas. See also Farooq, 2007a.

Usama ibn Zayd:

Regarding the same hadith from Ibn Abbas mentioned above, another companion of the Prophet, Usama, also held the same view. Further discussion on this point can be found in an article by Dr. Raquib uz Zaman, "Monetary and Fiscal Policies of the State: Claims and Reality" [Zaman, 1988]. The implications of this view are the same as those of Ibn Abbas discussed above. [See Abdullah Saeed, p. 30]

Zayd ibn Arqam:

The riba prohibited by the Quran is known as riba al-Duyun, riba al-Jahili, or riba al-Nasiah. Some followers of the Prophet believed this was the only prohibited usury. They relied on a statement attributed to Ibn Abbas after Usama ibn Zayd, which means: "There is no usury except in Nasiah." [Saleh, op. cit.]

This argument also reflects the views of Zayd ibn Arqam, Bara ibn Azib, and Ibn Zubayr among the companions of the Prophet. [Dr. Engku Rabiah Adawiya Engku Ali, "riba and its Prohibition in Islam," International Islamic University Malaysia].

This view means the same thing as the opinion of Ibn Abbas discussed above. See also Saleh, pages 26-27.

It is reported that Bara ibn Azib held the same view on usury as the companions mentioned above. [Saleh, pages 26-27; Ingu Ali]

It is reported that Urwa ibn al-Zubayr held the same view on usury as the companions mentioned above. [Saleh, pages 26-27; Ingu Ali]

It is reported that Abdullah ibn Masud held the same view on usury as the companions mentioned above. [Saleh, pages 26-27] Dawud ibn Ali [passed away in 270 AH]

Dawud ibn Ali is better known as the founder of the Zahiri school. An article titled Zahirism by Dr. Omar Farrukh explains the Zahiri view on usury in detail.

The issue of usury: Usury is forbidden. However, a tradition regarding it creates difficulty. Related to this, the Prophet Muhammad said: '(You may) exchange gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, only in equal amounts and on the spot.'

For all other goods, you can trade as you wish, provided the barter happens on the spot. Early jurists concluded from this tradition that no quantity of any good should be bartered for a larger amount of the same good; otherwise, the surplus taken would be usury. However, if you exchange a certain amount of forged gold for a larger amount of unrefined gold, the surplus is a gain, or better yet, a wage for craftsmanship. they believed the six goods mentioned by the Prophet were only examples; therefore, exchanging copper, coffee, leather, apples, or wool for a larger amount of those same goods was also considered a form of usury by analogy. On the other hand, Dawud ibn Ali believed the Prophet Muhammad named those goods intentionally. If he had intended to extend the list, nothing would have stopped him from doing so. Therefore, if a person exchanges a certain amount of goods, such as iron, corn, apples, or pepper, for a larger amount of the same goods, the surplus is not usury, but a gain. [Farrukh, undated]

According to al-Zahiri, the forbidden usury in riba al-Fadl (barter exchange) only applies to the six goods specified by the Prophet in the hadith. Because the Zahiri school rejects analogical reasoning, it refuses to extend usury to other goods. This contradicts the IBF movement's stance of broadly banning all forms of excess (usury), including interest. Dawud al-Zahiri was very controversial, and many orthodox scholars were highly critical of him. However, later on, Imam Ibn Hazm also accepted Zahirism and became a more important symbol of the school than al-Zahiri himself. Ibn Hazm also took the same position as al-Zahiri. In other words, according to Zahirism, the scope of the prohibition is much more limited or narrow than the traditionally expanded prohibition.

Imam Ahmad ibn Hanbal [passed away in 273 AH]:

Even among classical scholars, there is a lot of room for disagreement regarding the definition and interpretation of usury. Imam Ahmad is considered the founder of one of the orthodox schools of jurisprudence. His position is that only riba al-jahiliyyah is illegal usury.

The Quran strongly condemns usury, but other than contrasting usury with charity and mentioning excessive doubling, it barely explains the meaning of the word. Commentators describe a pre-Islamic practice of delaying payment for a debtor in exchange for an increase in the principal (riba al-jahiliyyah). Because this practice was recorded as already existing at the time of revelation, it is a specific example of what is forbidden. Therefore, Ibn Hanbal, the founder of the Hanbali school, declared that this practice—paying or increasing interest—is the only form of usury and is undoubtedly forbidden. [Vogel and Hayes, pp. 72-73, citing Ibn Qayyim al-Jawziyya, died 1350, I'lam al-muwaqqa'in 'ala rabb 'alamin, edited by Taha 'Abd al-Ra'uf Sa'd, Beirut: Dar al-Jil, 1973, 2:153-4]

Some argue that even if the validity of analogy as a source of law is accepted, extending the prohibition beyond the six commodities might violate one of the conditions for a valid analogy. The fifth condition for a valid analogy is that the legal wording of the original case must not be changed once the causal relationship is determined. The reason is that, in both letter and spirit, the textual prohibition takes precedence over analogy. Analogy is invalid when there is a textual law. Likewise, it is invalid if the legal wording of the original case is changed...[For example]... the Prophet only permitted the killing of five specific types of reptiles within the holy sanctuary. The analogy of these reptiles cannot be extended to other animals because the causal relationship changes the text's wording. Consequently, the number of animals exempted by the Prophet would exceed five. Therefore, this cannot be allowed. [Hassan, 1986, p. 23]

Once again, the argument for a total and general ban on interest goes against this position, as long as pre-Islamic interest (riba al-Jahiliyyah) is illegal.

