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Riba Only On Consumable Items
Respected Sir السلام عليكم ورحمة الله وبركاته
In his YouTube videos Ghamdi Sb has said that usury (Riba) is only applicable on consumable items.
According to him if money is borrowed for acquiring tangible assets then it will not be considered as Riba.
I want to put a simple real life example and request him to please explain how Riba is not applicable for tangible items.
An extremely poor sick man needs a wheelchair for himself. Assume the price of wheelchair is 1000.
In the first scenario, the poor man went to a money lender, borrowed 1000, agreed to repay 1200 in six months and bought a wheelchair.
In the second scenario, the money lender also thinks that Riba is not applicable on tangible items so instead of giving money he bought a wheelchair for 1000, gave it to the poor man and demanded the same repayment of 1200 in six months. If we analyze the above we will find that the substance of transactions in both the scenarios is absolutely the same. There is a clear exploitation of the poor in both scenario.
In both the cases poor man will be paying an extra amount of 200 and moneylender will be getting the same extra amount.
My simple question is how an extra amount of 200 is considered as Riba in the first scenario and how it becomes Halal in the second scenario?
Please guide the right way.
Jazakallah Khr
Tauqeer Uddin Ahmed
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9 Replies
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Riba Only On Consumable Items
updated 1 year, 11 months ago
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9
Replies
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Usual transaction in trades works on the principle that a person buys an item and then sells it to one who needs it adding a profit to the original price. In the above hypothetical case where one sells a wheelchair, it is trade, and it happens to produce the same result. If such transaction is disallowed, no trade is possible.
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Assalamu Alaykum,
Many thanks for your reply.
Being a Muslim we all believe that guidance from Allah (SWT) is universal and not limited to the cases of our choice.
We cannot ignore a situation by just saying that it is a hypothetical case. It is our strong faith that whether it is a real or hypothetical case, guidance from AL-Quran will cover it.
And the fact is that I did not put a hypothetical case rather it is a genuine real world situation. May be for developed countries such case are considered as hypothetical but if we simply go to some of the main hospitals in Pakistan we can easily find many poor people who are looking for financial assistance to get oxygen machines, patients beds, walkers, crutches, wheelchairs, nebulizer machines and all these are non-consumable items. People in remote and hilly areas are taking finances just to get portacabin houses and all these are non-consumable items. Poor laborers are paying Riba just for man-push cart, trolley cart, masonry equipment and all these are non-consumable items.
So please note that from nowhere these are hypothetical cases.
You have also said that ‘If such a transaction is disallowed, no trade is possible’. There is absolutely no relationship between such transactions and trade. Trade is 180 degrees different from such transactions. Such transactions are not at all trade. In trade buyers do have ability (money) and willingness to buy but in such Riba based transactions buyers (poor people) only have willingness they do not have ability to buy.
We all know it very well that Allah (SWT) has allowed trade and prohibited usury (Riba).
So my point is that when Ghamdi Sb says that Riba is not applicable on non-consumable items then such explanation of Quran will surely encourage greedy money lenders to exploit poor and needy people using the same trap that I mentioned in my earlier questions.
If lending money on riba is haram, than how can providing non-consumable items on riba be made halal. I think we need to look into the substance of the transaction rather than its form.
Jazakallah Khr
Tauqeer Uddin Ahmed
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Poor laborers are paying Riba just for man-push cart, trolley cart, masonry equipment and all these are non-consumable items.
I’m not sure what’s the problem. You would rather have these people die hungry? Who says they’re paying riba?
In trade buyers do have ability (money) and willingness to buy but in such Riba based transactions buyers (poor people) only have willingness they do not have ability to buy.
According to what principle? If someone can’t buy a house then they should live under the blue sky?
If lending money on riba is haram, than how can providing non-consumable items on riba be made halal.
You have assumed that the money earned from usable items is riba. With that understanding, your conclusion is correct. However, that is certainly not the case.
