2:275 Those who eat riba stand as those who have been touched
and electrified by Satan, because they claim that buying and selling
is like charging riba... but be on notice that God has allowed buy-
ing and selling transactions and He has forbid riba. For those who
receive God’s admonition and stop the practice of charging riba,
they will own what has happened before this admonition reaches
them, and his case will be in the custody; and those who return to
charging riba (interest) for the use of money (usury), they will be the
acquirers and owners of hellfire and in there they will remain to
eternity.Prophet Muhammad (pp) has further explained and elaborated on the
prohibition of riba in the Qur’aan. In Islam, the offense of charging, taking,
paying, or even acting as a witness in a riba-based transaction is considered
one of the worst seven offenses in the faith.34,35,36
To establish a universal and standardized legal code for and to regulate
business transactions, Shari’aa identifies the following two types of riba,
based on the Hadeeth of Prophet Muhammad (pp).
Types of Riba
There are two types of riba: riba al-jahiliyahandriba al-fadl.
Riba Al-Jahiliyah Riba al-jahiliyah means ‘‘the riba of the age of ignorance
and paganism.’’ It is also calledriba al-nassee’aa(the riba that is con-
strained by a time limit and is time dependent). This type of riba was widely
practiced by the pagan Arabs at the advent of Islam. This practice was con-
ducted by borrowing money to return it at a certain date. If the debt was not
paid on time, the creditor would levy an additional sum to prolong the pay-
ment through debt restructuring. This type of lending is similar to what
today are called interest-only loans with a balloon payment at maturity. In
this type of loan, the borrower pays only the interest (the rent on the money
he owes) and, at maturity, he/she pays the original debt. If he/she does not,
then a new agreement is concluded that increases the principal amount and
prolongs the maturity date.
This type of lending was prohibited in the original sources of Judaism
and Christianity, as well as in Islam. As the world grew and became more
sophisticated, these types of loans were also used by others for business and
for other commercial needs. In Islam, there is no doubt that this type of
lending is prohibited^37 as ordained in the original sources of the Qur’aan
and the Sunnah (tradition and living example)^38 of Prophet Muhammad
(pp), and in adherence to the original teachings of Judaism and Christianity.
The Faith-Based Judeo-Christian-Islamic Foundation 41