Ibn Qudamah [passed away 1223 AD]:

He is a famous scholar of the Hanbali school. He believes that when a loan involves items that are neither weighed nor measured, the creditor should get back the original value. Although this view only applies to items that are not weighed or measured, it influenced the later, more general view of Imam Ibn Taymiyyah discussed below.

"If the borrowed item is neither weighed nor measured, one may choose to ask for an equivalent to be returned on the day of repayment, or ask for the value of the item on the day it was borrowed." Ibn Qudamah argues that for items without measurement or weight, there can be no equivalent, so the debtor must return to the creditor the value of the item when it first existed, which is the value at the time the loan contract was made. [W. M. Ballantyne, Commercial Law in the Arab Middle East: The Gulf States (London: Lloyds of London Press, 1986), pp. 125-6; *refer to Al-Mughni, Vol. 4, pp. 357-8]

Imam Ibn Taymiyyah [passed away 1328 AD]:

Imam Ibn Taymiyyah needs almost no introduction, and his views build further upon those of Ibn Qudamah. He explains that a lender should be able to recover the original value or its inflation-adjusted value, which relates to the difference between nominal and real value. From his perspective, it follows that there cannot be a total ban on interest. This means that nominal interest, which only covers the inflation premium, would not be forbidden. In this case, you cannot say interest is forbidden, but positive real interest is. Ibn Taymiya, an independent Hanbali scholar whose views are often supported by legal modernists, argued that a lender should recover the original value.

There is reason to believe Ibn Taymiya's view should be adopted because the lender is not involved in the trade and does not make a real profit from it. If he cannot cover losses caused by inflation, he will be even less willing to provide interest-free loans. [W. M. Ballantyne, Commercial Law in the Arab Middle East: The Gulf States (London: Lloyd's of London Press, 1986), pp. 125-6]

Ebusuud Efendi, Mufti of Istanbul from 1545 to 1574 AD:

Perhaps the oldest statement of this kind was made by Ebusuud Efendi, the Mufti of Istanbul between 1545 and 1574 AD, who held the title of Sheikh ul-Islam toward the end of his term. Ebusuud defended this practice of collecting interest, especially for charitable foundations (waqf), arguing it was a practical necessity. As expected, this minority view, while endorsed by the Ottoman Sultan Suleiman, was rejected by most scholars in the Arab world who continued to support interest-free loans and traditional partnership financing. Because of this, European banking models were not widely adopted in the Islamic world until the 18th century. [el-Gamal, 2000; online, page 2]

Sir Syed Ahmad Khan [1817-1898 CE]:

Sir Syed Ahmad Khan was a reformist leader of the Aligarh Movement in India and the founder of Aligarh Muslim University. The confusing issue of banning usury or any transaction involving usury was solved by translating the word 'riba' as usury and distinguishing it from the Western concept of interest. This was the line of thinking adopted in India by Sir Syed Ahmad Khan and others in his school of thought, such as Nazir Ahmad and Syed Tufail Ahmad Manglori. Some Egyptian scholars (ulama), such as Tawfik Affendi and Sh. Islamil Khalil, along with modernists in Turkey, expressed the same view. [Fazlur Rahman Gunnauri, pages 24-25]

"... His focus on social cohesion, social progress, and social justice influenced his resistance to the standard prohibition of usury (interest) held by scholars until then. He asserted that this ban should only apply to the debts of poor people who borrowed money out of necessity. It should not apply to those who contribute to public interest by constantly expanding commercial activities. [Charles Tripp, Islam and the Moral Economy: The Challenge of Capitalism [Cambridge University Press, 2006, page 26, citing J. M. S. Baljon, The Reforms and Religious Ideas of Sir Syed Ahmad Khan (Lahore, 1970), pages 34-49] Muhammad Abduh [1849-1905] and Muhammad Rashid Rida [1865-1935]

Muhammad Rashid Rida:

It is claimed that according to the Grand Mufti of Egypt Muhammad Abduh (who passed away in 1905) and his disciple Muhammad Rashid Rida, what was forbidden was the form used during the Age of Ignorance. Nabil Saleh summarizes the views of Abduh and Rida by stating that, according to them, the first increase on a regular loan is lawful, but if a decision is made at the due date to postpone it for a further increase, this is forbidden. This view is clearly based on reports in the commentary of Tabari regarding how usury was practiced in the pre-Islamic period. These scholars did not explicitly and openly suggest that interest is acceptable without any restrictions. [Saeed, p. 43; For similar observations, see also Saleh, p. 28; El-Gamal: 'Rashid Rida on Usury']. Abdullah Saeed discusses the following based on Muhammad Rashid Rida (who passed away in 1935), a prominent scholar and disciple of Shaikh Muhammad Abduh.

