Why Usury is Prohibited
Fatwa No: 84764

Question

Why mark up (usury) is prohibited in Islam.

Answer

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

Al-Razi  and other Muslim scholars state five reasons for forbidding Riba (interest and/or usury).

Firstly, in Riba transactions a person takes the money of another without compensation because the person sells a Dirham for two Dirhams hand to hand or after a while he gets an increase in his money without giving something for it.

It is known that money is the key to getting what we need. So, it has to be protected. The Prophet said: “The inviolability of the money of the person is similar to the inviolability of his blood.

 So, taking his money without compensation is forbidden.

Secondly, some scholars state that Allah forbade Riba as it discourages people from working. In fact, when the money owner could get profit and interest through Riba transactions without having to work, he becomes lazy and prefers Riba than investing in trade and factories, and this in turn leads to unemployment among the people. Indeed, the public interest is in trade, crafts, factories and building.

Thirdly, Riba causes severing relations among people as it takes the place of good loans which promote kindness and courtesy among people.

Fourthly, most of the time it is the rich person who lends money with Riba to the poor person, hence putting yet another burden on the latter. So, encouraging Riba means giving more power to the rich over the poor who in addition will have to pay more than what he took and this is contradictory to mercy and benevolence and Allah is the most Merciful, the most Benevolent.

Fifthly, Riba is forbidden by evidence from the texts of the Quran and Sunnah and we are not asked to know its wisdom. We are only required to approve that Riba is forbidden and act accordingly.

Allah knows best.

Related Fatwa