Types of Riba


By: Hira Amjad, Regional Head – West Africa
Organization: Alhuda CIBE, Dubai

The scholars generally mention about two kinds of riba. The first is called Riba Al-Nasia or Riba Al-Jahiliya and the second is called Riba Al-Naqd or Riba Al-Bai or Riba Al-Fadl. And since the first kind is clearly mentioned in the Quran and its meaning was very obvious and well known, therefore some fuqaha have also termed it as Riba Al-Quran. The second kind had not been understood only by the text of the Quran but was specified by the Prophet (PBUH), therefore it is called Riba Al-Hadith.

1. Riba Al-Jahiliya or Riba Al-Nasia: It has been mentioned in the foregoing that during the period of ignorance, the term riba referred to the excess charged to the borrower in consideration for the deferred payment of the principal amount. This is supported by authentic dictionaries as well as the writings of the leading scholars of tafseer (interpretation of the Quran) and hadith, as discussed below;
1- Lisan ul Arab which is one of the most authentic dictionaries of the Arabic language:
“These are two kinds of riba and prohibited is every loan on which an excess is charged or some benefit is obtained out of this loan.”
2- Nihaya Ibn-e-Kathir which is very authentic and well known book explaining the terminology used in hadith:
“Riba has been mentioned in Hadith time and again and the basic thing is that charging any excess on principal without any contract of sale is riba”.
3- Tafseer-e-Ibn-e-Jareer Tibri which is considered the best tafseer, says:
“ Riba is prohibited (Haraam), Riba denotes the excess which the lender earns because the borrower extends the tenor of the loan and defers the payment of the principal.”
4- Tafseer-e-Mazhari by Qazi Sanaullah panipati mentions:
“ The dictionary meaning of riba is increase or excess. That is why the Quran says i.e. Allah increases charity. The prohibition of riba means that Allah has forbidden taking back any thing more than the value lent.”
5- Tafseer-e-Kabir of Imam Razi:
“Taking a note that there are two kinds of Riba; riba on loans/credit and riba by way of excess in spot transactions. Riba on loans/credit is the one which has been in vogue and well known since the period of ignorance of which the modalities were that one would lend a sum of money with the condition that a fixed sum would be paid (by the borrower) per mensem by way interest and the principal amount would remain intact. When the loan matured, the borrower was asked to return the principal. If the borrower expressed his inability to repay, they (the lenders) would extend the maturity and increase the interest. The kind of riba was in vogue in the period of ignorance. Riba on account of excess of one commodity in spot transactions is e.g., the exchange of one maund of wheat with two maunds of wheat (of inferior quality) and similarly other commodities.
6- Ahkamul Quran Ibn-e-Arabi Malki:
“The term Riba was well known and understood in Arabia. Those who consider this verse is only summary mention of the issue failed to understand the real objectives of Shariah. Allah sent His Prophet (PBUH) towards a nation of which he HIMSELF (PBUH) was a part and parcel and whose language he Himself (PBUH) spoke. Allah’s book was also revealed in their language so that it was easy for them to understand. The dictionary meaning of Riba is excess and the specific meaning is excess against which there is no material or pecuniary consideration, e.g., charging more than the principal amount in the case of a loan transaction.”
7- Akhamul Quran Abu Bakr Jassas Hanafi:
“ One kind of riba is that which occurs in sale and there is another which is not related to sale/purchase. It is the latter kind which was in vogue in the period of ignorance of which the essence is that money is lent for a period of time on the condition that the borrower will repay more than the sum borrowed.”
8- Bidaya Al- Mujtahid Ibn-e-Rushd Maki:
“Riba al-jahiliya which has been prohibited by Quran is that people would lend on the condition obtaining more than the amount lent. Upon expiry of the agreed term, the tenor would be extended and the interest increased. This is the riba which the Prophet (PBUH) declared null and void during his last pilgrimage.”
9- From Usamah Ibn Zayd (R.A) The Prophet (PBUH) said: “There is no riba except Nashiyah [waiting].” (Bukhari, kitab al-buyu, Bab bay’ al dinari nasa’an; also Muslim and Musnad Ahmad) “There is no hand-to-hand [spot] transactions.” (Muslim, kitab al-musaqat, bah bay’I al-ta’ami mithlan ni mithlin; also in Nasa’i)
10- From Ibn Mas’ud (R.A) The Prophet (PBUH) said:
“Even when Interest is much, it is bound to end up into paltriness.” (Ibn Majah, kitab al-Tijarat, Bab al-taghlizi fi al-riba; also is Musnad Ahmad)
11- From Anas Ibn Malik (R.A) The Prophet said:
“when one of you grants a loan and the borrower offers him a dish, he should not accept it; and if the borrower offers a ride on an animal, he should not ride, unless the two of them have been previously accustomed to exchanging such favors mutually.” (Sunan al-Bayhaqi, kitab al-buyu, Bab kulli qardin jarra manfa’atan fa huwa riban)
12- From Anas Ibn Malik (R.A) The Prophet (PBUH) said:
“ If a man extends a loan to someone he should not accept a gift.” (Mishkat, on the authority of Bukhara’s Tarikh and Ibn Taymiyyah’s al-Muntaqa)
13- From Abu Burdah ibn Abi Musa (R.A) I came to Madinah and met ‘Abdallah ibn Salam who said, “You live in a country where riba is rampant; hence if anyone owes you something and presents you with a load of hay, or a load of barely, or a rope of straw, do not accept it for it is riba.” (Mishkat, reported on the authority of Bukhari)
14- Fadalah ibn ‘Ubayd (R.A) said that” The benefit derived from any loan is one of the different aspects of riba.” (Sunan al-Bayhaqi) This is Mawquf implying that it is not necessarily from the Prophet; it could be an explanation provided by Fadalah (R.A) himself, a companion of the Prophet (PBUH).
From the foregoing quotations, it is obvious that the term riba referred to a particular kind of transaction, in Arabic language even before the revelation i.e., obtaining a benefit out of the lending of money. Only this was considered riba by the Arabs. It was this riba which was prohibited by Quran and it was the same riba which was declared null and void by the Prophet (PBUH) during his sermon on the occasion of His (PBUH) last pilgrimage.
It is mentioned in Tafseer-e-Qurtubi
“The people of Arab were of the opinion that riba was only when an amount was lent and a period was allowed for its repayment against an excess charged on the principal. They thought that this was similar to trading. Allah declared riba forbidden and refuted their claim by saying that Allah has permitted trading and forbidden riba. This is precisely the riba declared null and void by the Prophet (PBUH) on the day of Arafah by saying that all riba is concocted.”
There was nothing vague or absurd in this episode nor did anyone hesitate in comprehending or acting on these instructions for a minute. However, the Prophet (PBUH) based on the guidance from Allah, explained that certain other transactions also fall in the ambit of riba. That is why this was distinguished as Riba al-Hadith or Riba al-Fadl or Riba al-Naqd. The explanation given by the Prophet (PBUH) was not readily apparent from the dictionary meaning of the term or what was understood by the people during the period of ignorance. Unfortunately, complete details could not be checked with the Prophet (PBUH) by his companion (R.A) and that is Why Hazrat Umar Farooq (R.A) as well as other companion faced some difficulty in delineating the boundaries of this prohibition. Ultimately, using his discretion and preffering to err on the side of caution, Hazrat Umar (R.A) prohibited transactions where he even suspected a trace of riba. His remarks,
“So give up interest and whatever resembles interest” relates to this kind of riba.

