Rent and Riba

Rent and Riba


Riba,or interest, is sometimes confused with rent, whereas the two are quite different from each other.

Rent is a payment made periodically for the use (not consumption) of an asset, for example for the use of some land, building a machinery.

On the other hand, two simultaneously present conditions are present in any transaction which involves Riba.

i) Some benefit (in cash, kind, service or spirit) over and above the value of the commodity lent is made a condition by the lender for the loan he gives.

ii) The commodity borrowed, or its value, is to be 'recreated' by the borrower if he uses up the commodity or part of it so that he may return it, or its value, to the lender.

To use the terminology of accountancy, Riba is charged on circulating capital whereas rent is charged on fixed capital. It must be remembered that the nature of a transaction, not the commodity involved, determines whether the capital is circulating or fixed. For example, some equipment hired for producing other goods will be categorised as fixed capital, whereas the same equipment borrowed as stock-in-trade for sale by a trader who sells such equipment will be circulating capital.


B rents his house to A for one year at Rs. 500 per month. If in one of these months A does not have Rs. 500 to pay the rent, he will only have to vacate the house. In other words, he will have to return the asset he was using. He will not have to 're-create' the building to return it to the lender. This arrangement pertains to rent not Riba.

But if A borrows some wheat from B and has to pay Rs. 100 every month as interest, this arrangement involve Riba. The reason is that A will first use up (consume) the wheat and then will have to 're-create' it (or its value) to return it to B.

In the case of rent, A is never burdened beyond his ability to pay. If he is unable to pay the rent in any given month, he will have to vacate the premises at most. However, in the case of Riba, if he is unable to pay his dues, the lender has the right to demand not only the interest but also the 're-creation' of the value of the commodity borrowed by A, who at this stage, obviously does not even have the ability to pay the interest.

It is clear that in the case of Riba, the very nature of the arrangement is indicative of, and indeed based on, a great deal of indifference, apathy and callousness towards the borrower by the lending as the arrangement takes no account whatsoever of the conditions of the borrower before holding him liable for the total payment it entails. Occasionally, a situation arises in which the creditor sells the personal property of the borrower to get the interest and the value of the commodity loaned.

Articles by this author

Discourse on Knowledge and Beliefs

Abdus Sattar Ghauri (You will be missed!)

Discourse on Knowledge and Beliefs

Discourse on Knowledge and Beliefs

Review of Walid A. Saleh’s Article on Al-Wāhidīs

Lesbianism and Islam

Your Questions Answered

A Note on Ijmā‘

The Mughal Empire

Letter to the Christian Community on the Recent Gojra Tragedy

CII, Divorce Laws, and Argumentum ad Baculum

Twinkle, Twinkle

Trivializing Homosexuality

Wither, Wither

“Ask Naught of Me but the Tale of Promise and Loyalty”

A Discussion on Sufism, Epistemology, and Usul


In Hope and in Fear

The Taj

In Hope and in Fear

Take Not the Joy Away!

Email from Canada: Lamentations of a Sinner

Rent and Riba

The Meaning of Riba

Recommendations for Improving Education in Pakistan

The Redundant Warriors

Repeated Grave Sins

Your Questions Answered

Your Questions Answered

A Man’s First Foes

A Man’s First Foes

The Status of the Stock Exchange

Your Questions Answered

What if He is?

CA-15 and Love Laws

Blasphemy (A Novel)

Qital Without the Authority of the State

Smiling Alone*

Professionalism in Teaching

Tawhid in Sufism

Rent and Riba

The Meaning of Riba

Until Daylight….

Murder, Manslaughter and Terrorism—All in the Name of Allah

Quis Custodiet Ipsos Custodes?

Thou Mayst Kill!

Wali’s Consent In Marriage

Money is Everything!

Smiling Alone

No Jihad Without the State

O Si Sic Omnia!1

To Devalue or Not to Devalue?—That’s Not the Question

Tawhid in Sufism

Bank Job

The Budget 1996-97 For Whom the Bell Tolls? (Part 2/2)

The Budget 1996-97 For Whom the Bell Tolls? (Part 1/2)

Shaikh Mahmud Ahmad’s Concept of Time Multiple Counter Loan

Quid Rides?*

The Art of Interpretation

Did God need Creation?

The Meaning of Riba

Preformance of the Economy


No Jihad Without the State


Why Religion?

Whither Justice?

Order Of The Quranic Groups

Why Religion?


The Status of the Stock Exchange

Halaal Meat

Prohibition of Pig-Meat And Liquor

The Existence Of God


The Authenticity Of Hadith


Rent and Ribaa

Exploitative Interest

`I Am Allah, You Are Allah,  Every One Is Allah!’

No `Ology’ Like Etymology!


‘....but some animals are more equal than others’