How Does the Shafi‘i School Address Riba in Modern Financial Transactions?

Answered by Shaykh Dr. Muhammad Abu Bakr Badhib

Question

How does the Shafi‘i School of thought view the issue of riba (usury) and its prohibition in modern financial transactions?

Answer

In the name of Allah, and all praise is due to Allah, and blessings and peace be upon our master Muhammad, the Messenger of Allah, his Family, his Companions, and those who follow him.

Clear Prohibition of Riba

The rulings of Islamic Sacred Law have been clearly outlined in the texts of the Quran and Sunna. Lawful and permissible trade, as opposed to prohibited riba (usury), is explicitly mentioned in the Quran:

“Allah has permitted trading and forbidden interest.” [Quran, 2:275]

There are numerous evidences from both the Quran and Sunna prohibiting riba. In essence, riba involves taking an unjustified excess. [al-Fiqh al-Manhaji ‘ala Madhhab al-Imam al-Shafi‘i]

As mentioned in the narration:

“Every loan that brings benefit is riba.” [Bayhaqi, al-Sunan al-Qubra]

Definition of Riba

The Shafi‘i scholars define riba as:

“A contract involving a specified compensation where equivalence, according to Sharia standards, is not ensured at the time of the contract, or where there is a delay in delivering one or both compensations.” [Ramli, Fath al-Rahman]

Application to Modern Financial Transactions

Thus, if riba occurs in any transaction, it becomes impermissible. This includes modern financial dealings such as transactions through credit cards, mobile applications, or bank accounts.

For instance, if two parties exchange ribawi commodities (such as gold, silver, grains, etc.), the transaction’s validity depends on adhering to the Sacred Law requirements, such as ensuring equality in measure and immediate exchange. If these conditions are not met, riba occurs.

Timeless Nature of Sacred Law

It is incorrect to claim that riba applies only to traditional transactions and not to modern ones. Such a view is illogical. The conditions for lawful trade and prohibition of riba apply universally to all transactions, whether ancient or contemporary.

Sacred Law rulings are timeless and applicable to all eras and places. This is not a restriction on Muslims but rather a safeguard to protect them from falling into dubious or unlawful matters.

Conclusion

By adhering to these rulings, Muslims avoid entangling themselves in difficult-to-rectify situations. What Allah has declared unlawful remains so, and what He has made lawful remains permissible.

We ask Allah to enable us to avoid unlawful and doubtful matters, protect us and our loved ones from His displeasure and punishment, and guide us to the straight path. Allah alone is the Guide and Helper.

[Shaykh] Dr. Muhammad Abu Bakr Badhib

Shaykh Dr. Muhammad Abu Bakr Badhib is a prominent Islamic scholar from Yemen. He was born in Shibam, Hadhramaut, in 1976. He received his degree in Shari‘a from Al-Ahqaf University, a master’s degree from the Islamic University of Beirut, and a PhD in Usul al-Din from Aligarh Muslim University (AMU).

He studied under great scholars such as Shaykh al-Habib Ahmad Mashhur al-Haddad, Shaykh Fadl Ba‘ fadl, Habib Salim al-Shatiri, Habib Ali Mashhur bin Hafeez, and others. He has served as the Director of Publications at Dar al-Fiqh, the former Deputy Director of Cultural Relations at Al-Ahqaf University, a former Assistant for Employee Affairs at Atiyah Iron Company, a researcher at the Sunna Center affiliated with the Dallah al-Baraka Foundation, and a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch.

Currently, he is a researcher at Al-Furqan Foundation’s Makka al-Mukarrama and Madina al-Munawwara Encyclopedia branch, teaches traditionally through the Ijaza system at Dar al-Fuqaha in Turkey, supervises the Arabic department at Nur al-Huda International Institute (SeekersGuidance), and is a member of the Board of Trustees of the Manuscript House in Istanbul.

His works include “The Efforts of Hadhramaut Jurists in Serving the Shafi‘i School,” “Contributions of Hadhramaut Scholars in Spreading Islam and its Sciences in India,” “Hada’iq al-Na‘im in Shafi‘i Fiqh,” in addition to verifying several books in Fiqh, history, the art of biographies, and Asanid (chains of narration).