Nov 22, 2020
Key rules and types of riba (interest) with examples.
Summary of rules by Imam Nawavi:
1. When the underlying ‘Illah (operative cause behind a law) of the
two goods being exchanged is different, shortfall/excess and delay
both are permissible, e.g. the exchange of gold for wheat or
dollars for a car.
2. When the commodities of exchange are similar, excess and delay
both are prohibited, e.g. gold for gold or wheat for wheat, dollars
for dollars, etc.
3. When the commodities of exchange are heterogeneous but the
‘Illah (operative cause behind a law) is the same, as in the case
of exchanging gold for silver or US Dollars for Japanese Yen
(medium of exchange) or wheat for rice (the ‘Illah being
edibility), then excess/deficiency is allowed,
but delay in exchange is not allowed. (Reference Understanding
Islamic Finance, M. Ayub 2007, p.52)
“Do not sell gold for gold unless it is the same amount for the
same amount, and do not make one amount greater than the other. Do
not sell silver for silver unless it is the same amount and do not
make one greater than the other.” (Bukhari and Muslim).
“Gold with gold, silver with silver, wheat with wheat,
barley with barley, dates with dates, and salt with salt; same
quantity for same quantity, equal for equal; transaction being made
hand to hand (i.e. on the spot payment).” (Muslim)
Types of Riba
1. Riba Al-Nasee’ah (riba of
delay)
2. Riba Al-Fadl (riba of surplus)
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