Q: Last summer, I had a conversation with some American Muslims and Muslim immigrants in America while I was visiting one of my relatives living there. In conversation, we discussed many issues; Riba (usury), bank transactions in America, interests, and the question whether they are Riba or not. We all agreed that Riba is Haram (prohibited) but the controversial point was about interest; is the variable interest given by banks on a weekly, monthly, or yearly basis (Part No. 13; Page No. 396) lawful or unlawful? Is it Riba or not?We also talked about projects and their benefits for man, the rich America that pays salaries to the unemployed until they find work, so there are no needy people who are forced to borrow; there is no exploitation on the part of the bank or the debtor in addition to the value of banknotes and their difference from the stable value of gold and silver, etc. To distil, we were unable to reach a unanimous opinion and thus decided to refer these important issues to you to decide the correct opinion. It is worth mentioning that there is no Islamic bank in America and it is not reasonable for the Muslim residents of America to invest in an Islamic bank in Egypt, for example, because of the long distance between the two countries.

A: According to the Qur'an, Sunnah (whatever is reported from the Prophet), and the Ijma` (consensus of scholars), the two kinds of Riba are prohibited; Riba Al-Nasi'ah (usury of delay, conditional excess for delay of payment) and Riba Al-Fadl (usury of excess, selling an item for another of the same type, on the spot, but in excess). Allah (Exalted be He) says: O you who believe! Eat not Ribâ (usury) doubled and multiplied Allah (Exalted be He) also says: ...whereas Allâh has permitted trading and forbidden Ribâ (usury). Allah (Exalted be He) says: O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers. And if you do not do it, then take a notice of war from Allâh and His Messenger It is authentically reported in a (Part No. 13; Page No. 397) Hadith Sahih (authentic Hadith) that the Prophet (peace be upon him) cursed the devourer (taker) of Riba, its payer, its scribe, and its two witnesses. He said, “They are all equal.” It is reported on the authority of Abu Sa`id Al-Khudry (may Allah be pleased with him) who said that the Prophet (peace be upon him) said: Do not sell gold for gold, except like for like, and do not increase one part over another part; and do not sell silver for silver except like for like, and do not increase one part over another part, and of these (gold and silver), do not sell something present for something to be later delivered. (Related by Al-Bukhari and Muslim) Thus, it is evident that the interest given to the beneficiary on a weekly, monthly, or yearly basis, at a variable or fixed rate, is regarded as Riba, which is prohibited according to the Shari`ah (Islamic law).There is no wrong in investment projects that are established on a correct and legal basis, such as Mudarabah partnership (speculative partnership, giving an amount of money to trade with in return for a share in the profit), since they are lawful and recommended transactions. Allah (Exalted be He) says: Then when the (Jumu‘ah) Salât (prayer) is ended, you may disperse through the land, and seek the Bounty of Allâh (by working, etc.), and remember Allâh much: that you may be successful. Concerning paying salaries from Zakah money to the unemployed, it is obligatory on the rich to give their Zakah to poor Muslims, who are unable to earn their living, cannot find work, or their income is not sufficient to meet for their basic needs; in this case, they should be given Zakah that will suffice these needs. Allah (Exalted be He) says: As-Sadaqât (here it means Zakât) are only for the Fuqarâ’ (poor), and the Masâkin (needy) (Part No. 13; Page No. 398) Regarding the non-exploitation of the bank or the debtor, it is not a matter of exploitation, but a matter of Halal (lawful) and Haram. Allah (Glorified be He) says: ...whereas Allâh has permitted trading and forbidden Ribâ (usury). Allah (Exalted be He) does not specify a certain amount of profit to be Halal. How to violate the boundaries under the pretext of non-exploitation leaving Allah's commands and Shari`ah, and disobeying Islam i.e. Submission and obedience to Allah (Exalted be He)? As for the issue of banknotes, the majority of the Council of Senior Scholars gave a decision to that effect stating:The majority of the Council of Senior Scholars has decided that banknotes paper money is an independent sort of money. Thus, Saudi paper money is a sort of money and American paper money is another sort of money and thus, every form of paper money is an independent sort of money. Consequently, the following legal rulings are applied to paper money: First: Paper money is liable to the two kinds of Riba just as the case with silver and gold and other different sorts of money. This entails the following: (a) It is absolutely impermissible to exchange paper money for paper money of the same sort or of a different sort, (Part No. 13; Page No. 399) such as silver, gold, or on credit. For example, it is not permissible to exchange one American dollar for five Saudi riyals, more, or less on credit. (b) It is not permissible to exchange paper money for paper money of the same sort in excess, whether on credit or on the spot. For example, it is not permissible to exchange ten Saudi riyals in paper form for eleven Saudi riyals in paper form. (c) It is absolutely permissible to exchange paper money for paper money of different sorts on the spot. It is, thus, permissible to exchange the Syrian or Lebanese lira for a Saudi riyal in paper form or sliver, for more or less value. It is also permissible to exchange the American dollar for three Saudi riyals, or for more or less value, if this is done on the spot. It is also permissible to exchange a silver Saudi riyal for three Saudi riyals in paper form, or for more or less value, on the spot because this is considered bartering two different sorts even if they share the name but differ in reality. Second: It is obligatory to pay Zakah on paper money, if its value reaches the least of the Nisab (the minimum amount on which Zakah is due) of gold or silver, or if it reaches the Nisab when added to other money and commercial commodities possessed by their rightful owners. Third: It is permissible to use paper money as the capital in Salam sale (payment in advance) and partnerships.The fact that there is no Islamic Bank in America and the long distance between the residents in America and the Islamic banks are not an excuse for dealing in Riba. (Part No. 13; Page No. 400) If a person has excess money, they can invest it in buying real estate, trading, or giving it to someone to use in business for a known profit. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.