By Tn. Hj. Abd Aziz, Chairman of Shariah Advisory Panel (SAP), Al Ebreiz Global Capital Berhad
The Meaning Of Riba
What do we mean when we say “riba” in Arabic? The word riba means excess, increase, augmentation, expansion, or growth.
By definition, riba frequently refers to unfair trades/exchanges or fees/charges for borrowing. Interest is considered riba, or exploitation, unjust gain, and is therefore against Islamic law.
Usury is indeed forbidden, which is clearly stated in the Qur’an via Surah Al-Baqarah, Verse 275:
ذَٰلِكَ بِأَنَّهُمْ قَالُوٓاْ إِنَّمَا ٱلۡبَيۡعُ مِثۡلُ ٱلرِّبَوٰاْۗ وَأَحَلَّ ٱللَّهُ ٱلۡبَيۡعَ وَحَرَّمَ ٱلرِّبَوٰاْۚ
“That is because they say: “Trade is like usury,” but Allah has permitted trade and forbidden usury.”
(Surah Al Baqarah: Verse 275)
This shows that Allah S.W.T. forbids the practice of usury. This is because, if we compare usury to trading/business (buying and selling), both the potential for loss and the profit potential do exist in trading. A trader’s tangible, concrete feedback is also necessary. Contrarily, transactions involving a surcharge are intended to ensure profits for the lender regardless of the outcome. Under no circumstances are any transactions featuring a guaranteed return for the lender permitted because they constitute usury. The absence of guaranteed returns is the first of many factors Allah S.W.T. has allowed trading for, making it advantageous for human life. 
Usury or riba is also mentioned in Surah Al Imran, Verse 130:
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوا۟ ٱلرِّبَوٰٓا۟ أَضْعَٰفًا مُّضَٰعَفَةً ۖ وَٱتَّقُوا۟ ٱللَّهَ لَعَلَّكُمْ تُفْلِحُونَ
“O you who believe! Do not devour Riba multiplying it over, and keep your duty to Allah that you may prosper”
(Surah Ali-Imran: Verse 130)
A usury-based financial system causes the economic cycle to revolve around it. We must remember that usurious transactions are not isolated, one-off, or straightforward. They are compounded and recurring. When combined with the element of time, these two factors ultimately result in the multiplication of the principal amount over time.
The usury system encourages this multiplication by nature. So, the description in this verse is not restricted to transactions that were common in Arabia at the time it was revealed. That is a constant feature of this system. In the same way that it corrupts society’s financial and political life, this system ultimately leads to the corruption of its moral and psychological life. So, it clearly and distinctly affects the community and its members. 
Allah SWT also emphasized riba and stated in Surah Ar Rum, Verse 39:
وَمَآ ءَاتَيْتُم مِّن رِّبًا لِّيَرْبُوَا۟ فِىٓ أَمْوَٰلِ ٱلنَّاسِ فَلَا يَرْبُوا۟ عِندَ ٱللَّهِ ۖ وَمَآ ءَاتَيْتُم مِّن زَكَوٰةٍ تُرِيدُونَ وَجْهَ ٱللَّهِ فَأُو۟لَٰٓئِكَ هُمُ ٱلْمُضْعِفُونَ
“And whatever Riba you give, so that it may increase in the wealth of the people,
it does not increase with Allah, and whatever Zakat you give,
seeking Allah’s pleasure with it, (it is multiplied by Allah, and), it is such people who multiply (their wealth in real terms).”
(Surah Ar-Rum, verse 39)
This verse denotes that “Whatever you may give out in usury so that it might increase through other people’s property will bring no increase with Allah.” This is what some reports mention as the meaning of this statement, but it is a general statement that applies to all methods people use to increase their wealth usuriously. Allah S.W.T. also clarifies how to ensure proper growth: “Whereas all that you give out in charity or zakat, seeking God’s countenance, will bring you multiple increases.”
Giving money away without expecting anything in return or pursuing anything other than Allah’s pleasure is the only guaranteed way to increase our wealth. Is He not the One who gives food in vast or small quantities? Is He not the one who bestows or withholds favors? Allah S.W.T. multiplies His blessings or rewards those who spend money to seek His favor. Allah S.W.T. also deprives usurers of their profits by taking advantage of less fortunate ones. 
In other words, although all the additional payments to the capital you give to usurers will increase and expand their wealth, Allah S.W.T. will eliminate it and not bless it.
Moreover, according to the terminology of the jurists, there are several definitions of riba, for example:
Mazhab Hanafi: Usury is an excess of property without exchange (replacement) in a property exchange contract. The meaning is excess property, even if the excess is in the form of law only. Therefore, this definition covers riba al-nasi’ah and all types of defective and invalid sales and purchases (al-buyu’ al-fasidah) because delaying even one item of exchange results in excess, from a legal point of view, without accurate material exchange. The delay usually spawns an additional exchange.
Mazhab Syafie: Usury is a contract entered into as an exchange of certain goods, but at the time the agreement was entered into, this exchange was not known to be equal according to the measure of Syarak or the delivery of one or both of the goods was missed.
