Ala-Maududi
(2:275) As for those who devour interest,[315] they behave as the one whom Satan has
confounded with his touch.[316] Seized in this state they say: “Buying and selling is
but a kind of interest,”[317] even though Allah has made buying and selling lawful,
and interest unlawful.[318] Hence, he who receives this admonition from his Lord, and
then gives up (dealing in interest), may keep his previous gains, and it will be for Allah to
judge him.[319] As for those who revert to it, they are the people of the Fire, and
in it shall they abide.
315. The term riba in Arabic means ‘to grow, to exceed, to increase’. Technically, it denotes the
amount that a lender receives from a borrower at a fixed rate of interest. At the time of the
revelation of the Qur’an several forms of interest transactions were in vogue and were
designated as riba by the Arabs. Of these one was that the vendor sold an article and fixed a
time limit for the payment of the price, stipulating that if the buyer failed to pay within the
specified period of time, he would extend the time limit but increase the price of the article.
Another was that a man loaned a sum of money to another person and stipulated that the borrower
should return a specified amount in excess of the amount loaned within a given time limit. A
third form of interest transaction was that the borrower and vendor agreed that the former would
repay the loan within a certain limit at a fixed rate of interest, and that if he failed to do
so within the limit, the lender would extend the time limit, but at the same time would increase
the rate of interest. It is to transactions such as these that the injunctions mentioned here
apply.
316. The Arabs used the word majnun (possessed by the jinn) to characterize the insane. The
Qur’an uses the same expression about those who take interest. Just as an insane person,
unconstrained by ordinary reason, resorts to all kinds of immoderate acts, so does one who takes
interest. He pursues his craze for money as if he were insane. He is heedless of the fact that
interest cuts the very roots of human love, brotherhood and fellow-feeling, and undermines the
welfare and happiness of human society, and that his enrichment is at the expense of the
well-being of many other human beings. This is the state of his ‘insanity’ in this world: since
a man will rise in the Hereafter in the same state in which he dies in the present world, he
will be resurrected as a lunatic.
317. The unsoundness of this view lies in not differentiating between the profit one gains on
investment in commercial enterprises on the one hand, and interest on the other. As a result of
this confusion, the proponents of this view argue that if profit on money invested in a business
enterprise is permissible, why should the profit accruing on loaned money be deemed unlawful?
Similar arguments are advanced by those who thrive on interest in our own times. Their argument
runs as follows: A person who could have profitably invested his money in a commercial
enterprise loans it out to somebody who, in turn, makes a profit out of it. In such
circumstances why should the borrower not pay the lender a part of the profit? Such people,
however, disregard the fact that no enterprise in which a man participates, whether it is
commercial, industrial or agricultural, and whether one participates in it with one’s organizing
skill or capital, or by both, is immune from risk. No enterprise carries absolutely guaranteed
profit at a fixed rate. What is the justification, then, for the fact that out of all the people
in the business world, the financier alone should be considered entitled to a profit at a fixed
rate in all circumstances, and should be protected against all possibility of loss?
Let us set aside for a moment the questions of non-profitable loans and vacillations in the rate
of profit. Let us consider only the question of loans for profitable enterprises, and confine
our consideration to loans made at non-exorbitant rates of interest. The question, however,
remains: Which rational principle, which logic, which canon of justice and which sound economic
principle can justify that those who spend their time, energy, capacity and resources, and whose
effort and skill make a business thrive, are not guaranteed profit at any fixed rate, whereas
those who merely lend out their funds are fully secured against all risks of loss and are
guaranteed profit at a fixed rate? And which principle can justify the fact that a man lends out
his funds to an industrial concern and fixes, say for the next twenty years, that he will be
entitled to receive each year a given per cent interest on his capital, while the proprietors of
the industrial concern have no means of foretelling the price changes affecting their commodity,
and hence their profit? Let us consider another case, namely that of war loans. How can it be
appropriate that all classes of people endure all kinds of losses and are exposed to all kinds
of risks and dangers connected with war, whereas the financiers, simply by having made loans,
continue to receive Interest on them for long periods of time, sometimes even for a whole
century?
