Riba In Secured Loans For Consumables
( 1 ) Consumable, (2) additional amount, (3) demanded Which one of the above is a sin given in surah Alaraf?
These are the components that make a loan transaction unjust.
1. Spending wealth surplus to own needs in good works is recommended but not obligatory. True or false? 2. Lending money out of money saved for future needs is not obligatory. True or false? 3. Surplus wealth recommended for spending include usable assets like bike, car or a vacant house? true or false? 4. Surplus wealth can be spend in charity, loans or business? true or false? 5. Renting business is legit business. true or false? 6. In a renting business, the lender can claim damages in form of cash or any other asset equal in value of the lost asset. T/F? 7. In a renting business, one can rent out objects made of gold and silver such as medals, shields, souvenirs, coins, etc. true or false? 8. In a renting business, one can rent liquid assets like bonds, investment certificates, contracts, derivatives. true or false? 9. Renting and trading business can be combined, for example, I rent to own an assets or i can accept a different asset in return. Like dollar for rupee. true or false? 11. Borrowers commit no sin whether they use or consume anything as long as they return it or equal value to the lender. True or false? 12. A lender commits no sin whether his borrowers use or consume the rented assets as “no bearer of a burden shall bear the burden of another”. true or false? If all above statements are true, differentiating rent and riba based on usable and consumable is totally wrong and misleading. There are ahadiths on Riba for hand to hand transactions that do not involve loan or credit. Therefore, defining riba as ‘Sood’ is not enough. That is one reason why scholars could not figure out the difference correctly. Riba means hanging surplus without a counter part in transaction where both sides are not equal in value. This mostly happens in loan transactors but not always. This error in understanding Riba is extremely important as needs correction as it affects life of Muslim communities. Please arrange a video call with some scholars of farahi school who i can explain my “counter narrative” and if they see any merits they can discuss it with sir ghamidi.
Brother Wadood. I tend to agree with Faisal. Seems like you have some concerns and specific questions. I would love to ponder on those questions for my knowledge too; only if we take them one by one. It becomes difficult to handle too many items in a chat. 1. Zakat is obligatory; the rest is not 2. True (Lending without interest only) 3. Yes 4. Yes (Loans without interest only) 5. True (As long as it is not a Monopoloy or someone is not taking excessive profit by taking advantage of poor people) 6. Not necessarily; unless someone destroys rental property deliberately. Normally when something is rented, the rent includes depreciation and profit components and insurance is bought on the property in case of accidental damage. 7. Yes, as long as those items are not converted into something and used as-is. 8. False. It is lending; not renting. Renting requires tangible asset. 9. Yes 10. No. The same item need to be returned for renting. Not another item 11. No. Rented item can’t be consumed. 12. No. Rented item can’t be consumed
You stated “How does it make sense to link to prohibition of riba (eating others money unjustly) on loans for consumables only?” In my opinion all Usury (including interest on money) is prohibited; whether on consumable or not, but certainly it is a grave injustice if usury or interest is charged on loan that is used for consumables…because it puts undue burden on the borrowers who has to generate twice as much money to repay the loan. So, it becomes Riba, “taking undue advantage of someone’s situation or pressing need” On the other hand, if loan was taken to expand a business, then it is not a pressing need and it is not a dire situation. So, in my opinion, the Usury or Interest is still prohibited but it is not as severe sin as the prior one I mentioned.
Not it’s not. Profit is cost recovery for the value addition. There are ahadith that forbid reselling without value addition. Even in secular world, exorbitant profits without value addition are checked by the antitrust laws. Until the definition of trade as “value for value” exchange is not understood, riba cannot be understood. People get it wrong easily by taking profit as surplus and when they are told riba also means a surplus, they get confused why the surplus in trade/rent is ok but it’s not ok in riba. Once they close this door, they start guessing other possible reasons like ‘having to create or recreate value for repayment etc.’ these types of arguments are not relevant as the same kind of hardship of creating and recreating is involved in many scenarios that do not involve riba but those transactions are not forbidden. Similarly obligation of spending resources surplus to own needs apply to all kind of scenarios including those that do not involve loan or rba at all and therefore presenting them as the reason for riba being a sin is not correct
No doubt the rich is supposed to help the poor and the spirit of helping other should reflect in whatever we do. I have no disagreement on that one. However, what makes riba is not lack of charitable mindset – it’s about “eating up others money unlawfully”. Even if you flip the stereotype profiles of lenders and borrowers by assuming a poor man is lending money he saved for his needs to a rich neighbors who has a million $ tied up in fixed assets like real estate, it can’t justify riba. If thats true it alone destroys the whole premise on which Sir Ghmaidi’s interpretation of riba is based.