64 AN INTRODUCTION TO ISLAMIC FINANCE
rates. Some also argue that human wisdom and comprehension are limited
compared to the knowledge of Allah (swt) and therefore any exercise to
fully understand the rationale of the prohibition may not yield any optimal
comprehension.
Riba and Economic and Social Injustice
One of the primary and the most frequently articulated rationales for the pro-
hibition is that the existence of riba in the economy is a form of social and
economic exploitation, which violates the core Islamic teaching of social
justice. Therefore, the elimination of interest from the economic system is
intended to promote economically just, socially fair, and ethically and morally
correct economic behavior.
The logic as to why the Qur’an has given such a severe verdict against
interest is that Islam is against all forms of exploitation and is for an eco-
nomic system that aims to secure extensive socio - economic justice. Islam
condemns all forms of exploitation, particularly the injustice continued in
the form of a lender being guaranteed a positive return without assuming
a share of the risk with the borrower, who takes upon himself all sorts of
risks in addition to contributing his skills and labor. Considering that the
wealth an individual possesses is actually a trust held for Allah (swt), like
a person’s life (also a trust from the Creator) the trust of wealth is sacred
as well.^2 Then, if that wealth is taken unjustly, an injustice is done to the
sanctity of a human being.
The existence of riba is not compatible with Islam’s value system, which
prohibits any form of “unjustifi ed” enrichment (akl amwal alnas bi al - batil).
By eliminating riba, each party to the contract gets a fair and equitable
reward, which ultimately leads to more equitable returns and distribution
and therefore to a more just economic system.
Riba Violates Islam’s Principles of Property Rights
The Qur’an clearly and strongly condemns the acquisition of the property
of others through wrongful means (see 2:188, 4:29, 4:161 and 9:34). Islam
recognizes two types of individual claims to property: (a) the property rights
that are a result of the combination of an individual’s labor and natural
resources, and (b) rights or claims to the property that is obtained through
exchange, remittances of what Islam recognizes as the rights of those less
able to utilize the resources to which they are entitled, outright grants, and
inheritance. Money represents the monetized claim of its owner to the prop-
erty rights created by assets that were obtained or received through either
or both of these avenues. Lending money is, in effect, a transfer of these
rights from the lender to the borrower and all that can be claimed in return
is its equivalent and no more. Interest on money loaned represents an unjus-
tifi able and instantaneous property rights claim. It is unjustifi able because