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Any transaction or loan where the payment of an additional amount on the principal is made conditional to the advance of such a loan is called riba. The most common form of riba these days is interest, whether that paid on bank accounts or loans. Interest is strictly forbidden in Islam and to accept or deal in it is a major sin.
Riba in Qur’an
“That which you give as interest to increase the peoples’ wealth increases not with Allah; but that which you give in charity, seeking the goodwill of Allah, multiples manifold.” (Surah al-Rum, verse 39)
“And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other peoples’ property. We have prepared a grievous punishment for those among them who reject faith.” (Surah al-Nisa’, verse 161)
“O believers, take not doubled and redoubled interest, and fear Allah that you may prosper. Fear the fire which has been prepared for those who reject faith, and obey Allah and the Prophet so that you may receive mercy.” (Surah Aal-Imran, verses 130-2)
Riba in Hadith
From Jabir: The Prophet cursed the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: They are all alike [in guilt]. (Tirmidhi)
From Abdallah ibn Hanzalah: The Prophet, said: ‘A dirham of riba which a man receives knowingly is worse than committing adultry thirty-six times’ (Mishkat al-Masabih)
From Abu Hurayrah: The Prophet said: ‘Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother. (Ibn Majah)
Fatwa (Islamic religious opinion)
Shaykh Yusuf al-Qardawi
Quote from the translation of the book ‘Riba and Bank Interest’ by Yusuf al-Qardawi, Institute of Policy Studies, Islamabad, Pakistan
‘To forego interest from the deposits in banks practicing usury, even out of Taqwa, is still not right; doing so is much more sinful than taking it because with it non-Muslims establish and run organisations for furtherance of their un-Islamic objectives.’
Shaykh Suhaib Hasan (UK)
The Islamic Shari’a Council, London, UK, May 2002
‘Interest money, according to the most careful opinion, is good for any charitable purpose (including educational fees for poor students). Apart from building the mosques or printing the Qur’an’.
Why is interest forbidden?
Interest is forbidden as it is a socially unjust mechanism for lending money. It benefits the rich to the detriment of the poor and also does not involve any investment risk for the lending party.
I have interest money or my bank account pays interest, what should I do?
If one has interest money from a bank account or elsewhere many scholars recommend this money is given to a charitable cause with the understanding one will not receive any reward for the donation. The money should be used by the charitable organisation to help the poor and needy, but is not to be used for certain projects such as the construction of mosques or the printing of Quran.
Can I donate interest money to Saffron Community Trust?
Yes, you can. We will use your money to support our work helping save lives of the poor and needy but will not use it on projects where interest should not be spent, such as the construction of mosques.
How do I donate my interest?
You can donate your interest through our website or contact us on 07387160950. Please ensure that you select “Interest Money” as the “Donation Type”, so that we may spend your interest money correctly.