Mazhab Hanbali: Usury is the occurrence of excess in some matters and the delay of delivery that is specific to some issues based on the Shari’ah that prohibits it.
It can be said that most definitions of riba highlight that any goods with elements of ribawi and all their characteristics, such as no qabadh or delay, are considered as riba.
Prohibition of Riba/Usury as stated in the Quran and Hadith
The illegality of usury is ma’lum min ad-deen bi adh-dharurah or something that cannot be excused for not knowing the law in religion. Both Al-Quran and Sunnah have clearly explained the prohibition of usury in its various forms, both small and large amounts.
The following are excerpts from the Quranic verses and hadiths that forbid usury:
1. Loss of blessing to property
“Allah diminishes (the good of wealth carried out by taking) riba, and He increases (the blessing of the wealth given out) alms and Zakat. And Allah does not like every person who remains in disbelief and always commits sins.” (Surah Al-Baqarah: 276).
2. Only believers and pious people will leave riba
“O people who believe! Have faith in Allah and leave (do not demand any more) the remainder of usury (which is still on the debtor), if you are true believers.” (Surah Al-Baqarah: 278).
3. Usury practitioners will remain in hell if they do not repent
“Those who eat (take) riba can’t stand properly except like the one who is possessed by Satan standing and swaying because of the (Satan’s) touch. This is because they say: “That indeed doing business is just like usury.” Even though Allah has legalized buying and selling (business) and prohibited usury, therefore, whoever receives a warning (prohibition) from his Lord and stops (taking usury), then what he took before (before the prohibition) is his right, and the matter is up to God. And whoever repeats (the act of usury) is the people of hell; they will remain in it. (Surah Al-Baqarah: 275).
4. The Prophet S.A.W. cursed those who were involved in usury, directly or indirectly
Ahmad bin Yunus told us, Zuhair told us, Simak told us, Abdurrahman bin Abdullah bin Mas’ud told me, from his father, he said; The Prophet S.A.W. cursed those who eat usury, those who feed usury, their witnesses, and their writers. (H.R. Abu Dawud)
5. Usury is a great sin
From Abu Hurairah R.A. from the Prophet S.A.W. said: “Avoid the seven things that destroy.” The companions asked: “O Messenger of Allah, what is it? He said: “Shirk to God, witchcraft, killing a soul forbidden by God except by right, eating riba, devouring the property of orphans, turning away from the raging war, accusing adultery against free women who guard their honor, who believe, and who are clean from adultery.” (HR. Al-Bukhari, no. 3456; Muslim, no. 2669).
Therefore, it is very important to find knowledge to recognize usury, identify transactions that can cause usury, and learn how to avoid usury.
Types Of Riba
There are two types of riba in loan transactions:
Riba Al-Qardhu’ – whatever addition which was promised or agreed upon during the loan agreement due to the delay in repayment, which is whatever accrued benefits from the loan.
Riba Jahiliah – penalty or addition which was imposed due to delay in repayment of a loan.
Riba in sale transactions is based on hadith from Abu Sa’id al-Khudri R.A. that he said the Prophet Muhammad S.A.W. said:
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt (should be exchanged or bought and sold) in the condition that both are equal in amount and (hand over) hand to hand, so whoever adds or asks for more then he has committed usury, the taker and the giver are the same.”
In this hadith, the Prophet Muhammad S.A.W. mentioned six ribawi items. Ribawi items may give rise to riba if mistakes are made in their transactions.
Exchange Conditions Involving Ribawi Items
Failure to comply with hadith can give rise to Riba Al-Buyu’ (trading riba/riba in sales), which is divided into two:
Riba Al-Fadhl (the interest of excess/an increase in quantity)
– Riba of unequal exchange involving the same ribawi items. This happens when an exchange of an object for the same kind of object, with an increase in quantity, or the unequal exchange of commodities. E.g., One trades gold, silver, wheat, etc., for a more significant amount of the same commodity from another.
Riba An-Nasiah (the interest of delay/an increase for a delay)
– Riba from the exchange of ribawi items not on the spot or in cash which describes the premium added to the loan amount in exchange for the lender waiting as a requirement. Suffice it to say; this is the addition of a surplus or an extra amount to an originally transacted sum for the party awaiting delivery of what they have transacted for.
Why It Matters
Riba is indeed a major sin. In general, most of us only understand that riba happens when we promise to pay more than the exact amount of payment we borrow from the lender. Nevertheless, not many of us truly comprehend what exactly is the meaning of riba, together with other transactions that correlate or lead towards riba.
Moreover, riba can also mostly happen during transactions apart from taking loans. Many still do not know that riba can occur through general financial activities such as selling and buying gold and food, money exchange, investment, etc. Due to these reasons, all of us must learn about riba. This is because, in the hereafter, Allah S.W.T. will question us about where our source of income comes from, whether it comes from the halal or haram roots.
