M. Umer Chapra*
Abstract: There is no difference of opinion among Muslims that riba is clearly prohibited by both the Qur’an and the Sunnah. However, questions continue to be raised about its meaning and implications because of the two senses in which the term riba is used – riba al-nasi’ah and riba alfadl.
This paper is an attempt to clarify the meaning and implications of both these terms.]
Socio-economic justice is one of the cherished goals of all societies. There is,however, a difference of opinion on the strategy that should be used to realize this goal. In spite of this difference, one element which is common in the strategy of four of the world’s major religions (Hinduism, Judaism, Christianity and Islam) is the prohibition of interest? Since the followers of the first three of these religions have in general moved away from this prohibition, there are some Muslims who wish to do the same by arguing that what Islam has prohibited is riba and not interest. In their opinion bank interest is not riba. This raises the question of whether interest is really prohibited in Islam. This paper tries to answer this question in the light of the Qur’an, hadith and fiqh. All the Qur’anic verses related to riba as well as a representative sample of hadiths and fiqh are given in Appendices 1, 2 and 3, respectively.
The consensus prevailing among Muslims throughout history has been, and continues to be, that riba among other things, includes interest. This consensus is clearly reflected in the unanimous verdict of a number of international conferences of fuqaha (jurists) which have been held to discuss the question of riba, including the Mu’tamar al-Fiqh al-Islami held in Paris in 1951 and in Cairo in 1965, and the OIC and Rabitah Fiqh Committee meetings held in 1985 and 1986 in Cairo and Makkah, respectively.
(See al-Sanhuri, 1953-4, Vol.3, pp.241-2 and al-Qaradawi, 1994, pp. 129-42). The Pakistan Council of Islamic Ideology clearly reflected this consensus when it concluded in its 1980 report on the elimination of interest from the Pakistan economy that: “The term riba encompasses interest in all its manifestations irrespective of whether it relates to loans for consumption purposes or for productive purposes, whether the loans are of a personal nature or of a commercial type, whether the borrower is a government, a private individual or a concern, and whether the rate of interest is low or high” (See the Council’s Report, 1980, p.1). 
full article, please visit http://www.isdb.org