2. Riba Al-Naqd or Riba Al-Bai or Riba Al-Fadl: So far as the statement of Hazrat Umar (R.A) is concerned, it will be necessary before analyzing it to note that the Holy Quran had prohibited the Riba of Jahiliya with all their forms already mentioned above. All these forms related to the transactions of a loan or a debt created by sale etc. But after the revelations of these verses, the Holy Prophet (PBUH) prohibited some other transactions as well which were not known previously as Riba. The Prophet (PBUH) felt that, given the commercial atmosphere at that time, certain barter transactions might lead the people to indulge in riba. The Arabs used certain commodities like wheat, barley, dates etc., as a medium of exchange to purchase other things. The Prophet (PBUH) treating these commodities as a medium of exchange like money, issued the following injunction:
“Gold for gold, silver for silver, wheat for wheat, barley for barley, date for date, salt for salt, must be equal on both sides and hand to hand. Whoever pays more or demand more (on either side) indulges in Riba.”
It means that if wheat is exchanged for wheat, the quantity on both sides must be equal to each other and if the quantity of anyone side is more or less than the other, this transaction is also a riba transactions, because in the tribal system of Arab these commodities were used as money, and the exchange of one kilogram of wheat for one and a half (11/2) kilogram of another wheat would stand for exchange of one dirham for one and a half (11/2) dirham. However, this transaction was termed as riba by the Holy Prophet (PBUH), and it was not meant by the term riba al-jahaliya. Therefore, it was known as Riba al-Fadl. It is to noted that, while prohibiting the riba al-fadl, the Holy Prophet (PBUH) has identified only six commodities and it was not clearly mentioned in the above Hadith whether this rule is limited to these six commodities or it is applicable to some other commodities as well, and in the latter case what are those commodities? This question raised controversy among the Muslim jurists. Some earlier raised jurists, like Qatadah and Tawoos, restricted this rule to these six commodities only, while the other jurists were of the opinion that the rule will be extended to other commodities of the same nature. Then there was a difference of opinion about the nature of these commodities that might be taken as a common featured found in all the six commodities and a criterion for identifying the commodities which are subject to the same rule. Imam Abu Hanifa and Imam Ahmad are of the opinion that they can either be weighed or measured, therefore, any commodity which is sold by weighing or measuring falls within this category and is subject to the same rule, if it is bartered with a similar commodity. Imam AlShafie is of the view that the common feature of these six commodities is that they either eatables or they are used as a universal legal tender. Wheat, barley, date, salt, represent eatables while gold and silver represent universal legal tenders. Therefore, according to Imam AlShafae all eatables and universal legal tenders are subject to the rule mentioned in the Hadith. Imam Maalik is of the opinion that the common feature among these six commodities is that they are either food items or they can be stored, therefore, he holds that every thing which falls under the food items or can be stored is included in the same category, hence, subject to the same rule. This difference of opinion among the Muslim jurists was base on the fact that after specifying the six commodities the Holy Prophet (PBUH) did not expressly mention whether or not other commodities will assume the same status.
1- From Umar ibn Khattab (R.A) The last verse to be revealed was on riba and the Prophet (PBUH) was taken without explaining it to us; so give up not only riba but also raibah [whatever raises doubts in the mind about its rightful-ness]. (Ibn Majah)