'... Among the authentic hadith attributed to the Prophet regarding usury, there is one that seems to mention the terms loan (qard) or debt (dayn).' The fact that no loan or debt is mentioned in hadith related to usury led a minority of jurists to argue that the usury actually forbidden refers to certain forms of sales mentioned in the hadith literature. [Cited from Rida, al-Riba wa al-Mu'amalat fil al-Islam, Cairo: Maktabat al-Qahira, 1959, p. 11] Abduh's views are primarily known through the works of his disciple Rida. Their views did not receive any blanket approval. The reality is the opposite. In this context, they did not agree with any simple equation between riba and interest, and they even approved of certain forms of interest.

Whatever Abduh's exact intentions were, his ambivalence about equating all forms of interest with usury echoes the ongoing reassessment of the limits of legality in a changing environment. [Tripp, ibid., p. 127]

Ulama (scholars) from India and Mecca [1920s AD]:

Some scholars believe that only consumer loans fall under the prohibition of usury, because borrowers may be at a disadvantage for various reasons and are vulnerable to injustice and exploitation. This position and the basic argument may be questionable, but in this paper, each different position is not studied in detail. Instead, the facts being presented contradict the claims of a consensus regarding the equivalence of riba and interest.

Sheikh Muhammad Abu Zayd (1930):

He was a sheikh from Damanhur, Egypt. He earned the anger of the orthodox for his book 'Al-hidaya 'irfan fi tafsir al-Qur'an bil-Qur'an'. In 1930, Abu Zayd tried to use independent legal reasoning (ijtihad) to explain current riba practices, insisting that only excessively high interest is illegal. [Jansen, J. J. G., The Interpretation of the Modern Egypt, Leiden, E. J. Brill, 1980, p. 89, mentioned by Jay Smith in January 1996,

Dr. Marouf al-Daoualibi:

In the 1930s, Syrian scholar Marouf al-Daoualibi suggested that the Quran only forbids interest on consumer loans, not interest on investment loans. In the 1940s, Egyptian jurist Sanhuri argued that only compound interest should be forbidden.

Shaikh Mohammad Abd Allah Draz was a member of the Grand Ulema institution and a professor at Al-Azhar University in Cairo. Shaikh Draz earned his doctorate at the Sorbonne University. [Saleh, p. 29] mentions that his position contradicts the idea that usury is the same as interest. His position was mentioned in an appeal to the Supreme Court of Pakistan, which opposed treating all interest in the country as part of Sharia.

Zaidan Abu Karim Hassan:

[Saleh, p. 29] mentions this scholar's different position in his book. Abdullah Yusuf Ali [passed away in 1953]

Abdullah Yusuf Ali is perhaps the author of the most popular English translation of the Quran. Instead of equating riba with usury, he distinguishes between them, writing in footnote #324 of The Holy Qur'an: Text, Translation and Commentary [Tahrike Tarsile Qur'an, 2nd edition, 1988]:

Usury is condemned and forbidden in the strongest terms, and there is no doubt about this prohibition. When we talk about the definition of usury, there is room for disagreement. According to Ibn Kathir, Hazrat Umar found this matter difficult because the Messenger left this world before the details of the issue were fully resolved. This was one of three issues he hoped to receive more revelation about from the Messenger, with the other two being the Caliphate (Khilafat) and the inheritance of distant relatives (Kalalat). Our scholars (ulama), both ancient and modern, have written a great deal of literature on usury. I agree with their views on the main principles, but I differ from them on the definition of usury. Because this topic is very controversial, I will not discuss it in this commentary, but will address it elsewhere at an appropriate time. The definition I accept is: unfair profit earned from loans of gold and silver, and from necessities like wheat, barley, dates, and salt (based on the list mentioned by the Prophet himself), rather than through legitimate trade. My definition includes various forms of profiteering, but it does not include economic credit, which is a product of modern banking and finance.

Muhammad Asad [1900-1992]:

Muhammad Asad, the famous author of The Message of the Quran, does not equate interest with usury, but rather equates riba with usury. His commentary on this matter explains:

This is the earliest mention of the word and concept of usury in the chronology of the Quranic revelations. In a general linguistic sense, the term means an increase or addition of something beyond its original size or amount. In technical terms, it refers to an illegal increase of money or goods lent by one person or group to another person or group at interest. Considering the economic conditions of their time or earlier, most early jurists linked this illegal increase to profits gained through any form of interest-bearing loan, regardless of the interest rate or economic motive involved. In summary, as shown by the vast legal literature on this subject, scholars have not been able to reach an absolute consensus on the definition of usury that would cover all possible legal situations and address all emergencies in changing economic environments.

