(Series of Answers by the Eminent Scholar Ata Bin Khalil Abu Al-Rashtah, Ameer of Hizb ut Tahrir, to the Questions of the Visitors of his Facebook Page "Fiqhi")
Answer to a Question
To: Ala' Al-Maqtari
Question:
Assalamu Alaikum,
A question was received from one of the brothers named Muhsin Al-Jadabi - Sana'a.
He said ﷺ: "Any loan that brings a benefit is riba." The hadiths have specified that riba occurs in gold, silver, and certain commodities (dates, raisins, wheat, and barley). Is it then that obligatory paper money (fiat currency) does not involve riba by virtue of it not being covered by gold or silver? Also, is it permissible for a person to lend another person a ton of iron on the condition that he returns iron to him, but more than a ton, for example, a ton and a half?
May Allah reward you with goodness.
Answer:
Wa Alaikum Assalam Wa Rahmatullahi Wa Barakatuh,
Yes, riba (in trade) only occurs in the six categories: dates, wheat, barley, salt, gold, and silver. However, this is in the context of sale (bay’) and forward sale (salam). As for a loan (qard), it applies to everything; it is not permissible to lend something to be returned to you as less, more, or of a different type at all. Rather, it must be returned in the same type and amount as what was lent.
As for riba being only in these six types, it is because the consensus (ijma’) of the Sahaba was established upon them, and because the Messenger of Allah ﷺ says:
الذهب بالذهب والفضة بالفضة والبر بالبر والشعير بالشعير، والتمر بالتمر والملح بالملح، مثلاً بمثل، سواء بسواء، يداً بيد، فإذا اختلفت هذه الأصناف فبيعوا كيف شئتم إذا كان يداً بيد
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand; if these genera differ, then sell as you wish if it is hand to hand.” (Narrated by Muslim from Ubadah bin Samit)
The ijma’ and the hadith explicitly stated specific things in which riba occurs, so it is not established except in them. No evidence of prohibition was mentioned regarding types other than these six; therefore, riba does not exist in others, although everything of the same genus and everything to which their description applies is included. As for what is besides them, it is not included. Thus, riba in sale and forward sale occurs only in six things: dates, wheat, barley, salt, gold, and silver; they are genus names (as’ma' al-jins) to which analogy (qiyas) is not applied.
However, texts have been reported when discussing Zakat mentioning gold and silver as currency (naqd), meaning not just as a genus name, but as currency used by people as prices and wages. From these evidences, a legal reason (’illah) is deduced, which is the monetary nature (naqdiyyah). Thus, obligatory paper currencies (fiat money) are measured against them (via analogy) because this ’illah is realized in them. Consequently, the rulings of Zakat on currency are applied to them, calculated based on their market value in gold or silver. On the authority of Ali bin Abi Talib, the Prophet ﷺ said:
إذا كانت لك مئتا درهم، وحال عليها الحول، ففيها خمسة دراهم، وليس عليك شيء - يعني في الذهب - حتى يكون ذلك عشرون ديناراً، فإذا كانت لك عشرون ديناراً، وحال عليها الحول، ففيها نصف دينار
“If you have two hundred Dirhams and a year passes over them, then five Dirhams are due on them. You do not owe anything—meaning in gold—until you have twenty Dinars. If you have twenty Dinars and a year passes over them, then half a Dinar is due on them.” (Narrated by Abu Dawood)
It was also reported from Ali that he said: "In every twenty Dinars, there is half a Dinar, and in every forty Dinars, there is one Dinar." And from Ali (ra) who said: The Messenger of Allah ﷺ said:
فهاتوا صدقة الرقّة، في كل أربعين درهماً، درهماً وليس في تسعين ومائة شيء، فإذا بلغت مائتين ففيها خمسة دراهم
“...so bring the Sadaqah of Al-Riqqa (minted silver), one Dirham for every forty Dirhams. There is nothing due on one hundred and ninety, but when it reaches two hundred, then five Dirhams are due.” (Narrated by Bukhari and Ahmad)
Furthermore, Abdur-Rahman Al-Ansari narrated in the letter of the Messenger of Allah ﷺ and the letter of Umar regarding Sadaqah:
والورِق لا يؤخذ منه شيء حتى يبلغ مئتي درهم
“...and nothing is taken from Al-Wariq (silver) until it reaches two hundred Dirhams.” (Narrated by Abu Ubaid)
All these hadiths indicate the monetary nature and price-worthiness (naqdiyyah and thamaniyyah); because the terms Al-Riqqa (with the context of ‘in every forty Dirhams’), Al-Wariq, Dinar, and Dirham are terms applied to minted and coined gold and silver, i.e., those which are currency and prices. Expression with these terms indicates that the monetary nature and price-worthiness are intended by these hadiths, and many Shariah rulings are attached to them, such as Zakat, blood money (diyat), expiations (kaffarat), amputation for theft, and other rulings.