2- The Prophet (PBUH) said; Sell gold in exchange of equivalent gold, sell silver in exchange of equivalent silver, sell dates in exchange of equivalent dates, sell wheat in exchange of equivalent wheat, sell salt in exchange of equivalent salt, sell barley in exchange of equivalent barley, but if a person transacts in excess, it will be usury (Riba). However, sell gold for silver anyway you please on the condition it is hand-to-hand (spot) and sell barley for date anyway you please on the condition it is hand-to-hand (spot).”
3- From Abu Said Al-Khudri (R.A) The Prophet (PBUH) said: Do not sell gold for gold except when it is like for like,and do not increase one over the other; do not sell silver for silver except when it is like for like, do not increase one over the other; and do not sell what is away [from among these] for what is ready.” (Bukhari, kitab al-buyu, bab bay’I al fiddati bi al-fiddah; also Muslim, Tirmidhi, Nasa’I and Musnad ahmad)
4- From Ubada ibn al-Samit (R.A) The Prophet (PBUH) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt – like for like, equal for equal, and had-to-hand; if the commodities differ, then you may sell as you wish, provided that the exchange is hand-to-hand.” (Muslim, kitab al-Musaqat, Bab al-sarfi wa bay’I al-dhahabi bi al-waraqi naqdan; also in Tirmidhi)
5- From Abu Sai’d al-Khudri (R.A) The Prophets (PBUH) said: “ Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt – like for like, and had-to-hand. Whoever pays more or takes more has indulged in riba. The taker and the giver are alike [in guilt].” (Muslim, ibid; and Musnad Ahmad)
6- From Abu Sai’d (R.A) and Abu Hurayrah (R.A): A man employed by the Prophet (PBUH), in khaybar brought for him janibs [dates of very fine quality]. Upon the Prophet (PBUH) asking him whether all the dates of khayabar were such, the man replied that this was not the case and added that “ they exchanged a sa’ [measure] of this kind for two or three [of the other kind]”. The Prophet (PBUH) replied; “ Do not do so. Sell [the lower quality dates] for dirham and then use the dirhams to buy janibs. [when dates are exchanged against dates] they should be equal in weight.” (Bukhari, kitab al-buyu, Bab idha arada bay’ a tamrin bi tamrin khayrun minhu; also Muslim and Nasa’i)
7- From Abu Sai’d (R.A) Bilal (R.A) brought to the Prophet (PBUH) some barni [good quality] dates whereupon the Prophet (PBUH) asked him where these were from. Bilal (R.A) replied, “ I had some inferior dates which I exchanged for these- two sa’s fo a sa’.” The Prophet (PBUH) said, “Oh no, this is exactly riba. Do not do so, but when you wish to buy, sell the inferior dates against something [cash] and then buy the better dates with the price you receive.” (Muslim, kitab al-Musaqat, Bab al-ta’ami mithlan bi mithlan; also Musnad Ahmad)
8- From Fadalah ibn Ubayd al-Ansari (R.A): On the dat of khaybar he bought a necklace of gold and pearls for twelve dinars. On separating the two, he found that the gold itself was equal to more than twelve dinars. So he mentioned this to the Prophet (PBUH), who replied, “ It [jewellery] must not be sld until the contents have been valued separately.” (Muslim, kitab al-Musaqat, Bab bay’I al-qiladah fiha khara-zun wa dhahab; also in Tirmidhi and Nasa’i)
9- From Abu Ummah (R.A) The Prophet (PBUH) said: “Whoever makes a recommendation for his brother and accepts a gift offered by him has entered riba through one of its large gates.” (Bulugh al-Maram, kitab al-buyu, bab al-riba, reported on the authority of Ahmad and Abu Dawud)
10- From Anas Ibn Malik (R.A) The Prophet (PBUH) said: “ deceiving a mustarsal [an unknowing entrant into the market] is riba.” (Suyuti, al-jami, under the word ghabn; Kanz al-Ummal, kitab al-buyu, al-bab al-thani, al-fasl al-thani, on the authority of sunan al-Bayhaqi)
11- From Abdallah ibn abi Awfa (R.A) The Prophet (PBUH) said: “ A najish [one who serves as an agent to bid up the price in an auction] Is a cursed taker of riba.” (Cited by ibn Hajar al-Asqalani in his commentary on al-Bukhari called Fath al-bari, kitab al-buyu, bab al-najish; also in Suyutt, al-jami al saghir, under the word al-najish and Kanz-ul-Ummal, op.cit., both on the authority of Tabrani’s al-kabir)

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