In the words of Ibn Kathir, the subject of usury is one of the most difficult subjects for many scholars (ahl al-ilm). It should be remembered that the passages legally condemning and prohibiting usury (2:275-281) were the last revelations received by the Prophet, who passed away a few days later (see the note on 2:281). Therefore, the companions did not have the chance to ask him about the implications of the prohibition for Islamic law, to the point that it is reliably narrated that Umar ibn al-Khattab said: The last thing revealed was the passage about usury; Lo, the Prophet passed away without explaining its meaning to us (Ibn Hanbal, on the authority of Said ibn al-Musayyab). However, the harsh condemnation of usury and those who consume it—especially when viewed against the backdrop of human economic experience in the following centuries—clearly shows its nature and its social and moral impact. Roughly speaking, the condemnation of usury refers to profits gained through interest-bearing loans that involve the exploitation of the economically weak by the strong and resourceful. This exploitation is characterized by the lender retaining full ownership of the loan capital and having no legal concern for the purpose of the loan, maintaining a contractually guaranteed profit regardless of any losses the borrower might suffer from the transaction or how the borrower uses the money. Considering this definition, we realize that the question of which types of financial transactions fall into the category of usury is, in the final analysis, a moral issue closely related to the socio-economic motives behind the relationship between the borrower and the lender. From a purely economic view, this is about how both sides can fairly share profits and risks in a loan deal. It is impossible to answer this dual question in a rigid, once-and-for-all way. Our answers must change as human society and technology develop, which also changes our economic environment. While the condemnation of the concept and practice of usury is clear and final, every generation faces the challenge of giving this term new dimensions and economic meanings. For lack of a better word, this term might be interpreted as usury.

Professor Fazlur Rahman [passed away in 1988]:

Fazlur Rahman (1911-88) was perhaps the most learned of the major thinkers in the second half of the twentieth century, both in classical and Western philosophical and theological discourse. He came from a Punjabi family immersed in traditional learning. He then went on to study modern critical thinking at Oxford University under H. A. R. Gibb and Van Der Bergh. Overall, he was a dedicated teacher and research scholar, especially innovative in his Avicenna studies, and held positions at Durham, McGill in Montreal, and the University of California. From 1969 until his death, he served as a professor at the University of Chicago. [M. Yahya Birt, Information on Fazlur Rahman, 1996] As one of the most prominent scholars of the last century, his work on riba and interest is essential reading. He challenged the traditional position that equates usury with interest. [Rahman, 1964]

Allamah Iqbal Ahmad Khan Suhail:

Allamah Suhail studied under famous Indian scholars like Allamah Shibli Nomani. His book written in the 1930s, "What is Usury?" only recently became available in English. This is a must-read for anyone wanting to understand the challenges of equating usury with interest. He uses classical sources to show how traditional, orthodox views on equating usury with interest are simplistic and wrong, and how Quranic verses and relevant hadith about usury are misunderstood and misused.

Maulana Sa'id was the Grand Mufti of Darul Uloom (Waqf) in Deoband. Following general Hanafi Fiqh, and specifically the Deobandi tradition, he believed that interest-based transactions are conditionally allowed in non-Muslim countries, especially charging interest to non-Muslims. In a fatwa regarding bank interest and insurance, Maulana Sa'id argued:

"...there is no doubt that giving one rupee to a non-Muslim and taking back two rupees from him with his consent is correct, because this [excess amount] is not usury." (Suhail, page 192)

In fact, this is the consistent position of Deoband and its leaders and scholars. The meaning of this position is that it does not align with any total ban on usury, let alone interest.

Maulana Abul Kalam Azad:

Maulana Abul Kalam Azad (1888-1958) is a famous figure in modern Indian history. He is also a famous scholar. I have not yet confirmed his views directly from his own writings. However, his views are mentioned in testimony given during the Pakistan Supreme Court hearings on the issue of banning interest.

To support the argument that charging interest on bank loans does not violate Sharia, the lawyer mentioned Maulana Abul Kalam Azad. Chief Justice Sheikh Riaz pointed out that Maulana Azad's Quranic commentary (tafseer) is incomplete and only covers 17 sections. The lawyer replied that this made no difference to him because the commentary on the Chapter of the Cow (Surah Al-Baqarah) he wanted to mention is complete. He said that the application of the verse is limited to the poor class and does not apply to all transactions.

Sheikh Mahmoud Shaltut:

Sheikh Mahmoud Shaltut (1893-1963) was a prominent Egyptian scholar. From 1958 to 1963, he was also an imam at Al-Azhar University in Egypt. Dr. Fathi Osman mentions the following on page 919 of his book.

Muhammad Abduh, the prominent Egyptian mufti, believed that interest paid by post offices on savings there was halal. This view was later supported by former Grand Imam of Al-Azhar Mahmud Shaltut [who passed away in 1962]. he allowed interest on national bonds if economic development and personal or public interest required issuing them [al-Fatawa, Issue 8, Cairo: 1975, pp. 351-355]. Shaltut also agreed in advance to any fixed-interest transactions offered by the state, state-affiliated institutions, or any agency connected to the state, assuming there was no exploitation by any party in those cases.

Dr. Said Ashmawi, an Egyptian religious reformer and former chief justice:

Ashmawi's argument is interesting. He points out that in the early days, usury led to the enslavement of debtors, such as debtors being sold as slaves by the Prophet according to the hadith. For the interpretation and dating of this hadith, which stands in opposition to later laws, see Irene Schneider, Kinderverkauf und Schuldknechtschaft (Stuttgart, 1999), p. 74ff., which is a response to H. Mozki, “Der Prophet und die Schuldner,” Der Islam 77 (2000), p. 1ff. [Book review of Schari'a und Moderne: Diskussionen über Schwangerschaftsabbruch, Versicherung und Zinsen, by Rüdiger Lohlker. (Abhandlungen für die Kunde des Morgenlandes) 156 pages, bibliography. Stuttgart, Germany: Deutsche Morgenländische Gesellschaft, 1996. (Thesis) ISBN: 3-515065-822; Reviewer, Adam Sabra, University of Michigan, note #1]

Shaykh Muhammad Sayyid Tantawi was the highest-ranking scholar and cleric at Al-Azhar and the Grand Mufti of Egypt.