Even in our classical fiqh and Islamic banking, the concept of ijarah (lease) and Ijara wa Iqtina (lease to own) transactions are considered absolutely fine.
By your viewpoint, renting out anything would be haram, while we have evidence of prophet Muhammad SAW himself being involved in such transactions. For example, please see:
https://sunnah.com/bukhari/47/16
In transactions based on usable items, a portion of the payment received is the usage fee or rent. On what principle do you insist that it’s riba?
For reference, we had a similar discussion before:
I suggest that you do a bit of in-depth research on this topic and then understand Ghamidi sahab’s viewpoint in this regard. A transaction doesn’t become riba according to our own wishes – we need to have evidence from prophet SAW or God in order to categorize something as haram. Ghamidi sahab has explained his viewpoint in depth in the following videos. If you see anything questionable in principle, please don’t hesitate to point it out.
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Respected Faisal Sb السلام عليكم ورحمة الله وبركاته
Many thanks for your reply.
To be very honest the only reason I wrote to this platform is to learn.
Unfortunately when I approach our classical Islamic scholars I do not find something practical specially on riba.
Since Ghamdi Sb explains topics in much detail that is why I want to ask about my confusion on this topic but if you don’t like I will not ask again.
It is my opinion and I may be wrong that riba is such a complex issue that can be better understood with examples.
Principally we all know that riba is prohibited but when we apply it in our daily life we need more clarity.
My earlier question was different, in that post I asked about ‘Interest Payers‘ and in this post I want to know about interest implications on non-consumable items.
For the last time and if you think appropriate:
I want to rephrase my question again and humbly request you to please specifically answer about this case even if you think it as hypothetical.
There are two extremely poor persons and only one money lender. Both of the poor men desperately need accommodation. Both approached the same money lender.
To one poor man the money lender gave cash of 5000 as loan and demanded to repay 5500 in ten months. The man poor with this borrowed money bought a portacabin house. As per my understanding this extra amount of 500 is riba.
To the second poor man the money lender gave a portacabin house which he (money lender) bought for 5000 and demanded the same repayment of 5500 in ten months from the second poor man. As per my understanding this extra 500 is also riba no matter if it is being charged against a non-consumable item.
My only confusion is that when in both cases the money lender is getting the same benefits, in both cases poors are being exploited then how one transaction can be halal and one haram.
My confusion is that Ghamdi Sb says interest is not applicable on tangible things but I do not find any difference in both the transactions. Please tell me the specific point/factor on the basis of which we can declare frist transaction prohibited and second as allowed. Hope you understand my point of view.
While answering please keep in mind that I do not want these poor people to live under sky rather I want that they both poor men should get interest free loans.
Jazakallah Khr
Tauqeer Uddin Ahmed
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Please don’t hesitate to continue asking – there are no hard feelings at all. The purpose of this app is precisely to help people understand things.
The reason that I shared a reference to your previous question was because while this question is different, the principle remains the same. Things don’t become haram according to our own wishes; we can only make things haram on the authority of God and His prophet SAW.
If I understand it correctly, what you are saying is that if an additional amount earned when lending money is considered riba, then how come it’s not considered riba when selling things on installments. I will attempt to explain, and the idea is actually very simple.
I am sure that you will agree that rent transactions are perfectly halal. I even shared a hadith reference with you above. When we analyze rent, it is nothing more than usage fee for a usable item for a predetermined time period.
Now consider that instead of renting the same usable item, we buy it on installments. For simplicity sake, let’s consider that the cash price for that item was $1200, but the seller agreed to sell it to us for 12 monthly installments of $100. I am sure you will agree that this is also a perfectly halal transaction. The problem with this transaction, however, is that it is unjust to the seller. He has $1200 tied up for an entire year, while he could have sold the same item to someone else for the upfront cash price. Additionally, by selling on installments he is assuming a risk – we might default on the transaction and he might lose some or most of his money.
