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  Home  : Quran on Riba : Hadith on Riba : Types of Riba
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What Is Riba?

i. Linguistically the word Riba means increase, growth or addition (according to Sabuni & others).

ii. When money is “charged”, its imposed positive and definite result is Riba.

iii. Riba is the premium paid by the borrower to the lender along with principal amount as a condition for the  loan.

iv. Riba is prefixed, and hence there is no uncertainty on the part of either the givers or the takers of loans.

v. Riba cannot be negative, it can at best be very low or zero.

The Holy Qur'an did not give any definition for the term for the simple reason that it was well known to its immediate audience. It is like the prohibition of pork, liquor, gambling, adultery etc, which were imposed without giving any hard and fast definition because all these terms were well known and there was no ambiguity in their meaning. Similar was the case of Riba. It was not a term foreign to Arabs. They all used the term in their mutual transactions. Not only Arabs but all the previous societies used to practice it in their financial dealings and nobody had any confusion about its exact sense. In the verse of Surah An-Nisaa the Holy Qur'an has reproached the Jews for their taking Riba while it was prohibited for them. Here this practice is termed as Riba in the same manner as it is termed in Surah Al-i- 'Imran or Surah Al-Baqarah. It means that the practice of Riba prohibited for Muslims was the same as was prohibited for the Jews.

According to Maulana Maududi: The term Riba in Arabic means 'to grow, to exceed, to increase'. Technically, it denotes the amount that a lender receives  from a borrower at a fixed rate of interest. At the time of the revelation of the Qur'an several forms of interest transactions were in vogue and were designated as Riba by the Arabs. Of these one was that the vendor sold an article and fixed a time limit for the payment of the price, stipulating that if the buyer failed to pay within the specified period of time, he would extend the time limit but increase the price of the article. Another was that a man loaned a sum of money to another person and stipulated that the borrower should return a specified amount in excess of the amount loaned within a given time limit. A third form of interest transaction was that the borrower and vendor agreed that the former would repay the loan within a certain limit at a fixed rate of interest, and that if he failed to do so within the limit, the lender would extend the time limit, but at the same time would increase the rate of interest.

The definition of Riba given by the expert commentators of the Holy Qur’an are given below:
a) Imam Abubakr Al-Jassas (D.380 AH) in his famous work Ahkamul Qur'an has explained Riba in the following words:
"And the Riba which was known to and practiced by the Arabs was that they used to advance loan in the form of Dirham (silver coin) or Dinar (gold coin) for a certain term with an agreed increase on the amount of the principal advanced."

On the basis of this practice the same author has defined the term in the following words:
"The Riba of Jahiliyya is a loan given for stipulated period with a stipulated increase on the principal payable by the loanee."

b) The well-known Imam Fakhruddin Al-Raazi has mentioned the practice of Riba in the days of Jahiliyya as follows:
"As for the Riba An-Nasiah , it was a transaction well-known and recognized in the days of Jahiliyya i.e. they used to give money with a condition that they will charge a particular amount monthly and the principal will remain due as it is. Then on the maturity date they demanded the debtor to pay the principal. If he could not pay, they would increase the term and the payable amount. So it was the Riba practiced by the people of Jahiliyya."