We, the members of the Islamic center of Greater Toledo, OH took a 3 million dollar bank loan for the initial construction of the mosque in 1981 and also 2.5 million dollars for later expansion of the center contrary to the Muslim mindset against taking and paying bank interest. I have taken a mortgage for my home, not because I cannot afford to pay in front but because it makes economic sense (also The Qur’an 7:31 advises me: “…but do not waste: verily, He does not love the wasteful!”)
Let me state explicitly: Let there be no doubt that the Quran categorically prohibited Riba. “O you who have believed, do not consume” Riba,” (3:130). “Allah has permitted trade and has forbidden Riba “(2:275). Then what is the rationale to go against the Muslim consensus (Ijma) on bank interest? It is based upon multiple observations of which six are listed below:
Muslim consensus gives a special status to cash/ currency as compared to all other assets.
Umar Ibn-Khattab’s statement on Riba and conflicting messages from Hadith’s collections.
The definition of Riba by eminent early Muslim scholars
Definition of Riba in al-Jahiliyah (Pre-Islamic Arabia)
Muslim consensus gives special status to cash/ currency as compared to all other assets.
A simplified definition of interest is a fee paid by a borrower of assets to the creditor as a form of compensation for the use of the assets. Scholarly voices from Muslim countries without free press draw a boundary line between cash and other assets. It restricts the rent of cash illegitimate or Haraam and makes the rent of all other assets legitimate or Halal. This artificial bifurcation, cash being separated from other assets, is completely baseless due to the following reasoning:
A) None of the branches of knowledge directly related to assets e.g. accounting, economics, and commerce recognize it. Even in ordinary life, it is not so, the same treatment is given to cash and all other assets throughout the world in theory as well as in practice. First of all, this artificial bifurcation of assets is not admitted throughout the world neither in theory nor in practice, and hence does not exist in the real world.
B) The handpicked religious scholars of the autocratic Muslim countries decreed that assets, which depreciate, could be rented. So, all assets that are depreciated with the passage of time can be given on rent. But this rule is not admitted in the case of cash/currency, even though currency is also depreciated with the passage of time due to inflation. Hence here also the unnatural division is a completely self-contradictory concept.
C) The most important point is that the Quran is also not ready to accept this baseless concept of artificial bifurcation. The simple proof of this fact is that the Quran has used the term maal for all assets that include cash. Quran has used the word 86 times but it is never used exclusively for cash anywhere in the Quran. Hence the Quran does not support this strange concept of bifurcation.
According to the so-called “Islamic financing,” renting an asset or apartment or other commodity is Halal, and renting cash, Haraam. For example, renting of $ 100,000 for buying a home at the current 4% yearly interest rate costs $ 4000 interest even without an expected 33% US tax decrease on it. Renting $ 100,000 apartment costs the renter about 500 dollar/month = 6000 dollar/year is Halal. The renter owes more money to the apartment owner than to a bank and still apartment renting is Halal and renting currency is Haraam.
Islam’s position regarding justice is unequivocal and universal. “O ye who believe! Stand out firmly for justice, as witnesses to Allah, even as against yourselves, or your parents, or your kin, and whether it be (against) rich or poor: for Allah can best protect both. Follow not the lusts (of your hearts), lest ye swerve, and if ye distort (justice) or decline to do justice, verily Allah is well- acquainted with all that ye do.” [Quran 4: 135]. Who is the most just and more honorable in this instance? The one who rents an apartment for more money or a bank that rents the money for less and at the same time promotes saving?
2. Umar Ibn Khattab (RA) delivered a sermon on the pulpit of Allah’s Messenger (Pbuh) saying, “Alcoholic drinks were prohibited by Divine Order, and these drinks used to be prepared from five things, i.e., grapes, dates, wheat, barley, and honey. Alcoholic drink is that that disturbs the mind.” `Umar added, “I wish Allah’s Apostle had not left us before he had given us definite verdicts concerning three matters, i.e., how much a grandfather may inherit (of his grandson), the inheritance of Al-Kalala (the deceased person among whose heirs there is no father or son), and various types of Riba.”
(Reference: Ibn Majah, Sunan Ibn Majah, tr. M. T. Ansari (New Delhi, 2000), Book of Inheritance, Vol. 4, #2267)
So, most Muslims believe that the Quran or Prophet did not explain Riba. Initially let me quote a few Hadiths pertinent to our discussion.
