Exploitative Interest

Exploitative Interest


Question: If only `exploitative interest'(ie interest at an exorbitant rate) is prohibited in Islam, then can a normal interest at a mutually acceptable rate be charged for a loan?

Answer: Some people argue that only usury (interest at such an exorbitant rate that it exploits the debtor) was declared unlawful by Islam. Therefore, normal interest at a mutually acceptable rate can be charged. The following verse of Surah Aal-i-Imran is usually presented to support this point of view:

`O believers! Do not devour interest, doubling and redoubling.'[3:130]

This verse, however, does not support the argument. It merely indicates the intensity of the sin by pointing out that some people not only `devour' interest, which God has forbidden, but also charge it at an exorbitant rate (doubling and redoubling). The Quran uses this style to point out the heinous nature of a sin where a person not only does something wrong, but also goes beyond all limits in doing so. As an example of this style, consider the following verse of Surah Noor:

`Force not your slave-girls to prostitution that you may seek pleasures of the life of the world, if they would preserve their chastity.' [24:33]

This verse, of course, does not mean that if the slave-girls are willing, prostitution may be allowed. It merely points out the intensity of the sin of those who force such slave-girls to prostitution who wish to avoid the despicable crime.

The following verses of the Quran clearly point out that all types of interest, exorbitant and normal, are forbidden:

`O you who believe! Observe your duty to Allah, and give up what remains [due to you] from riba [interest], if you are [in truth] believers.' [2:278]

`And if the debtor is in strained circumstances, then [let there be] postponement to the time of ease...' [2:280]

These two verses have the same context and, when taken together, clearly show that interest has not been prohibited merely in cases where the debtor is in stringent circumstances. The words `And if the debtor is in strained circumstances' indicate an exceptional case, and point out that the prohibition in the previous verse (2:278) is of interest at a normal mutually acceptable rate.

`He unto whom this admonition comes from his Lord, and [he] refrains [in obedience to it], he shall keep that which is past, and his affair is with Allah. As for him who returns [to interest]---such are the rightful owners of the fire; they will abide therein forever'. [2:275]

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