Riba In Secured Loans For Consumables
Injustice is when there is a breach of mutual contract. If a loan or any other contract is done when the free consent of parties is compromised by a force of necessity and it is proven that the contract is biased (not as per custom of trade in that society) the contract is deemed null and void by court of law. Those who force other party to pay under such contracts are zalm and the additional money they collect is riba, be it in form of sood, rent or sale price in a hand to hand transaction. If parties agree, there is no Zulm in returning value in a different asset. For example, i can rent to own a (surplus) cow against a ton of wheat payable over 5 years. Now buyer has to create principal and rent both and can use the cow pull a cart and also milk it to drink (consumable). This transaction is lawful only if the pice of the cow and the rent I charged is as per the market. It does doesn’t matter if the wheat he gave me had to be created or recreated or it caused any due or undue hardship on the buyer. AS long as the contract was fair free mutual consent of the parties there is no question of sin or riba or injust or unlawful eating of wealth of buyers by sellers.
Bro Nadeem, That was a hypothetical scenario. Here we are not discussing who should do what. The scenario is supposed to help us figure out what is wrong in riba and what makes it such a big sin that it’s like a war against God and His messenger. The scenario shows that even if a person with no surplus resources lends money to someone who doesn’t need charity and claims riba and that causes no hardship to the borrower, it would be a sin. That’s because riba is a sin in it’s nature. it’s a zulm and it’s got nothing to do with the profile of lenders, borrowers or even the goods bought with loan money. It’s a sin because the two sides of a transaction are not equal – the difference causes loss to one party and that tantamount to zulm, injustice and eating up others money unlawfully. On the other hand, trade has a “value for value” exchange so God has made it lawful. Rent is a form of trade instead of riba and that’s because here the value is transferred in form of usage instead of goods and as long as value exchanged is the same it does not cause transfer of wealth from one party to another. I guess i am repeating myself so i must stop here. If you agree with the “value for value” principle, we can move on to applying the concept to different scenarios and see how it goes.
How does a fixed amount of return makes it riba? Rib arises only when a party is short changed. How can a party be short changed if the value created out of a blend of money and efforts is more than the fixed amount payable to one party? How is stocks different from lending money, if a company goes bust you get your principal back out of the sale proceeds of the assets just like lenders or creditors of the company do.