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    Lecture 8 A: Concept of Riba

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    Abbas Baloch
    Riba refers to excess compensation without consideration and includes interest on loans. There are two types of Riba: Riba An Nasiyah and Riba Al Fadl. Riba An Nasiyah is predetermined interest paid on a loan beyond the principal amount. It is considered the primary form of Riba and is forbidden in the Quran. The wisdom behind prohibiting Riba An Nasiyah is that while consumers may gain transitory profits, it has severe curses in this world and the afterlife that outweigh any benefits by damaging one's spirituality and morality.

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    Lecture 8 A: Concept of Riba

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    Abbas Baloch
    22 views6 pages
    Riba refers to excess compensation without consideration and includes interest on loans. There are two types of Riba: Riba An Nasiyah and Riba Al Fadl. Riba An Nasiyah is predetermined interest paid on a loan beyond the principal amount. It is considered the primary form of Riba and is forbidden in the Quran. The wisdom behind prohibiting Riba An Nasiyah is that while consumers may gain transitory profits, it has severe curses in this world and the afterlife that outweigh any benefits by damaging one's spirituality and morality.

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    Islamic economic

    Original Title

    Lecture 08a (1)

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    Riba refers to excess compensation without consideration and includes interest on loans. There are two types of Riba: Riba An Nasiyah and Riba Al Fadl. Riba An Nasiyah is predetermined interest paid on a loan beyond the principal amount. It is considered the primary form of Riba and is forbidden in the Quran. The wisdom behind prohibiting Riba An Nasiyah is that while consumers may gain transitory profits, it has severe curses in this world and the afterlife that outweigh any benefits by damaging one's spirituality and morality.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    22 views6 pages

    Lecture 8 A: Concept of Riba

    Uploaded by

    Abbas Baloch
    Riba refers to excess compensation without consideration and includes interest on loans. There are two types of Riba: Riba An Nasiyah and Riba Al Fadl. Riba An Nasiyah is predetermined interest paid on a loan beyond the principal amount. It is considered the primary form of Riba and is forbidden in the Quran. The wisdom behind prohibiting Riba An Nasiyah is that while consumers may gain transitory profits, it has severe curses in this world and the afterlife that outweigh any benefits by damaging one's spirituality and morality.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6

    Lecture 8 a

    Concept of Riba
    What is “Riba”
    • The word "Riba" means excess, increase or addition.
    According to Shariah terminology, it implies any excess
    compensation without due consideration (consideration
    does not include time value of money).
    • This definition of Riba is derived from the Quran and is
    unanimously accepted by all Islamic scholar
    Classification of Riba
    There are two types of Riba
    i. Riba An Nasiyah
    ii. Riba Al Fadl
    Riba An Nasiyah
    • Riba An Nasiyah' is defined as excess, which results from predetermined
    interest (sood) which a lender receives over and above the principal (Ras
    ul Maal) in any loan transaction.
    • Riba An Nasiyah refers to the additional premium which is paid to the lender
    in return for his waiting as a condition for the loan and is technically the same
    as interest
    • This is the real and primary form of Riba. Since the verses of the Holy
    Quran has directly rendered this type of Riba as haram, it is also called
    ‘‘Riba Al Quran.’’
    • Similarly, since only this type was considered as Riba in the dark ages, so it
    has earned the name of “Riba Al Jahiliyyah” as well.
    Continued
    • According to the above definition of Riba An Nasiyah, the giving and taking, paying and
    receiving of any excess amount in exchange for a loan at an agreed rate is included in
    interest regardless of whether its being at a high or low rate. It has been proven through
    ahadith that the Holy Prophet paid excess at the time of loan repayment but since this
    excess was not agreed therefore, it cannot be called interest.
    • This clarifies that the word "draws“ in the hadith definition "Every loan that draws
    interest is Riba.“ Taking paying and receiving of excess amount, as a pre agreed
    term/condition in the loan contract.
    • The Quran has not altogether forbidden all types of excess; as it is present in trade as
    well, where it is permissible.
    • Islam has categorically made a clear distinction between the excess in capital resulting
    from sale and excess resulting from interest. The first type of excess is permissible but
    the second type is forbidden.
    Wisdom behind the prohibition of Riba An
    Nasiyah
    • The consumer of Riba does have some casual and transitory
    profits apparently coming to him, but its curse in this world
    and in the Hereafter is much too severe as compared to this
    benefit. Those who indulge in Riba suffer such a spiritual and
    moral loss that it virtually takes away the great quality of
    being 'human' from him.

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