Now consider a transaction that’s hybrid of the above two perfectly halal transactions. In this transaction, the seller agrees to sell us the same usable item on installments, but stipulates that until the item has been paid in full, he will charge us a monthly usage fee (rent) for the portion of the item that is unpaid for. The only confusion here is that they generally call this usage fee interest, while we have been told that interest is haram. Otherwise, a hybrid of two perfectly halal transactions can only be halal – there’s no real basis to term this transaction as haram. In fact, this transaction would be the most fair because not only that it will allow a buyer to benefit who can’t afford to buy the item for the upfront cash price, but it won’t be unjust to the seller either.
I hope that this helps.
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In the case of consumable things like money, one has to reproduce it to return, but in the case of useable things like house or car, the item is still there, and can be returned as it is. so both are quite different in nature and implications.
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This is a perfect answer to the scenario presented above. I believe no other explanation seems to fit in the whole concept of interest and rent. The idea of returning the usable item if not to be paid in full, makes trade halal even though the profit earned is the same as money lending of the same amount.
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I want to add a few statements/questions:
Assumptions: riba on non-consumables is not haram.
I would like to add to the discussion that, although it might be a matter of personal judgment/principles, the nature of the item being rented out matters as much as the categorization of the loan. If interest/rent is being charged on what Islam defines as basic necessities and rights of human beings, even if they’re non-consumable, it has to be haraam. But then again, the state is responsible for providing basic rights and necessities for its subjects* And if the state is unable to provide enough basic necessities to its people, the reason is likely to be, in a capitalist society, rationing of basic necessities is done according to wealth. So the very idea of a capitalist society (privately-owned organizations) that controls basic necessities such as basic housing, appropriate nutritional products, and good enough education and other means to progress in the society despite lack of currency/money, seems to perpetuate the system of interest. You see nutrition, education, and shelter are basic human rights needed to progress in society. Are we going to differentiate both the taking of loans for either haram or halal on the basis of one thing being a consumable and the not being?
In my opinion, it’s the state that is at fault when it fails to provide these things. The consequence is always manipulation of the market by private organizations.
I’ve rambled enough here are my questions:
Does anyone here agree and can back it up with more sound logic that, if the state (policy-making leadership) is unable to provide basic rights, there is no way to escape the concept of interest? Either in the way of consumable or non-consumable goods? Is the onus of the riba then on the state because individuals do not possess the ability to work and produce as much as an elected state body is supposed to?
Can it be backed up in Islam that unless basic human rights are fulfilled by the state, individuals should strive for negating it, but not be responsible solely for the burden of the charging riba? Because it kind of makes sense.
*is this backed up in Quran/Ahadith?
Another question:
Ghamdi Sb makes the distinction between consumable and non-consumable interest but he has only the backed-up concept of non-consumable interest (stated as rent) from a Hadith. Wouldn’t it help to state the concept of consumable interest specifically being mentioned as riba, or even be mentioned at all in relation to riba in Hadith or Quran, or in any Abraham religions for that matter? Unless a reference to that is there, it leaves the whole topic open to extremely wide interpretations, one of which I find the strongest is Ghamdi Sb’s.
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Ghamidi sahab has not created but only explained the distinction between usable and consumable items in regards to riba. Also he’s not the first one or the only one to explain this difference. Regardless of that, it is already well known that when a fee is charged on usable items it’s called rent or usage fee. There’s no prohibition of renting things in God’s religion. Prophet SAW as well as sahaba are also known to have rented usable items. For example, please see:
https://sunnah.com/bukhari/47/16
For Ghamidi sahab’s own explanation in regards to usable and consumable items, please refer to the following video from 13:07 to 30:05:
https://youtu.be/QZZpVOQQ5Wc?start=13m7s
Islam has not placed any responsibility of meeting the basic needs of its people on the state. In other words, Islam is not partial to a socialist or a capitalist system. It is left up to the people to decide with mutual consultation what kind of system they want. If you would like to discuss this point further please create a new question on Ask Ghamidi.
Finally, I think that there’s of course room for error in application, there isn’t, however, any room for interpretation in regards riba on usable vs. consumable items.
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