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Home arrow Business & Finance arrow The art of RF (riba-free) Islamic banking and finance

The Faith-Based Judeo-Christian- Islamic Foundation of the Prohibition of Interest and the RF (Riba-Free) Banking System

This chapter studies in some detail the fundamental issue of the prohibition of riba (interest) in Islam and researches its foundations by tracing it back to its origins in the Jewish and Christian faiths and Bibles. An introduction to the religion of Islam is included at the beginning of this chapter to familiarize the reader with an overview of the fundamental foundation of Islam as revealed in the Qur'aan, the teachings of Muhammad (pp) as well as its links to the revelations to the teachings of Moses (pp) and Jesus (pp).

Charging interest (called riba in the Qur'aan and ribit in the Torah) is divinely prohibited in Judaism and Christianity as it is also clearly and strictly prohibited in Islam. That is why it is believed that this can present the followers of the Abrahamic faiths (Judaism, Christianity, and Islam) with a wonderful window of historic proportions to cooperate together to bring to market a credible, efficient, fair, and equitable financing and banking system — The RF (riba/ribit-free) banking and finance system — which uses the Judeo-Christian-Islamic RF banking and finance discipline. It is important to study, learn, and reflect upon the history of the prohibition of interest from the original teachings of Moses (pp) in the Torah (Jewish Bible), the teachings of Jesus (pp) in the Christian Bible, and the teachings of Muhammad (pp) as revealed in the Qur'aan to discover how these attitudes and disciplines developed over time and eventually produced the more relaxed interest-based banking and finance practices used today.

The main reason for the prohibition of ribit/riba — the prohibition of renting money to those who need it — is to prevent those who have money from taking advantage of and abusing the freedom of the poor and the needy. Slavery became rampant among the Hebrews in ancient Egypt because of the charging of ribit on loans needed by those who did not have the money to buy seeds or to meet their daily needs. When Moses (pp) came to free the Hebrew slaves, he was taught by God to remove ribit from society as revealed in the Torah and later explained and elaborated on in the Talmud by the learned rabbis. It is interesting to note that the rabbinical laws do not allow a Jewish person to stand as a witness in a Jewish court if he is involved in usury/interest. The prohibition of riba/ribit started the transformation process of societies and nations to freedom. It empowered the Hebrews to move out of Egypt behind the leadership of Moses (pp) by crossing the Red Sea to establish new settlements and farmlands. When Jesus (pp) was commissioned to preach God's teachings, the society he was sent to consisted of people who lived in an agrarian society with slavery being practiced. Jesus (pp), as revealed and taught in the Bible (Injeel — the name used for the Bible, in Arabic, among the Muslims), propagated the principle of prohibiting the use of renting money to the poor and the needy as a tool to enslave them and to eventually confiscate their collateral properties, including agricultural lands of the farmers if they could not pay their debt back as agreed. It is interesting to note that in the early days of the Catholic Church, a Catholic who participated in usury/interest through charging it or receiving it is denied a Catholic burial. When Prophet Muhammad (pp) was commissioned by God, the world was experiencing the dawn of the commercial era and international trade. Islam taught, reinforced, and made into law the principles of prohibiting ribit/riba, which involves the rental of money at a price called usury or interest rate and the use of money to take advantage of the unfortunate circumstances of people by confiscating their freedom and eventually turn them into slaves if they do not pay back the principal and usury (riba or interest) at the agreed-upon time. In addition, and in order to meet the demands of the new society of expanding trade and international business, Islamic teaching started a business revolution to define the disciplines, regulations, and rules needed for riba-free business and trade financing, as revealed in the Qur'aan and according to the teaching of Prophet Muhammad (pp).

In Christianity, it is interesting to note that according to the First Century a.d. oral tradition of the Pharisees (a Pharisee is a member of an ancient Jewish sect, distinguished by strict observance of the traditional and written law, and commonly held to have pretensions to superior sanctity) as committed to writing in Mishnah Sheqalim 1:3-6, money changers who had “set up in the Temple” exacted “surcharges” for their services. In Christianity, Jesus Christ (pp) stated that one of his goals is to drive the money changers out of the Temple (John 2:15-15; Matthew 21:12-13; Mark 11:15-18).

S. C. Mooney, an author and a leading contemporary Protestant opponent of interest on money, states: “What is being argued here is not a new idea, or a new interpretation of Scripture. It is the historic position. This is not a call to strike out in a new direction; it is a call to return to faithfulness to God. . ..”

It is also interesting to note that under the Biblical concept of the Jubilee (the word Jubilee in the Hebrew Scriptures means a year of rest to be observed by the Israelites every 50th year, during which slaves were to be set free, alienated property restored to the former owners, and the lands left untilled), no indebtedness would last longer than the sabbatical seventh year. Visitors to Philadelphia, Pennsylvania, will notice that the key Jubilee passage from Leviticus (25:10) was engraved on the Liberty Bell in Philadelphia by the founders of the United States of America.

History also documents that as late as the fifteenth century, movements abounded to eradicate the renting of money for a price called interest — in other words, to prohibit usury. For example, during the time of the Protectorate that administered the kingdom under England's first fully Protestant monarch, the boy-king Edward VI, the laws of England were returned to their immemorial Catholic position on usury, last implemented by the English Catholic King Henry VII in 1495. All interest on money was declared illegal. The Protestant Edward Vi's law banning usury is one of the most stirring documents authored against usury. It is interesting to note that King Henry VII's prohibition of usury in his realm was overthrown in 1545 by his son and successor, King Henry VIII.

As an adherent to Islam and not to Christianity nor to Judaism, the author felt that it would be more appropriate, fair, and credible to study the prohibition of the charging of usury (charging interest to rent money in Judaism and Christianity) is to ask an expert scholar who is also an adherent to each faith and who has demonstrated expertise in the field of finance to summarize the position and the original teachings of his/her faith on usury/the charging of interest on money. It was thought that it would also be useful to discuss how these clear theological injunctions that prohibited the charging of usury/interest were modified, diluted, and/or reconstructed to become in the current acceptable form and which led to the practice of freely and openly charging interest on money.

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