Since the obligatory paper money has realized this monetary nature and price-worthiness—acting as prices for things and wages for benefits and services, and with it gold and silver are bought just as all other commodities and assets are bought—it has realized the monetary nature and price-worthiness that were present in gold and silver minted as Dinars and Dirhams. Therefore, it is covered by the hadiths on the obligation of Zakat in the two currencies (gold and silver). Thus, Zakat is obligatory upon it just as it is obligatory on gold and silver, and it is valued by gold and silver. Whoever possesses an amount of this fiat currency equal to the value of twenty gold Dinars—which is 85 grams of gold—which is the nisab (threshold) for gold, or possesses an amount equal to the value of 200 silver Dirhams—which is 595 grams of silver—and a year passes over it, Zakat becomes obligatory upon it, and he must pay one-quarter of one-tenth (2.5%).
Zakat for gold is paid in gold, in representative paper money, and in reliable paper money. Zakat for silver is paid in silver, and in representative and reliable paper money. It is also sufficient to pay Zakat for gold in silver or in obligatory fiat money, and for silver in gold or obligatory fiat money; because they are all currencies and prices, so one suffices for the other, and it is permissible to pay one for the other as the purpose is achieved by that.
As long as Zakat is obligatory in them, then the rulings of wealth such as riba, blood money, expiations, amputation for theft, and other rulings are likewise applied to them. Thus, the rulings of riba in gold and silver as currency—not just as a genus—apply to obligatory fiat money as currency because the ’illah of monetary nature is realized in it.
As for the loan (qard), it is permissible in these six categories and in others, and in everything that can be owned and whose transfer of ownership is permissible. Riba does not enter into it except if it brings a benefit, due to what Al-Harith bin Abi Usamah narrated from the hadith of Ali (ra) with the wording: "The Prophet ﷺ forbade a loan that brings a benefit," and in another narration: "Every loan that brings a benefit is riba." Excluded from this is what falls under the category of "good repayment" without a prior condition of increase, due to what Abu Dawood narrated from Abu Rafi’ who said:
استسلف رسول الله ﷺ بكراً فجاءته إبل الصدقة فأمرني أن أقضي الرجل بكره فقلت لم أجد في الإبل إلا جملاً خياراً رباعياً فقال: أعطه إياه فإن خيار الناس أحسنهم قضاءً
"The Messenger of Allah ﷺ borrowed a young camel (Bakr). When the camels of Sadaqah arrived, he ordered me to repay the man his young camel. I said: I did not find among the camels except a four-year-old camel of excellent quality. He said: Give it to him, for the best of people are those best in repayment."
Accordingly, any loan of the six categories or others must be returned to its owner without any increase ("benefit"), otherwise it is riba. Consequently, it is not permissible for you to borrow a ton of iron and return it as a ton and a half, as this would be riba.
I hope the answer is clear, Allah willing.
Your brother, Ata Bin Khalil Abu Al-Rashtah
14 Rabi’ Al-Akhir 1439 AH Corresponding to 01/01/2018 CE
Link to the answer from the Ameer's (may Allah protect him) page on Facebook