AHMAD KAMAL BIN ROSLAN
2009658166
SHAZANAH BT SARWAR KHAN
2009826226
QUESTION 12
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Describe the following features which
have been prohibited in Islam:
a. Riba
b. Maysir
RIBA
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DEFINITION :Literally - increase, addition, and
augmentation
Technically:
1) increase in trade
transactions
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Muhammad Ala Thanwi
“An
increase
without
any
corresponding consideration which
has been stipulated in favour of one
of the two parties in a contract of
exchange”
2) increase in loan
transactions
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Abu Bakar Jassas ;
“It is a loan given with
stipulated increase on the
principle payable by the
loance”
PROHIBITION OF RIBA IN AlQURAN
4 stages
Surah al- Rum: 39
Compare riba with
Zakat& charityPraised zakat&
charity but not riba
Surah al-Nisa: 161 Surah ali-Imran : 130
Riba was prohibited
for jews
however,they
continued
to practice riba &
Incurred the wrath of
Allah (s.w.t)
Prohibited the
charging of
double and
multiple
riba
Surah alBaqarah
275-281
Conclusively
prohibited
all forms of riba
PROHIBITION OF RIBA IN
HADITH
From Jabir (Gbpwh);
“ the prophet (pbuh) cursed the receiver and the payer of interest , the
one who records it and the witnesses to the transaction and said: they
are all alike [in guilt]
From Anas ibn Malik (Gbpwh);
“ The prophet said: when one of you grants a loan and the borrower
offers him a dish, he should not accept it,and if the borrower offers a ride
on an animal, he should not ride, unless the two of them have been
previously accustomed to exchanging such favours mutually
Bilal (Gbpwh) once visited the Messenger of Allah (Pbuh) with some
high qualities dates. The Prophet (Pbuh) inquired about their source. Bilal
explained that, he traded two volumes of lower quality dates for one
volume of higher quality dates. Due to this, the Prophet (Pbuh) said;
“This is precisely the forbidden riba! Do not do this. Instead, sell the first
type of dates, and use the proceeds to buy the others”
MUSLIM JURISTS OR
SCHOLARS VIEWS ON RIBA
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Abd al-Rahman al-Jaziri in his book ‘al-Fiqh 'ala
al-Madhahib al-Arba'ah’ stated that, in fiqh
terminology, riba means an increase in one of two
homogeneous equivalents being exchanged without
this increase being accompanied by a return.
Muhammad ibn Abdullah ibn al-Arabi who is a
Qur'an commentator and Maliki jurist states that, riba
literally means increase, and in the al-Baqarah: 275,
it stands for every increase not justified by the
return.
CLASSIFICATIONS OF RIBA
Types of
Riba
Riba alBuyu’(riba in
trade transaction
Riba alNasiah
Riba alFadl
Riba alDuyun (riba in
loan transaction)
Riba alQardh
Riba alJahilliyah
CLASSIFICATIONS OF RIBA
(cont)
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Riba al- Buyu’ (riba in trade transaction):Riba al-Nasiah (riba of delay)
-charged based on deferment of completion of an exchange
- Eg: if 5 kg of gold is exchanged with another 5 kg of gold,
with a delay of one year, the said trade transaction will amount
to riba al nasiah since there is an existence of delay in the said
transaction
Riba al-Fadl ( riba by way of access)
-arises when there is any additional quantity or in equality in the
exchange of goods
-Eg: an exchange of 5 kg of wheat with 6 kg of wheat amounts
to riba al-fadl
CLASSIFICATIONS OF RIBA
(cont)
Riba al- Duyun(riba in loan transaction):
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Riba al-Qardh :any predetermined benefit, for the owner of debt
stated in the contract, which the debtor needs to fulfill. This
form of riba could be viewed in loan contracts.
Riba al- Jahilliyah:a form of interest, which is charged above
the original debt as a penalty to the debtor due to his inability
to service the loan repayment within the time agreed. This form
of riba could be viewed in credit card transactions where, the
delay of repayment of the debt by the debtor will result the
debtor to pay an additional or surplus amount to the creditor
RATIONALE ON THE PROHIBITION
OF RIBA
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The paramount reason or rationale behind the
prohibition of riba are to prevent any forms of
injustice, exploitations and manipulations among the
parties involved in a trade or loan transaction.
