❀ The Present Banking System: Islamic or Interest-Based? ❀
Source: Ahkam wa Masail, Issues of Buying & Selling, Vol. 1, p. 355
❖ Question:
The last verses revealed in the Qur’an dealt with riba (interest). A few days after their revelation, the Prophet ﷺ passed away. Therefore, he did not explain them further, and perhaps explanation was unnecessary, as Islam had already reached completion.
In Hadith, riba is explained in this manner:
“Gold for gold, silver for silver, wheat for wheat, barley for barley, salt for salt, and dates for dates — an exchange with increase or decrease is not permissible, for this is riba.”
As for livestock, some leniency is found, as in the incident of ‘Ali (RA) where he gave an old camel in exchange and later received twenty younger camels.
Some people argue that riba applies only to these few commodities (gold, silver, wheat, barley, salt, and dates), and everything else is exempt.
Now the question arises: our country’s banking system, connected to the national economy, where rupees are lent and after a period an excess amount is demanded in return — can this system be considered Islamic, or is it interest-based?
❖ Answer:
Alhamdulillah, was-salatu was-salamu ‘ala Rasulillah, amma ba‘d!
The present-day banking system is a completely interest-based (ribawi) system, and it is haram.
Qur’anic Evidence:
﴿وَأَحَلَّ ٱللَّهُ ٱلۡبَيۡعَ وَحَرَّمَ ٱلرِّبَوٰاْۚ﴾
(al-Baqarah: 275)
“Allah has permitted trade and forbidden riba.”
﴿وَإِن تُبۡتُمۡ فَلَكُمۡ رُءُوسُ أَمۡوَٰلِكُمۡ لَا تَظۡلِمُونَ وَلَا تُظۡلَمُونَ﴾
(al-Baqarah: 279)
“And if you repent, then yours is your capital without increase or decrease. You will not wrong, nor will you be wronged.”
✦ Conclusion:
The current banking system functions on the principle of riba (interest), not on the principle of halal trade. Hence, it is not Islamic but haram.
ھذا ما عندي، والله أعلم بالصواب
❖ Note:
The narration in Muwatta Imam Malik (Kitab al-Buyu‘, Bab: Exchange of Animals and Forward Sale in Them) regarding ‘Ali (RA) is mawquf and munqati‘ (disconnected), because Hasan ibn Muhammad’s meeting with ‘Ali (RA) is not established. This verification is attributed to Shaykh Hafiz Imran Arif.