A selective reading of the set of Hadiths 1-5 definitely seems to endorse the opinion on Riba held by most mosque communities, that all forms of bank interest are prohibited. But a parallel reading of the set Hadith 1-5 and the set of Hadith A-E leads to different or at least six kinds of “holy truths.”
Initially let me quote the set of Hadith 1-5 that Muslims use to endorse the point of view that all Riba or Interest in finance is Haraam.
Jabir said that Allah’s Messenger (may peace be upon him) cursed the accepter of Riba and its payer, and one who records it, and the two witnesses, and he said: They are all equal. (Muslim: Book #010, Hadith #3881)
Narrated ‘Aun bin Abu Juhaifa: My father bought a slave who practiced the profession of cupping. (My father broke the slave’s instruments of cupping). I asked my father why he had done so. He replied, “The Prophet forbade the acceptance of the price of a dog or blood, and also forbade the profession of tattooing, getting tattooed and receiving or giving Riba.” (Bukhari: Book #34, Hadith #299).
From Anas ibn Malik: The Prophet said: “If a man extends a loan to someone he should not accept a gift.” (Mishkat, op. cit., on the authority of Bukhari’s Tarikh and Ibn Taymiyyah’s al-Muntaqa)
Narrated Abu Burda: When I came to Medina. I met Abdullah bin Salam. He said, “Will you come to me so that I may serve you with Sawiq (i.e. powdered barley) and dates, and let you enter a (blessed) house that in which the Prophet entered?” Then he added, “You are in a country where the practice of Riba is prevalent; so if somebody owes you something and he sends you a present of a load of chopped straw or a load of barley or a load of provender then do not take it, as it is Riba.” (Bukhari: Book #58, Hadith #159)
Abu Sa’id al-Khudri (Allah be pleased with him) reported Allah’s Messenger (may peace be upon him) as saying: Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, salt by salt, like by like, payment being made hand to hand. He who made an addition to it, or asked for an addition, in fact, dealt in The Riba. The receiver and the giver are equally guilty. (MUSLIM: Book #010, Hadith #3854)
Summary of the above Hadiths:
Any addition over the loaned capital during the term of the loan is Haraam.
The Creditor cannot accept or the debtor cannot offer even a gift because the gift becomes Riba.
The following set of Hadiths A-E challenges and contradicts the above set of Hadiths 1-5 and its derived conclusions:
Narrated Jabir bin ‘Abdullah: “I went to the Prophet in the mosque (the sub-narrator Mas’ar thought that Jabir had said, “In the forenoon.”) He ordered me to pray two Rakat. He owed me some money and he repaid it to me and gave more than what was due to me. (Translation of Sahih Bukhari, Volume 1, Book 8, Number 434)”
Abu Huraira (Allah be pleased with him) reported: There came a person demanding a camel from Allah’s Messenger (may peace be upon him). He (the Holy Prophet) said: Give him (the camel) of that age or more mature age and said: Best among you is one who is best in clearing off the debt. (MUSLIM: Book #010, Hadith #3900)
“Malik related to me from Humayd ibn Qays al-Makki that Mujahid said, “Abdullah ibn Umar borrowed some Dirhams from a man, then he discharged his debt with Dirhams better than them. The man said, ‘Abu Abdar-Rahman. These are better than the Dirhams which I lent you.’ Abdullah ibn Umar said, ‘I know that. But I am happy with myself about that.’…” Malik’s Muwatta: Book #31, Hadith #31.42.91
Narrated Abu Rafi’:
“The Messenger of Allah (s borrowed a young camel, and when the camels of the sadaqah (alms) came to him, he ordered me to pay the man his young camel. I said: I find only an excellent camel in its seventh year. So the Prophet (s) said: Give it to him, for the best person is he who discharges his debt in the best manner.” (Jami Al- Tirmidhi, Kitab al-Buyu, v.6, #56]
Narrated Al-A’mash: We argued at Ibrahim’s dwelling place about mortgaging in Salam. He said, “Aisha said, ‘The Prophet bought some foodstuff from a Jew on credit and the payment was to be made by a definite period, and he mortgaged his iron armor to him.” (Bukhari: Book #35, Hadith #454)
Narrated ‘Aisha: The Prophet died while his armor was mortgaged to a Jew for thirty Sa’s of barley. (Bukhari: Book #59, Hadith #743)
This type of mortgaging or using a pawnbroker’s service was recognized as Islamically valid and acceptable, as illustrated through this Hadith.