In order to appreciate the rationale underlying the
prohibition of riba in Islamic transactions, one shall
generally analyse the advantages of performing an
interest-free transaction in Islamic banks as
compared to an interest-based transaction in the
conventional banks
RATIONALE ON THE PROHIBITION
OF RIBA (cont)
Islamic banks
Conventional banks
will reward the depositors only in
the event where the banks are
gaining profits. In the circumstances
where the Islamic banks are
suffering losses, the banks will not
be compelled to pay any amount of
profit to their depositees
would be obliged to pay to the
depositors more then the
principal amount deposited
regardless whether the financial
institution is having financial
difficulties or suffers loss
the clients of an Islamic bank will
receive a fair share of profit based
on the proportion agreed
clients of a conventional bank are
guaranteed to receive a fixed
income from the bank, the
income agreed is only a very
small portion as compared to the
total amount of profit gained by
the banks
RATIONALE ON THE PROHIBITION
OF RIBA (cont)
Islamic banks
Conventional banks
have resorted contract of
exchange as the best
accommodative mode of
mobilising funds under an Islamic
finance framework. Due to this,
various innovative instruments
based on the contract of exchange
have been developed.
Eg: BBA (deferred payment sale),
murabahah (mark up sale),ijarah
(leasing),ijarah thumma al-bay
(islamic hire purchase) and bay-al
dyn (sale of debt)
Accumulate profits through
interest- based transactions
RATIONALE ON THE PROHIBITION
OF RIBA (cont)
Islamic banks
Conventional banks
has explored the contract of
-Accumulate profits through
security to mobilise the funds and
interest- based transactions
present product available based on
hiwalah (transfer of debt).
-have also maintained the contract
of services
-E.g: Letter of Guarantee based on
kafalah, fees for money transfer and
the like.
-
MAYSIR
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Definition:
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Maysir derives from the word “Yusrun”
which denotes wishing something valuable
with ease and without paying any
equivalent compensation for it, or without
working for it, or without undertaking any
liability against it, or by way of a game of
chance.
MAYSIR
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Definition:
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Professor Mohammad Hashim Kamali:
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Maysir is a purchase and sale of an asset in the
expectation of a gain from the changes in the
price of the asset.
However, it is difficult to provide a
comprehensive definition since there are
distinguishing lines between investment,
speculation and gambling.
MAYSIR
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Definition:
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Ibn Taymiyyah:
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gharar is one of the branches of gambling.
whether or not the transaction involves gambling
and unlawful devouring of the property of others
(akl mal al ghayr bi’l batil).
Gharar thus occurs in a contract when one of the
parties takes what is due to him but the other does
not receive his entitlement.
If his right continues to be unfulfilled, the first
becomes guilty of the wrongful devouring of the
property of his counterpart in the transaction, and a
gharar sale of this kind engages in gambling and
punting (al-qimar wa’l maysir)
MAYSIR
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Why Maysir is prohibited?
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Dr. Mohd Ma’sum Billah:
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Gambling, which includes raffling or a lottery
makes a person dependent on chance, luck and
empty wishes, thus, making that person less
inclined to work seriously and productively.
In Islam, an individual’s property is sacred and
it may not be taken away from the owner
except through lawful exchange, or unless he
or she gives it away freely to charity.
Accordingly, taking the property of a person as
gambling losses is unlawful.
MAYSIR
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Prohibition of Maysir in Al-Quran:
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They ask Thee concerning wine and
gambling. say: "In them is great sin, and
some profit, for men; but the sin is greater
than the profit." They ask Thee How much
They are to spend; say: "What is beyond
your needs." Thus doth Allah make Clear
to you His Signs: In order that ye may
consider
(al-Baqarah:219)
MAYSIR
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Prohibition of Maysir in Al-Quran:
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O ye who believe! Intoxicants and
gambling, (dedication of) stones, and
(divination by) arrows, are an
abomination,- of Satan's handwork:
eschew such (abomination), that ye may
prosper. Satan's plan is (but) to excite
enmity and hatred between you, with
Intoxicants and gambling, and hinder you
from the remembrance of Allah, and from
prayer: will ye not then abstain?
(al-Maidah: 90-91)
MAYSIR
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Prohibition of Maysir in Al-Quran:
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Forbidden to you (for food) are: dead
meat, blood, the flesh of swine, and that
on which hath been invoked the name of
other than Allah…; (forbidden) also is the
division (of meat) by raffling with arrows:
that is impiety.