A more extreme and recent example is the view of Egyptian Mufti Shaykh Muhammad Sayyid Tantawi. In 1989, he declared that interest from certain government investments based on interest was not forbidden usury. He argued that the earnings were little different from sharing in the profits of the government's use of funds, or that bank deposit contracts were new. By doing this, he joined a small group of famous religious figures who issued fatwas declaring clear interest-based practices to be permissible. This fatwa caused a storm of controversy. Almost all traditional religious scholars opposed it, while secular modernizers praised it warmly. Later, he went even further, saying that interest-bearing bank deposits were completely lawful, especially compared to accounts that imposed unfavorable conditions on customers. He suggested that the law should change the legal terms used for bank interest and bank accounts to clarify that they were free from the stain of usury. [Vogel and Hayes, page 46]

Although he was a traditional and orthodox scholar in every way, his position was met with harsh and flat rejection by other scholars. However, this is an illustrative case for those who think, argue, or claim that only heretical or deviant scholars or intellectuals could possibly hold a different position challenging the equivalence of interest to usury. Yet, as Mahmoud Jamal pointed out, the basis for this fatwa goes back at least a century. The basis for this fatwa is at least a century old.

Abd al-Wahhab Khallaf [1888-1956]:

Dr. Abd al-Wahhab Khallaf was a famous scholar and jurist from Al-Azhar. Principles of Islamic Jurisprudence (Usul al-Fiqh) was one of his main fields, and he made valuable academic contributions in these areas. Sheikh Tantawi drew on some important opinions from Dr. Abdul Wahab Khallaf when he formulated the aforementioned religious ruling (fatwa).

Tantawi (2001, p. 131) quotes word-for-word similar statements from Khallaf (pp. 94-104), Al-Khafif (pp. 165-204), and others (pp. 204-211), saying: 'In this era of corruption, dishonesty, and greed, not fixing the profit (as a percentage of capital) will leave the principal at the mercy of the investment fund's agent, whether it is a bank or another institution.' [Quoted from Mahmoud El Gamal's introduction, available on the La Riba Bank website]

Sheikh Nasr Farid Wasil, Tantawi's successor as the Grand Mufti of Egypt:

Sheikh Nasr Farid Wasil echoed his predecessor, Sheikh Tantawi, in 1997 by simply stating that the controversy over bank interest should end because 'there is no such thing as an Islamic bank and a non-Islamic bank.' [Tripp, ibid., p. 130]

'I will give you a final and decisive ruling (fatwa)... as long as the bank invests the money in permissible venues, then the transaction is permissible.' Otherwise, it is forbidden... there is no such thing as an Islamic or non-Islamic bank. Therefore, let us stop this controversy over bank interest.' [Al-Ittihad (UAE), August 22, 1997]

Dr. Fathi Osman:

Dr. Fathi Osman is a famous scholar. He has taught at famous universities in the Middle East, Asia, and the West. In his highly praised work, Dr. Osman responds to Muhammad Asad's views on this issue and adds the following commentary on verses 275-281 of al-Baqarah:

The verses above deal with illegal riba, followed by other verses involving loan contracts between people. Usury, or riba in Arabic, was mentioned earlier. Riba can include any illegal increase on the principal if that increase is unfair and therefore harmful to individuals and society. As Ibn Kathir noted in his commentary on verse 2:275, and as other commentators and jurists have noted, riba is one of the most difficult subjects in law. This is because the verses prohibiting riba, along with what the Prophet said about riba during his Farewell Pilgrimage sermon, appeared in the final days of the Prophet's life. Therefore, according to a manuscript by Ibn Hanbal, the companions did not have the chance to ask him about this matter, and even Caliph Umar expressed a wish that the Prophet could have provided some explanation. Generally, riba relates to loans that involve exploiting the economically weak: the borrower might only be using the money to meet basic living needs. Even if he or she uses the loan for investment, the interest they receive might be less than what the lender gets in any case, or the borrower might lose everything. In his commentary on the above verses, Muhammad Asad correctly points out: "...we recognize that the question of which types of financial transactions fall into the category of riba is closely related to socio-economic motives." The motives mentioned here are the motives for lending and borrowing, which, beyond the genuine agreement of the borrower and lender, relate to mutual gains and losses and the circumstances upon which fair interest in a transaction is based. So, this is a question of how both sides fairly share the profits and risks of a loan deal. Our answer must change as things change. These changes might happen in the situation of the parties involved, the society, or the economy.

What Muhammad Asad clarified is vital. Usury is not the name of a specific physical object. It is a transaction between two or more people that can only be understood within its historical and social context. Explaining usury as an increase or addition does not explain the issue, because any legal profit is also an increase. Linking the word increase to a loan might not be convincing enough. You must consider the situation of the society and the traders, because a loan might provide mutual benefit or social usefulness. Therefore, the socio-economic background is necessary to define socio-economic practices and to clarify the harm and injustice in a transaction that provides a legal basis for prohibition. The scriptures about usury are few, and the Prophet passed away before detailing answers to questions about it. In his Farewell Sermon, he mentioned usury only in the context of loans between Arabs before the time of ignorance (al-jahiliyyah), which emphasizes the historical and social context of this transaction.