Abu Barzah Al-Aslami narrated that the Messenger of Allah (S.A.W.) said: The feet of the slave of Allah shall not move [on the Day of Judgement] until he is asked about five things: about his life and what he did with it, about his knowledge and what he did with it, about his wealth and how he earned it and where he spent it on, about his body and for what did he wear it out. (Hadith Riwayat At-Tirmidzi, No. 2417)
Due to these reasons, it is very crucial for everyone to learn the forms of riba and to understand their impacts. The next step is applying the rules regarding riba in one’s daily transactions. This is an essential part of the proper practice of Islam and of doing right by others in society. Unfortunately, few references based on religious knowledge can explain the intricacies of usury-based transactions. For example, the education curriculum at the school and university levels rarely touches on matters such as loans, buying and selling, contracts, savings, and even investments.
In addition, the world is also increasingly immersed in usury because of the human desire to become rich quickly and fastest. The rich get richer, and the poor get poorer. Those who become rich because they already have a lot of money, and by keeping money in fixed savings accounts only, they will earn multiples of millions of Ringgit every year through riba.
We are capable of abolishing riba. We can make this temporary world a better place and fair for the ummah without riba. Of course, at the same time, we don’t have to stay away from the modern world, and we also don’t have to escape from being involved with the latest technology. We genuinely need to gain knowledge, especially about riba, and with this knowledge, we will be able to straighten our paths in life by avoiding riba. This is because Islam is a practical religion for every transition of time until the Day of Judgment.
After we have changed all the transactions in life to halal transactions and free from riba, we will be grateful to Allah S.W.T. that we have succeeded in riba-free transactions, investments, etc. Even though the rules are timeless, modern circumstances must be considered as one applies the rules regarding riba to daily transactions. Indeed, at Al Ebreiz Global Capital Berhad (AGCB), we ensure that AlaDeen Gold Wallet abided by Shariah-Compliant Principles regarding buying, selling, saving, redeeming, and earning through Gold & Silver Bars and Gold Dinar & Silver Dirham Coins. However, there is no assurance that your savings or investments in gold and silver will turn a profit. This is due to the price of gold and silver changing every day, and that’s the fact. Thus, the profit or loss of your silver and gold investments/savings truly depends on your ability to invest/save in the long term and how you manage your financial planning towards attaining your financial goals in life and harvest for the hereafter.
In conclusion, if you have debt, pay it back immediately to eliminate any possible harm from dealing in riba, and then commit never to do so again. If you are a creditor, don’t add any interest at all. Keep all of your transactions halal and free from riba. It is morally correct to do so. Again, yes, it is indeed possible to be usury-free. Only with the proper knowledge can we do good and be free of usury. From Mu’awiyah bin Abi Sufyan R.A., the words of Rasulullah S.A.W., meaning: “Whoever Allah wills good for him, then Allah will give him understanding in religion.” (Muslim No. 1037)
Let us pray that we will all be free from things that involve usury/riba. Ameen, Insha Allah.
About AGCB’s Chairman of Shariah Advisory Panel (SAP)
Tn. Hj. Abd Aziz Bin Mohd Nor, better known as Ustaz Lariba, is an independent speaker of Islamic teaching. He regularly lectures in mosques and musallah, mainly in Kuala Lumpur, Selangor, Negeri Sembilan, Pahang, Penang, Johor, Malacca, Perlis, and Kelantan, private office musallah in Kuala Lumpur and Selangor, as well as public and private higher education institutions and education offices district.
He is a Certified Shariah Advisor and Auditor (CSAA) and Fellow from the Auditing and Accounting Organization for Islamic Finance Institution (AAOIFI), Bahrain. He also holds a Master of Science (MSc) in Islamic Finance from the International Center for Education in Islamic Finance (INCEIF), Kuala Lumpur, a Master in Business Administration (M.B.A.) from the International Islamic University, Malaysia (IIUM), and a Bachelor’s Degree in Computer Studies and Mathematics from Macalester College U.S.A.
He has worked as a part-time lecturer in Islamic Economics and Islamic Law of Contracts at the University of Kuala Lumpur (UNIKL) and in small business management and new business joint venture management at Tun Razak University (UNIRAZAK). He is also an experienced Shariah consultant who helps companies towards Shariah compliance, a corporate training consultant in the muamalat, leadership, corporate transformation, company evaluation, and program and project management. Due to his expertise in Islamic finance, he was invited as a panelist on the Tijari show by TV AlHijrah to discuss the topic of Shariah-compliant eWallet, cryptocurrency, and Qurban scams.
He has served in the following companies:
- Senior Manager at Petronas Dagangan Berhad
- Chief Operating Officer at Telekom Technology Sdn Bhd (subsidiary of Telekom Berhad)
- Project Director at AmBank Group and Bukhary Group
- Vice President at Asian Finance Bank and MBSB Bank
- Program Director at Pernec Berhad (a subsidiary of P.N.B.)
He is an associate member of the Malaysian Islamic Finance Shariah Adviser Association (ASAS) and a member of the Senior Association of Islamic Finance (ARIF).
He serves at Lariba Consulting as the Chief Executive Officer, offering Shariah-compliant consulting services, information technology, corporate consulting, and corporate training and muamalat. He is a Shariah advisor to direct sales companies, electronic payment gateway system companies, and gold and silver trading companies, including digital gold. On the other hand, he is also the Chairman of the Shariah Advisory Panel of Al Ebreiz Global Capital Berhad.