RIBA 1 Essay Example

Ban on Riba in Islam

1. Types of Riba

There are basically two types of riba that are classified as follows; first, there is riba An Nasiyah, which is defined as a surplus that emanates from preset interests rates for which a given lender enjoys over and above the initial amount invested or rather Ras ul Maal (Rahman, 1964). Second, there is Riba Al Fadl, which is basically a surplus compensation that is absent of any consideration emanating from a sales of commodities.

It is important to note that riba An Nasiyah is the most known and primary Riba mentioned by the Quran as Riba Al Quran.

2. Reasons on Riba Ban in Islam

The Quran notes that any form of riba is haram since it encourages excess of what was initially invested on. Thus, it is prohibited in Islam because of such aspects as economic effects resulting from storing money in an idle state and unproductive thereby leading to more miseries for the poor (Rahman, 1964). Subsequently, Quran notes that riba causes social effects especially because it promotes enmity between the poor and rich as well as propelling corruption to the highest degree. It also causes psychological and spiritual effects since results to arrogance amongst the rich (Rahman, 1964).

3. Different Views of Bank Interest in relation with Riba

The conventional view indicates that bank interests results to riba given that it related to the primary Riba: Riba Al Nasiyah (Rahman, 1964). The liberal view postulates that bank interests is not a form of riba since it constitutes dividends for money deposits made in banks however; there is also the most convincing position that indicates bank interests are a form of riba.

Reference

Rahman, F, (1964) «Riba and Interest» Islamic Studies, 3 (1), 1-43