Some modern jurists ignore historical development and socio-economic differences and changes. They tend to treat the word interest used in modern transactions, such as banking, insurance, and mortgages, as if it were the exact synonym for usury. This ignores the modern development of banking and insurance businesses and independent institutions. It leads to a separation between financing and financial investment on one side, and production, whether agricultural, industrial, or commercial, on the other. Also, the time factor has become vital in modern transactions. Revolutionary changes in transport and communication have had a huge impact on the circulation of money, the flow and availability of cash, and therefore the demand for credit.

Transactions made by phone, fax, or computer have sped up, which increases the risk factor. The modern global village we live in has developed mass production and mass marketing, which require huge capital. An Australian company might have businesses in Malaysia or Pakistan and might rely on financing from American or European banks. This creates a need for specialized institutions to handle financing and provide financial services that differ from the long-term or medium-term operations and risks of agricultural, industrial, or commercial businesses. These financial institutions benefit a wide range of shareholders, depositors, and borrowers, and they are usually not owned by individuals. Legal protections can therefore prevent monopolies and various forms of fraud and exploitation. The central bank has a supervisory and controlling role over financial activities and financial institutions. Also, money no longer exists in the form of gold or silver, so it cannot keep its value stable. Over time, fluctuations in currency value and inflation in commodity prices affect the purchasing power of money. All these qualitative changes in the contemporary world economy must be considered deeply to accurately determine the nature and role of interest.

The famous Egyptian jurist and professor of Islamic law at Cairo University, Abdel-Wahab Khallaf (who returned to Allah in January 1956), cited late Hanafi sources in his distinguished book Ilm Usul al-Fiqh (first edition, 1942). This source allows borrowing if the borrower is in need, and the loan can be repaid with an extra amount (page 210). 12th edition, Kuwait, 1978. here that, in general, even if there is a clear and explicit prohibition against something, Allah allows an individual to do it in cases of necessity (for example, 2:173; 5:3; 6:119, 145). 16:115], he allows society to do the same in cases of common need [for example, see Khallaf, 'Ilm Usul al-Fiqh, pp. 208-210; al-Juwayni, Imam ul-Haramayn Abdul-Malik, Ghiyath al-Umam, edited by Fu'ad Abdel Mun'im, Mustafa Hilmi, Cairo: no date, p. 345])

Dr. Ibrahim Shihata [1937-2001]:

Dr. Shihata was a legal scholar who served as General Counsel of the World Bank and Secretary-General of the International Centre for Settlement of Investment Disputes. "There is no doubt that usury is prohibited by the two main sources of law—the Quran and Sunnah. However, neither of these sources defines the scope of this prohibition. A rational interpretation of these sources suggests that as an exception to the general rule of freedom of contract, this prohibition should be interpreted strictly according to its underlying rationale, which is to help transactions rather than complicate them. Therefore, prohibited usury can cover cases of clear enrichment in trade and loan operations without justification, to ensure the fairness of these transactions and protect weaker parties from unfair exploitation and excessive uncertainty. [Some comments on the issue of usury and the challenges faced by 'Islamic banking']

Dr. Syed Nawab Haider Naqvi:

Dr. Naqvi is a leading economist in Pakistan and holds a PhD from Princeton University. From 1979 to 1995, he served as the Director of the Pakistan Institute of Development Economics in Islamabad. He also wrote Ethics and Economics: An Islamic Synthesis [UK: Islamic Foundation, 1981]. He is very cautious about equating interest with usury, especially when trying to abolish interest while keeping the capitalist system mostly intact. He is also unwilling to take a clear stand on the issue of banning interest. Because of this, he hedges his observations by saying, "if [interest] is identified as usury." In the article Banking: An Assessment, he writes:

Banking theory is caught between two related logical statements: (i) usury is equivalent to all modern interest-based financial transactions, including bank interest; (i) usury is equivalent to all modern interest-based financial transactions; (i) usury is equivalent to all modern interest-based financial transactions; (i) usury is equivalent to all modern interest-based financial transactions; (ii) profit-based banking—more accurately, a banking system proposed according to general profit and loss sharing (PLS) principles, without any guaranteed support for bank deposits or bank advance returns—is superior to capitalist interest-based banking. These two assertions, although (wrongly) viewed by most thinkers as absolute truths not limited by space and time, do raise difficult theoretical and empirical questions, and there are no simple answers. As for the first assertion—that bank interest is usury and therefore forbidden, while profit is allowed—the root of the difficulty is that in a capitalist system, interest and profit are inseparable; in fact, the two are connected like Siamese twins. The mainstream view among secular economists is that average interest rates are determined by the same set of forces that determine the rate of profit on capital invested in production, independent of monetary variables (Panica, 1991). Changes in the rate of profit are caused by changes in interest rates, speculative trading, and productivity (Pindyck, 1988). Therefore, separating the twins requires a complex surgical operation on the economic structure.

