Monday, July 18, 2005

Rashid Rida on Riba -- I: The Hayderabad fatwa

This series of postings present arguments and views expressed in the publication Al-Riba w al-Mu`amalat fi al-Islam (Riba and Transactions in Islam), by Rashid Rida, published by Dar ibn Zaydun (Beirut) and Maktabat Al-Kulliyat al-Azhariyyah (Cairo), 1986.

No dates were given in Rida's forward, the actual Indian fatwa, or Rashid Rida's analysis. The forward to the whole volume was written by Muhammad Bahgah al-Bitar, and dated 1959, but the actual fatwa and Rashid Rida's analysis must be earlier.

Rashid Rida provided in Al-Manar an introduction in which he stated:

The readers of Al-Manar know that the issue of Riba is among the greatest Muslim civil problems that have occupied rulers, leaders and schoalrs in this age. We have many questions regarding the dealings of banks, corporations, and contracts that jurists may consider to contain riba... We have been postponing our answer to those issues until an oppotunity arises to solve this problem through detailed analysis upon which solutions to the contemporary problems may be built.
The Islamic Indian government of Hayderabad has given us such an opportunity a few months ago, when it published a manuscript on the issue, containing a fatwa by some of their scholars, printed by the Asafi government, and sent by its supreme Shari`a court to famous scholars in various Islamic countries, requesting their opinion regarding its Islamic legal proofs...
The actual text of the fatwa contains background research, published in pp. 19-72 of the book cited in the beginning of this posting. The research (from which I shall quote selectively below and in later postings) culminates in a fatwa in the form of questions and proposed answers:

What say you, respected scholars, regarding the
following answers to the listed questions?

Are those answers correct or incorrect?

Illustrate or illuminate your answers with legal proofs (بالدليل)
Questions:

(1) The term riba in <و> (God has permitted trade and forbidden riba), is it or is it not abstract (مجمل), especially within the Hanafi school? If we accept that the Qur'anic term is abstract, how is it explained by the Legislator (based on Qur'an and valid Prophetic Tradition - Hadith)?

(2) Explain to us what riba means based on Qur'an and valid Hadith.

(3) Is of isn't a pre-specified benefit (increase) stipulated as a condition at the inception of loans
(النفع المعين المشروط في القرض ربا منصوص أم لا؟) a form of riba addressed by Canonical Texts?

(4) If it is said that a pre-specified benefit stipulated in loans is riba, what is the legal proof accepted by the respected jurists?
Answers

(1) Hanafis and other major scholars agree that the riba mentioned in the Qur'an is abstract, the level of agreement may be characterized as a consensus. The Hadiths of 'Ubadah and others are considered by the majority of jurists to be explanations of the abstract concept (see pp.19-25).

(2) Riba is an increase without compensation in sales (الربا هو الفضل الخالي عن العوض في البيع) [references to Al-Mabsut and Sahrh al-Hidayah], and the proof for this explanation are the narrations by `Ubadah and others (wheat for wheat, etc.), see pp.25-6.

This explanation is also supported by the verse (God has permitted trade and forbidden riba), based on the view that the Qur'anic verse forbade riba as an abstract concept, which is explained by Hadith. Thus, the riba of Qur'an cannot be different from the riba of Prophetic Tradition (Sunnah). In other words, the riba mentioned in the Qur'an is precisely the riba defined by Hadith (see pp.30-1).

(3) A benefit stipulated as condition in a loan is not a riba explicitly mentioned in the Canonical Texts, (النفع المشروط في القرض ليس هو ربا منصوصا لعدم ثبوته من القرآن و من حديث صحيح) since there is no proof thereof in Qur'an and valid Hadith (see pp. 31-44).

(4) Since a benefit stipulated as a condition in loans is not established as riba by Qur'an or Hadith, it was variously proven to be riba based on analogical reasoning (see p.71), or based on the Hadith (كل قرض جر منفعة , every loan which brings a benefit [is riba]), and both proofs are doubtful.

The first proof is doubtful since the analogy is invalid based on differences in instigating factor (قياس مع الفارق فلا يصح) see p.71.

The second proof is doubtful since the Hadith has a weak chain of narration, and thus is not valid, and cannot be used as proof.

Moreover, if we deem [the first proof based on] analogy to be valid, the ruling would still be doubtful [today], since rulings based on analogy change with time [reference to Majallat al-Ahkam in footnote]. In this regard, anyone who understands current times and people's dealings would alow [interest in loans], as they have allowed paying compensation for teaching Qur'an, calling for prayers, leading prayers, etc. [footnote stating that earlier rulings had forbidden such compensation]. In this regard, declaring [benefit or interest on loans] to be forbidden based on earlier rulings, we claim that those earlier rulings were only built on reasoning by analogy, without other proof. Anyone claiming otherwise must provide alternative proof, and God knows the truth best.
That is the text of the fatwa itself, with proofs for its assertions in various parts of the earlier published texts, to which I shall return in later postings. Rashid Rida's reply to the four fatwas was published in pp. 79-84, and followed by a long treatise on "The Nature of the Riba that is Definitively Forbidden in Itself, the nature of Suspected Riba Forbidden to prevent routes to circumvent the prohibition, and the nature of sales and trading" on pp.85-169.

In the next posting, I shall translate Rashid Rida's response to the four fatwas, followed by the proofs of the Hayderabad jurists in the third posting, and Rashid Rida's definition of definitively forbidden riba in the fourth.

