[2:275] Those who charge usury are in
the same position as those controlled by the devil's influence. This is because
they claim that usury is the same as commerce. However, GOD permits commerce,
and prohibits usury. Thus, whoever heeds this commandment from his Lord, and
refrains from usury, he may keep his past earnings, and his judgment rests with
GOD. As for those who persist in usury, they incur Hell, wherein they abide
forever
The Quran forbids usury, not interest. Quite a few states
in USA have laws against usury. Usury is defined as excessive interest. A
Dictionary defines usury as "an excessive or inordinate premium for the use of
money borrowed", "extortionate interest", or "the practice of taking exorbitant
or excessive interest." The Arabic language also makes distinction between
interest (Fa'eda) and usury (Reba). The Quran forbids Reba or usury.
Earning interest and paying interest is perfectly
acceptable, as the Quran has not prohibited interest. Interest is an essential
component of the financial aspect of an individual or an organization.
Individuals may need to save money in a bank, may carry a credit card for
convenience, or may borrow and pay interest for an automobile or to own a house.
Borrowing money and thus paying interest for business loans is an essential
component for business and organizations. Thus paying interest, as long as it is
not considered excessive by the standard of the day and community, to a credit
card company, to a financial institution for a loan of any kind (business, car,
house mortgage) is allowed and perfectly legal from a Quranic point of view.
Also earning interest from a financial institution like a bank or bonds or
mutual fund is also fine.
As defined above usury is excessive interest. Unlicensed
or illegal moneylenders (mafia as a well known example) charge usury, excessive
interest. Such unlicensed or illegal moneylenders are all over the world and
can easily be accessed by a few inquiries. For those who live in USA, any
individual can find out about these moneylenders by asking about them within
their ethnic business community. These illegal moneylenders have entirely
separate standards for making loans - they charge excessive interest (usury) and
usually rely on someone's life (guarantor) as collateral. The Quran forbids in
dealing with usury - borrowing money and paying usury or earning money by
charging usury. The Quran specifically states that usury cannot be equated to
commerce or taken as a normal business practice. The practice of usury,
unfortunately, is prevalent all over the world with individuals and business
engaged in this practice.
In practical terms as long as we are dealing with any
state-licensed institution like a bank, Mortgage Company, Credit Card Company,
etc., we are not violating any Quranic commandment as these institutions usually
follow the law of the land and do not charge excessive interest. They calculate
their interest rate on daily basis considering the status of the economy and the
need of the society. However, if we deal with the illegal moneylenders who
practice usury, we are in violation of clear Quranic commandments. This is not
to say that one may not borrow or lend money to a friend or relative and even
charge interest. Such transaction must be in writing as the Quran cleary
commands in verse 2:282 and may involve interest, to at least pay for the cost
of the loan to the lender if any, and compensate for any change in the value of
the currency over the time of the loan, but should not involve usury.
[2:282] O you who believe, when you
transact a loan for any period, you shall write it down. An impartial scribe
shall do the writing. No scribe shall refuse to perform this service, according
to GOD's teachings. He shall write, while the debtor dictates the terms. He
shall observe GOD his Lord and never cheat. If the debtor is mentally incapable,
or helpless, or cannot dictate, his guardian shall dictate equitably. Two men
shall serve as witnesses; if not two men, then a man and two women whose
testimony is acceptable to all. Thus, if one woman becomes biased, the other
will remind her. It is the obligation of the witnesses to testify when called
upon to do so. Do not tire of writing the details, no matter how long, including
the time of repayment. This is equitable in the sight of GOD, assures better
witnessing, and eliminates any doubts you may have. Business transactions that
you execute on the spot need not be recorded, but have them witnessed. No scribe
or witness shall be harmed on account of his services. If you harm them, it
would be wickedness on your part. You shall observe GOD, and GOD will teach you.
GOD is Omniscient.
A note should be made that the Quran, which spells out
religious laws for our great religion, removes the shackles and burdens imposed
on us by the ignorant scholars and religious leaders. Most of the "Muslim"
countries have various laws against interest and have sham "interest-free
banking" reflecting their ignorance of this simple Quranic truth. Unfortunately,
quite a few of those who call themselves Muslims fall victims to the falsehood
spread by these religious leaders.
[2:276-280] GOD condemns usury, and
blesses charities. GOD dislikes every disbeliever, guilty. O you who believe,
you shall observe GOD and refrain from all kinds of usury, if you are believers.
If you do not, then expect a war from GOD and His messenger. But if you repent,
you may keep your capitals, without inflicting injustice, or incurring
injustice. If the debtor is unable to pay, wait for a better time. If you give
up the loan as a charity, it would be better for you, if you only knew.
[3:130] O you who believe, you shall
not take usury, compounded over and over. Observe GOD, that you may succeed.
[4:161] And for practicing usury, which
was forbidden, and for consuming the people's money illicitly. We have prepared
for the disbelievers among them painful retribution.
[30:39] The usury that is practiced to
increase some people's wealth, does not gain anything at GOD. But if you give to
charity, seeking GOD's pleasure, these are the ones who receive their reward
manifold.
[7:157] "(4) follow the messenger, the
gentile prophet (Muhammad), whom they find written in their Torah and Gospel. He
exhorts them to be righteous, enjoins them from evil, allows for them all good
food, and prohibits that which is bad, and unloads the burdens and the shackles
imposed upon them. Those who believe in him, respect him, support him, and
follow the light that came with him are the successful ones."
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