Bank Interest And Islam
By M. Anwar Abbasi

Besides Islam, Riba is forbidden in every religion and philosophy. That is why the Muslims of all times and ages tried to get rid of this menace. However, the introduction of banking system gave rise to the question about the nature of income from the institution; whether this income falls in the domain of Riba? Economists, particularly the majority of religious scholars consider bank interest as Riba and as such forbidden.

It is unfortunate that, on the hypothesis that interest and riba are synonymous terms, the real task has been put aside and all efforts have been directed towards introducing alternative methods based on tricks long ago rendered obsolete. The energies and capabilities that should have been spent on important matters are being wasted on trivial things. Had the entire struggle been meant to achieve the objectives that, according to scholars, are laid down by Islam, it has failed miserably.

Whether in the field of economics or other faculties of social studies, words and terminologies and technical intricacies have their own importance—realities are more significant, yet hard. You may give a rose any name you like; it will remain a rose. So it is mere wishful thinking to hope that we can bring about economic and social revolution by changing the name ‘bank interest’ and assigning the same task to bai murabaha (trade between buyer and seller) or ijara (rent) or any other Arabic label. The notion of a welfare state is an Islamic concept, but is it not the reality that the welfare states in Europe are making a mockery of Islam in relation to bank interest? Islamic scholars fail to understand how this could be relevant in the context of interest. We have been so deeply engrossed, and still are, in words and terminologies that we have lost sight of reality, and the terminologies remained suspended in the air and failed to have a practical effect. Those who believe in actions and not words have eliminated economic and social inequality by providing a glimpse of Islamic laws despite the presence of interest; the irony is that we are happy with the introduction of the Arabic labels.

It should have been our focus to make deliberate efforts to exterminate riba and promote charities as a substitute in our society to help poor and destitute people. However, this did not happen. Scholars wrongly mistook bai (trade) for an antonym of riba and started proposing different forms of financing that act just like interest because it was mistaken for a synonym of riba.

Extremely pedantic experts, religious scholars and economists alike, continued for decades with their analytical dissection of the definition of riba. In Pakistan, the case of riba, which had been shelved for about twelve years, suddenly came to the surface, inviting combatants to lock their horns again in the arena of religious and anti-religious jargon. Not surprisingly, the nation will hear the same repetitive and circular reasoning leading it nowhere, plunging it again into an intellectual vacuum.

The government authorities, who are conscious of the importance of interest, simply do not know how to tackle these arguments. The result is obvious: stalling the main issue instead of coping with it has been the main tactic of government and financial institutions. Religious scholars, Muslim economists and a few columnists who consider bank interest as riba have invested too much in this view to rethink their theories. This situation demands a daring venture from a non-partisan thinker who could address these conflicting issues of the Muslim world.