I could not resist, however, posting here Rashid Rida's response to the fourth fatwa:

I say [regarding the fourth fatwa]: It appeas that this fatwa was the one for which the entire treatise was composed. Its import is that a benefit stipulated as a condition at the inception of loans is not the type of riba that was mentioned explicitly in the Qur'an or established based on a valid Hadith or valid reasoning by analogy. [The jurists argued further] that if the analogy was valid at an earlier time, its ruling may be reversed based on necessities of needs in curent times, as would be the case for any ruling based for analogy. The author of the treatise has relied on various jurists views in this regard in his footnotes. This is a juristic inference on a topic wherein jurists have differed in opinion, based on evident juristic grounds (و هو اجتهاد في مسألة اختلف فيها الفقهاء له وجه فقهي ظاهر). This is sufficient explanation of our views on this fatwa ( وحسبنا هذا بيانا لرأينا في الفتوى). As for our view on the foundational concept of riba, we shall explain it in later chaptes, and success comes from God.
Before ending this posting, I should link it to my discussion of attempted Islamic reformation a century ago (led by Al-Afghani, Abduh, and to a lesser extent Rida). Not much would be different in Islamist circles today had Rida, Abduh and their contemporaries been more explicit in his acceptance of conventional banking practice as not necessarily the forbidden riba (Abduh was quoted by Tantawi as having said in Al-Manar that it may be riba, but not "the riba" that is so terribly forbidden in the Qur'an, the one which destroys households, etc.). Many of the other rulings of Abduh and his students have been rejected since mid-Century as western, or even heretical (e.g. Abduh was not opposed to statues and portraits, provided that they were clearly not in a place of worship, where idolatry would be feared). Indeed, all contemporary jurists, including the most liberal, say that interest on loans is the forbidden riba -- Dr. Tantawi and others get around that problem by arguing that deposits at banks are not really loans, see my presentation on the Azhar fatwa on bank interest here.

What I hope to accomplish with this series of postings is to get people to think again about the usefulness of blindly accepting certain jurists views, which may not be based on proper legal proof.

13 Comments:

Blogger heraish said...

yusuf qaradawi has clearly stated that interest is the haram riba. This was approved by a group of scholars. They analysed the current situation and gave this fatwa in light of texts and current situation

5:26 PM  
Blogger Mahmoud El-Gamal said...

A fatwa is an opinion. Abu Hanifa used to say that it is not permissible to tansmit fatwa without transmitting simultaneously the basis on which it was made. Where there is a definitive applicable text, there is no need for fatwa. So, by definition, all opinions issued in fatwas, regardless of number, have a probability of error, which is different in different circumstances. My goal is to educate people on the grounds for various arguments. Who reached which conclusion is of very little interest or relevance.

5:47 PM  
Blogger heraish said...

assalmu alikum

I think, if possible, it would be useful to post a link to the full text of Tantawi's fatwa. If that is not available then if you could post the full unedited text of his fatwa even if it is in Arabic, it would be greatly appreciated. I am actually surprised that "counter" fatwas were given based on media reports rather then a full reading of the text.

Allahu Mustaan.

10:22 AM  
Blogger Mahmoud El-Gamal said...

I published the entire fatwa with translation in my article "Interest and the paradox of contemporary Islamic law and finance", Fordham International Law Journal, 27(1), December 2003. An electronic version of the earlier working paper (also containing the full text of the fatwa, and some discussion of the reply to it) is here.

I have more information on the basis of the fatwa and the arguments surrounding it (based on a special visit that I paid to Al-Azhar for that purpose) posted here.

10:34 AM  
Blogger Editor, www.netvert.biz said...

I have always held the view that Fiat Money (printing paper currency without commodity backing such as gold or silver) is against the ideals of Islam for trust and measures in commercial and other dealings. The gold backing for currency was abandoned by IMF in 1970 and since than there has been severe and continuous inflation causing drastic decrease in purchasing power of almost all the fiat currencies. I was glad to read when a leading economist regarded Fiat money as FRAUDULENT
MONEY as under.

"Today, fiat money, money that is created out of nothing and without work, is used worldwide. The reason monetary authorities have gotten away with this prima-facie fraudulent money is a combination of coercion (specifically legal tender laws in every nation and restrictions the IMF has put in place internationally that prohibit member countries from linking their currencies to gold, and only to gold), misrepresentations, and nondisclosure of material information. Since the 8th century in China, every experiment with fiat money has ended in disaster, many times destroying the middle class, that group that protects society from the barbarians. To counter this risk and to protect and preserve our civilization, it is essential that we once again return to "the standard of every great civilization": gold-as-money."_ Dr. Lawrence Parks

Therefore I am convinced that when banking interest is regulated by the Government it cannot be regarded as Riba which virtually means usury - not interest. The interest charged by the banks for loans to purchase vehicles, houses and other items of need including education, medical treatment etc. can be regarded as a provision for compensating loss of purchasing power of money over a period as well as a provision for administrative and business expenses/costs. Protection for return of principle sum is provide in verse 2. 279. Fiat money's priciple sum (net worth as compared to gold) decrease over a period. Gold was used for Islamic Dinar from the beginnig.

It would be noted that the Islamic theological research committee of Egypt's Al-Azhar institute - seen by many as the philosophical centre of the dominant Sunni strand of the faith - has voted 21-1 to approve fixed interest rates.

See detail discssion and example with verses and hadiths in my article at
http://www.netvert.biz/paklink/articles/riba2.html

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Blogger Muhammad Saeed Babar said...

To my mind, the discussion and fatwas for and against the issue of interest is only for the purpose of satisfying our inner most desire to turn to something that is very easy and doubtful at the same time. But Allah (SWT) says " And for those who fear Allah He (ever) prepares a way out" "And He provides for him from (sources) he never could imagine. And if anyone puts his trust in Allah sufficient is (Allah) for him. For Allah will surely accomplish His purpose: verily for all things has Allah appointed a due proportion." Ayat 2,3 Sura At-Talaq

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