318. The essential difference between non-interest business transactions and interest-bearing
transactions rests on the following grounds:
(1) In ordinary business transactions there occurs a mutually equitable exchange of benefits
between the buyer and the seller. The buyer derives benefit from the article which he purchases
from the seller; the seller receives compensation for the effort, ingenuity and time spent on
making the article available to the buyer. In interest-bearing transactions, on the other hand,
the exchange of benefits does not take place equitably. The interest receiving party, receives a
fixed amount as a payment for using the loan he advances and thus his gain is secured. The other
party to the transaction has only one thing at his disposal – a period of time during which he
can make use of the funds loaned, and which may not always yield a profit. If such a person
spends the borrowed funds on consumption, there is obviously no question of profit. Even if the
funds are invested in trade, agriculture or industry, one stands the chance both of making a
profit and of incurring a loss during the period of time in question. Hence an interest-bearing
transaction entails either a loss on one side and a profit on the other, or an assured and fixed
profit on one side and an uncertain and unspecified profit on the other.
(2) In business enterprises the profit that a person makes, however large it may be, is made
only once. The person who lends out money on interest receives, on the contrary, an on-going
profit which multiplies with the passage of time. Moreover, however large the extent of the
profit made by the borrower from the loaned money it will still be within certain limits, while
the claims of the lender in return for this profit are unlimited. It is even possible that the
lender may seize the entire turnover of the borrower if he defaults on payment, thus depriving
him of all the resources from which he makes his living. It is also possible that even after the
lender has seized all the property of the borrower, his claims will still remain unsatisfied.
(3) In a business deal, the transaction ends with the exchange between a commodity and its
price. After this exchange has taken place, no obligation remains on either party towards the
other. If the transaction is that of rent, the thing rented (e.g. land or building) is not
consumed but is rather used and remains intact, and is returned to the owner after a stipulated
period of time. In a transaction involving interest, however, what actually happens is that the
borrower first spends the loaned funds, then reclaims them with his efforts, returning them to
the lender together with a surplus.
(4) In agriculture and industry, and in trade and commerce, one makes a profit after having
expended one’s effort, intelligence and time. In an interest-bearing transaction, on the
contrary, one becomes entitled to a sizeable share in the earnings of others without any toil
and effort, by merely allowing someone to make use of one’s surplus money. The lender is neither
a ‘partner’ in the technical sense of the term, for he does not share both the profit and the
loss, nor is his share in proportion to the actual profit.
There is thus a tremendous difference from an economic point of view between business
transactions as such and interest- bearing transactions. Whereas the former plays a highly
constructive role in human society, the latter leads to its corrosion. This is in addition to
its moral implications. By its very nature interest breeds meanness, selfishness, apathy and
cruelty towards others. It leads to the worship of money and destroys fellow-feeling and a
spirit of altruistic co-operation between man and man. Thus it is ruinous for mankind from both
an economic and a moral viewpoint.
319. What is said here is not that man will be pardoned by God for the interest taken in the
past, but that it is for God to judge him. The expression: ‘may keep his previous gains’ does
not signify absolute pardon from God for the interest one has taken, rather it points to the
legal concession that has been made. It only means that no legal claim will be made for the
interest taken in the past. For were such claims to be entertained, an endless succession of
litigation would ensue. From a moral point of view, however, the earnings made by way of
interest would continue to be impure. If a person is really God-fearing and if his economic and
moral viewpoint has really undergone a change under the influence of Islam, he will try to
abstain from spending on himself the income which he has obtained by illegitimate means. He will
also try to seek out those from whom he has derived illegitimate earnings and will try to return
those earnings to such people; if he is unable to locate them, he will try to spend them on
collective welfare rather than on himself. It is this conduct alone which can save him from the
punishment of God. As for one who continues to enjoy his illegitimate earnings, it is not
unlikely that he will be subjected to God’s punishment.