in a world without a surplus of capital, the possibility of zero interest rates is flatly denied, because it is hard to imagine people having enough savings to drive the net productivity of capital down to zero. However, this does not mean we should not abolish bank interest if it is considered usury, but we should clearly realize that once interest is permanently abolished as a source of income in a capitalist economy, we simply do not know what the results of this step will be. In the same article, Naqvi also asserts: "Contrary to popular concepts, risk and uncertainty do not necessarily constitute the characteristics of interest that are illegal in Islamic law, which is the meaning of usury." echoing those who believe exploitation and injustice are the focus of scholars and experts, Naqvi wrote: "Economists have widely pointed out that the reason for prohibiting usury ('illat al-hukm) is not just the mathematical formula used to calculate it itself;" Instead, it is its so-called adverse effect on the distribution of income and wealth.

Professor Salim Rashid:

Professor Rashid holds a Ph. D. in economics from Yale University. Currently, he is a professor of economics at the University of Illinois at Urbana-Champaign. In an unpublished, privately circulated paper titled 'The Value of Time and Risk in Islamic Economics' (1983), he explains his questions regarding the equivalence of riba and interest, and why denying the 'time value of money' from an Islamic perspective leads to anomalies and makes economics inefficient from an economic standpoint. He wrote: "If Islam truly does not allow any time discrimination regarding economic value, then the Islamic system must be economically inefficient." This is not the case.

Dr. Imad-ad-Deen Ahmad:

He is an American scholar and the president of the Minaret of Freedom Institute. His views are explained in an article titled: "riba and interest: Definitions and Implications."

Dr. Abdulaziz Sachedina:

Dr. Sachedina is a professor of religious studies at the University of Virginia. His views are explained in an article titled: "The Problem of Usury in Faith and Law."

Dr. Omar Afzal:

Dr. Afzal earned a doctorate in linguistics from Cornell University, is an alumnus of Aligarh University, and holds an Alim degree (Islamic and Arabic studies) from IHIS Rampur. He is a distinguished linguist who is fluent in many languages from the Middle East, South Asia, and Europe. He has expertise in Islamic law, Islamic history, contemporary Islamic movements, the Islamic calendar, and modern Islamic thought. He worked at Cornell University for twenty-six years. He guided several research projects and earned his doctorate and master's degrees. He is a prolific writer, an editor of The Message, and a member of the law faculty. He also served as the chairman of the Center for Research and Communication and the Committee for Crescent Observation International.

In an article titled "Riba: Interest, Usury or Both?", he wrote: "[It] is an attempt to open a debate on 'interest'—a term well-known in modern monetary transactions and legalistic views." Modern banking is largely based on the traditional interpretation of "usury," which does not distinguish between "usury" and "interest." It is also an undeniable fact that modern financial institutions like banks and insurance companies must be corrected to reduce fraud and provide better service. However, any Islamic solution must also be judged by similar standards of "justice" and social responsibility.

Banking is a new phenomenon, and so is interest, which is different from usury. Over the past few decades, it has become an essential part of normal human life. Even those who call interest usury have bank accounts, write checks, use credit cards, and take out loans to buy homes. All Muslim countries, including those that are officially Islamic states, actively participate in interest-based banking. Islamic scholars (ulama) should sit down with economists and experts in finance and development to find ways to align the intentions of Allah with the needs of modern economy and development.

Dr. M. Raquib uz Zaman:

Dr. Zaman served as the Charles A. Dana Professor of Finance and International Business and as chair of the Department of Business Administration at Ithaca College in New York. He has published many academic works in the fields of Islamic economics, finance, and banking. Please visit his webpage for a complete list. Several of his articles are available on the learning resources page. "In Islamic law, there is no preliminary evidence to prove that all interest is usury. So-called Islamic banks are neither Islamic banks nor commercial banks in the true sense. Islamic fiscal policy is more like a lofty slogan than a practical policy tool for today's governments to adopt." [Monetary and Fiscal Policies of Islamic Countries: Claims and Reality]

Dr. Hormoz Movassaghi:

Dr. Movassaghi is a professor and associate dean at the School of Business at Ithaca College (New York). He has co-authored many research works on Islamic finance and banking with Dr. M. Raquib uz Zaman (mentioned above).

Dr. Abdullah Saeed:

Dr. Sayyid is a professor of Arab and Islamic studies for the Sultan of Oman and the director of the Centre for Contemporary Islamic Studies at the University of Melbourne. From a critical perspective, his book, Islamic Banking and Interest: A Study of the Prohibition of Riba and its Contemporary Interpretation, is a must-read.

Dr. Mahmoud El-Gamal:

Dr. El-Gamal is the chair of the Islamic economics, finance, and management department at Rice University, and a professor of economics and statistics. He has published many academic works in this field. He also maintains an active blog. He is known for emphasizing the mutual benefits of organizing Islamic financial institutions, which is not the case at present. Therefore, we discard overly simplistic and incorrect assertions that Islamic finance is 'interest-free' or that it denies the 'time value of money'. [El-Gamal, "The Economic Wisdom of the Prohibition of Riba", Thomas, p. 123]

While Dr. El-Gamal does assert that "...no one can correctly deny that interest on loans is the prohibited riba an-nasiah," he also challenges the simplistic and general equation of riba and interest. "Not all interest is prohibited riba,... [and] not all riba is interest."