(al-Maidah: 3)
MAYSIR
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According to a tradition reported by Abu Huraira,
Allah's Messenger (pbuh) forbade a transaction
determined by throwing stones, and the type which
involves some uncertainty. The form of gambling
most popular to Arabs was gambling by casting lots
by means of arrows, on the principle of lottery, for
division of carcass of slaughtered animals. The
carcass was divided into unequal parts and marked
arrows were drawn from a bag. One received a large
or small share depending on the mark on the arrow
drawn. Obviously it was a pure game of chance.
MAYSIR
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Why conventional Life Insurance is
prohibited?
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First, a life insurance contract involves
unlawful elements, which can never be
binding as the Prophet (saw) says to this
effect:
“… the Muslims are bound by the conditions
except the condition which prohibits the
permitted one or the one which permits the
prohibited one.”
(al-Tarmizi)
MAYSIR
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Why conventional Life Insurance is
prohibited?
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Second, it contains an element of betting.
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When betting, the gambler always hopes for a
chance to make a gain.
Similarly, in a life insurance policy, the assured
upon the payment of premiums to the insurer,
always hopes for a chance to gain a large
amount of money.
Hoping for such a chance is similar to gambling
and thus, Shari’ah never recognises life
insurance as a valid transaction.
MAYSIR
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Why conventional Life Insurance is
prohibited?
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Third, it contains the element of maysir
(gambling).
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When gambling, a gambler pays a certain
amount of money in the hope that he will gain
an additional large amount of money.
Similarly, in a life insurance policy the assured
hopes for a chance to make a gain. This is the
same as gambling which is prohibited by the
Shari’ah.
MAYSIR
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Why conventional Life Insurance is
prohibited?
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Fourth, it contains the element of Riba.
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Many Ulama oppose life insurance practices,
because they contain elements of both kinds of
riba, i.e. riba al-fadhl and riba al-Nasiah.
For example, if the insurer pays the insured or
his beneficiary more than what the insured had
paid by way of paid-premium, it becomes riba
al-Fadhl;
the payments made by the insurer to the
assured after a particular period of time
become riba al-Nasiah.
MAYSIR
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Why conventional Life Insurance is
prohibited?
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Fifth, it has an element of al-Gharar
(uncertainty).
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The contract is deemed to be null and void ab
initio.
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In a life insurance contract, the subject matter
of the contract is the death of the assured and
it is not certain whether the assured’s death
will occur during the policy period or not.
This uncertainty in the policy leads it to be
invalid.
MAYSIR
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Speculation in the Stock Market:
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Short Selling?
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Short selling of stocks is not permissible
because it is seen to be speculative in nature.
Under this practice, when a person foresees
that a share price will fall, that person will
borrow from and instruct his remisier to sell the
shares in that company, even though he does
not own the shares.
Later, when the price of the shares do fall, that
person will purchase the stocks and close its
position.
MAYSIR
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Speculation in the Stock Market:
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Short Selling?
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This practice is clearly prohibited under the
Shari’ah principles because it involves the
selling of something which the seller does not
as yet own.
MAYSIR
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The Effect of the Contract Entered Into:
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A void contract is an agreement which is
merely null and incapable of conformation.
The Mejella defines a void contract as “a
contract which is not good in its
foundation”.
According to Dr. Hussain Hamid Hassan: “A
void contract has no existence in the eyes
of the law, it does not confer a right, does
not become obligatory and does not
transfer any property.”
MAYSIR
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The Effect of the Contract Entered Into:
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Among the circumstances whereby a
contract is said to be void or bathil:
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(1) A contract which involves immorality;
(2) A contract which object is unlawful;
(3) A contract which involves illegality against
public policy;
(4) A contract which foundation or substance is
unlawful or illegal;
(5) Any other contract or agreement which
directly or indirectly contrary to the divine
sanctions which would render it void ab initio;
and etc.
CONCLUSION
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The practice of riba and maysir is strictly prohibited
under the Shariah law as provided by the Al-Quran
and hadith.
The opinions delivered by the Muslims jurists have
also further clarified the prohibitions on riba and
maysir.
It is crucial to note that, the practice of riba and
maysir are illegitimate in any Islamic form of
transactions.