Religion Riba, Prohibitive Transaction In Islam

vestment. Riba, on the other hand, is unearned income. The lender does not have to put in any effort to earn interest. Lenders simply gain revenue by offering money which in itself cannot generate income. Money in debt-based economies is simply an end in itself.

Trade transaction is executed immediately an item is exchanged and money (profit) earned. In a riba-based transaction, the debtor has to consume the money, reproduce it (if lucky) and then pay it plus interest. Even so, the interest can still be compounded until paid in full. Thus, a debtor runs double risks in a ribabased transaction.

Term deposit accounts offer a good example of contemporary form of riba. Depositing at a bank for a specified period against a specified interest is definitely usurious. The depositor earns riba during the term without working or taking any risks.

This is equally evident in contemporary Murabaha (cost-plus financing) and Bai Muajjal (sale with deferred payment). Some Islamic banks (IBs) undertake these transactions in a typical ribabased manner. Whereas the Shari’ah assumes that IBs actually buy and possess the items before selling them to customers, most IBs do not fulfill this requirement. Islamic Banks enter into fictitious deals which guarantee themselves a predetermined profit exactly equal to the conventional interest rate margins. These IBs in fact do not even deal in real goods nor share any real risks!

tive, zero or negative (loss).

Profit is earned through investing actively in the real economy. Businesses trade to meet people’s needs in order to make profit. Interest, by contrast, is earned passively. Moneylenders do not take any risks in the monetary economy. The loans are collateralised and interest earned without any real investment or participation in trading.

Profit is halal. Riba is haraam. In Islam, wealth can only be generated through active work. The Shari’ah favours gains proportional to work done. Profit is earned through effort and risks. It is consideration for the entrepreneurial effort and risks incurred in an in-

From the foregoing, we realize that business in Islam is not about making profit only. It is an opportunity to please Allaah Almighty more and establish a halal way of life. Profit, is paramount, but should come second after Allaah Almighty. Businesses ought to put Allah Almighty before profits. Implement Islamic values (of social justice, honesty and truthfulness) and business will boom.

May Allaah Almighty make this sermon a beneficial one for me, the writer, the readers, and the entire Muslims. And our last prayer, is praise be to Allaah Almighty, Lord of the worlds.

•Sheik Muhammad Abdulalimi, is the Mudiru Ad-Da’wah Wal-Irshad, Obaagun, State of Osun.