Dr. Muhammad Shawqi al-Fanjari:

Dr. al-Fanjari once taught economics at Al-Azhar University in Egypt. He wrote a book titled The Essence of Economic Policy in the Importance of Islamic Economics, which is available online. Like any Muslim, he views usury as forbidden. However, when discussing public interest or common interest, he wrote that interest changes depending on the situation. He acknowledged, without criticism, the views of some scholars who avoid making a blanket statement between riba and interest.

What is considered beneficial in one situation might not be considered beneficial in another. Imam al-Shatibi said on this matter: We believe most things we call good or bad are relative, not absolute. Things are good or harmful in one situation but not in another, and for one person but not for someone else. They are that way at a specific time, but not at another time.

Perhaps this is why some scholars believe interest from savings accounts, government bonds, and investment certificates is not usury (see Sheltout 1969 303, and Khallaf and Abou Zahra 1951).

Dr. Rasul Shams:

Hamburg Institute of International Economics: Religion can promote the development of science, but it is not meant to establish different branches of science. We cannot find any basis to prove that Islamic economics is a science based on the prohibition of interest. ["A Critical Assessment of Islamic Economics", Hamburg Institute of International Economics, 2004]

Professor Emeritus, Department of Economics, University of Alberta, Canada:

Professor Noorzoy distinguishes between nominal terms and real terms. Although he seems to genuinely consider excessive behavior, distinguishing between real interest and nominal interest does not align with the traditional position held by schools of Islamic law, which maintain that any indexation based on inflation is singular. "Traditional interpretations of riba laws show that when usury is converted into average interest, the loan principal is not allowed to 'increase'. However, is this 'increase' measured in real value or nominal value, and therefore, should a real interest rate or a nominal interest rate be applied to the loan? The interpretation of 'increase' in laws involving usury includes both nominal and real forms. According to usury of delay (riba al-nasi'ah), 'increase' refers to the nominal measure of the loan principal. However, according to usury of surplus (riba al-fadl), growth is measured by real value because the law refers to non-monetized barter transactions, where any change in value is measured in real terms. ["Islamic Law on Usury (Interest) and Its Economic Implications"]

Dr. Mohammad Fadel:

Dr. Fadel is an assistant professor of law at the University of Toronto. He holds a doctorate in Near Eastern Languages and Civilizations from the University of Chicago. In a conference discussion on page 7 of Volume 1, Issue 2 of the International Journal of Islamic Financial Services, Dr. Fadel explained his position on the equivalence of riba and interest. The type of usury that applies to credit sales is called usury of delay (riba nasi'a). Nasi'a means delay. The same structure applies here as well. Credit sales are not restricted by the rules of usury of delay (riba nasi'a) unless there is evidence that the traded goods have been marked for special regulation. However, the reason for prohibiting this type of usury is solely the delay in exchange (nasi'a), not the difference between the cash price and the credit price. To give another example, selling a car for a cash price of $10,000 or a credit price of $12,000 to be paid over 5 years is not prohibited under the rules of usury of delay (riba nasi'a): according to the jurists (fuqaha'), goods simply have two different prices, a cash price and a credit price. This transaction does not involve usury because the buyer is taking on a debt, rather than increasing the value of an existing debt in exchange for more time to pay it back. Therefore, it also does not involve pre-Islamic usury (riba al-jahiliyya). However, according to economists, the price difference is a function of the time value of money, which is interest. Therefore, the words riba and interest are not synonyms, and we should stop confusing them. Some usury is interest, but not all of it. For example, trading one pound of high-quality dates for two pounds of lower-quality dates does not involve the time value of money at all, yet it is described as usury. Similarly, some interest is usury, but not all of it. If I owe a bank 100 dollars and agree to delay payment by increasing the debt I owe in exchange for the debt, this is both interest and usury. However, if I buy a car on credit, I will pay interest, but I will not be paying usury.

Dr. Muhammad, also known as Abu Yusuf Khalil Correnti, studied in Saudi Arabia, Syria, and Yemen according to the religious beliefs of Sunni, Shia, and Zaydi followers, specializing in law. He earned his doctorate in Islamic law (sharia) from McGill University. His academic works include books on eschatology, faith, and practice, as well as translations of religious literature by other scholars. He is currently a professor of religious studies at San Diego State University. In answering a question put to him, he wrote: Let us not consume usury many times over (3:130). This statement exists because, according to the mufassir, when a person borrowed money in the pre-Islamic period and promised to repay it within a year, they were asked to pay the amount due at the end of that period. If they could not pay, they would extend the time for another year, but the amount owed would double. Da'f means doubling (3:130). If they could not pay at the end of the second year, the amount owed would double again, which meant that in many cases, the amortized amount would become several times higher than the original loan amount. This practice is called riba, which translates to usury in modern terms.

In my view, many scholars, experts, and professionals in Islamic finance do not believe that riba and interest are the same thing. For example, read the book Islamic Finance in the Global Economy by Ibrahim Warde (Edinburgh University Press, 2000) and see if you can determine his personal stance on whether riba equals interest