# Is bank interest the same as the riba forbidden in the Quran?

*Risk-sharing, loan sharks and Mufti Abu Layth's reading of Quranic riba*

- URL: https://muftiabulayth.org/r/wce73zqci_i/s/26/
- Date: 2020-07-10 · Kind: discussion · Transcript tier: machine · Recording: Shaykh Omar Baloch | Cynicism, Consumerism & the Catch 22 of Riba | Mindtrap with Mufti #30 (1:35:53–1:42:19)
- Status: general teaching
- Watch from the start of the segment: https://www.youtube.com/watch?v=wCe73zqCi_I&t=5753s
- Recording page: https://muftiabulayth.org/r/wce73zqci_i/

**Topics:** Riba, mortgages and loans

**Summary (not a quotation; machine-made, unchecked):** Mufti Abu Layth holds that the riba of the Quran meant loan sharking, not modern banking; the guest says today's banks are loan sharks.

## Longer summary

The guest says partnership achieves the same goal more efficiently by sharing risk, so that a buyer who defaults gets back the share he paid, and that cycles of cheap credit and mass foreclosure have repeated many times, leaving the first generation worse off than its parents. Mufti Abu Layth agrees about the housing bubble but says he does not see it as an Islamic problem because he does not see riba as meaning mortgages, and uses the example of a ten thousand pound loan repaid as fourteen thousand over five years, saying a borrower would want to repay nothing extra but society needs to motivate lenders. Mufti says his general view is that the riba of the Quran was speaking about loan sharking, not the monetary system we have today. The guest asks what the banks are doing if not loan sharking, and describes an Islamic sale at an agreed mark-up in which a buyer who defaults keeps his share. Mufti agrees that cruel mortgage schemes exist but says that in the UK the home is treated as a sacred space and is not easily taken, and the guest says that in the US it takes about a year.

## Sources and names cited

- Shaykh Omar Baloch
- riba

## Transcript (machine tier, 1:35:53–1:42:19)

[1:35:13] when I have a house I'm investing in it like it's my house like in terms of furniture in terms of everything in it you know all that happening but that happens with certain rented on non provision and take it all the way but they won't note that that's not necessarily true that's not necessarily true of I firstly said that because look there's a process before they so okay sure look I'm not defending the the kind of like the the the vicious mortgage kind of schemes what I'm saying is we need to backtrack and say well what is the actual problem

[1:35:52] with this concept of river what is it what is the problem because if we're saying just getting back more than you give this is the very basic impulse that motivates human beings do the same thing in a much more efficient way for the business site as well as the invest in the person who is important just to be clear that what you're saying is they should share the risk is that what you say no but is that no but is that what you're saying you're saying that it's fine to get back more so long as you are sharing the risk yes that's one thing

[1:36:29] right but no longer pay my payments yeah at least the percentage that I invested I invested for two years out of five year or let's say five years out of 30 years I should get that percentage of five years back okay let's simplify this what's happening is they lower the interest rates people get the houses right then the market goes into the economy people lose their houses by millions and this cycle has been repeated itself almost 17 times now you see look I'm in a worse situation than they were this is the first generation

[1:37:06] by the way that is worse off than the generation before it no I agree with look with the housing bubble crisis I understand that although I don't see as an Islamic problem because I don't see rebar to mean mortgages but that said I want to just understand this concept of rebirthing okay let's simplify let's take it to just a loan a monetary loan so you asked for ten thousand pounds today ten thousand dollars the person is giving you with the understanding that you're gonna pay back up to five years later and you're gonna pay back 13,000 let's say now this is what the I

[1:37:45] understand see I wanna this is not what happens that's a very wrong example no so when you take it yes if this is not what the bank is doing it is it is not it's not doing the equivalent of giving you ten thousand asking for thirteen thousand back or it's not doing this with businesses right because that's not what practically happens no but every month yeah yes so you do pay so so let's say you've got you know so you've got a yessiree so you've got let's say you take out a hundred thousand no loans are usually up to a certain amount usually twenty-five thousand is a is an unsecured loan in the UK let's say you took hours for simple figures saying ten

[1:38:25] thousand to make it a nice round simple figure so if you took ten thousand usually they might say they offer you a five year repayment program and at the end of the five years you've paid back something like let's say fourteen thousand so now yes you are paying on a monthly basis though but it accrues to that total amount now what I'm saying is that you see I understand if I was a person that was borrowing money I would want to not give back a penny more than I've borrowed as a human being I understand that but I have to also understand that society won't function with these simple you know blocks it

[1:39:03] needs more motivation so the giver will need so let me answer you how the motivation is there let's say I made a house or I bought a house for a hundred thousand you see but we're going back to houses now so I want to just understand no so I to simplify I said just a loan so we can understand monetary loan so we can understand the concept of of rebirth that is being problematized because I've obviously said in my general view is that yes Reba the Republic were on was

[1:39:41] talking about lone chakra and it wasn't speaking about general what we have today this system and the monetary system has kind of moved much ahead and I've said that the no but is not if this is not loan sharking what we're doing with the banks if that is not loan sharking that I don't know what I don't generally people are losing their houses no but you see you're still fixated on mortgages if we speak about a general loan now if you take ten thousand pounds and after five years you pay back fourteen thousand let's say after spread over five years but it sets a very bad

[1:40:21] precedent so put that but then you see if you're agreeing with that that's red in the middle of the night and there's no cars yeah but I still see but because chef's if you don't motivate people they won't be then giving they won't set up these things system that you know I'm speaking for which is the Islamic system which is what you would obviously speak for too but we're just having this conversation coast just you know which is that look when why just get two percent back why not get fifty percent yeah okay so so

[1:40:59] now so okay so even in Islam there is this understanding of they will sometimes go up to a thorough yeah now they say a full of something mean you agree yeah I'm willing to pay this much more let's say the house is a hundred thousand now you're selling it to me for one hundred and thirty thousand me and you agree yeah it's one hundred and thirty we're fine but at least if I invest in half of the time in it I'm getting my hair you see i I feel the discussion here has kind of that point of discussion diverges into something about certain let's say mortgage schemes that are then cruel in return which I agree with you I agree

[1:41:39] with that essence that look and I actually do feel in the UK it's not that easy to just I saw I saw I'm obviously not familiar with that system over there because here it's not that easy to just say well oh you defaulted on a payment out you go we've taken over the house it doesn't work that easily because the home is a sacred space and society does recognize that so either but they eventually get it usually now it is it takes up to a year okay right like a year but they eventually get it I was trying to more kind of like Zone in on the discussion of rebirth something personal I have a roofing company ok and

## Cite

Mufti Abu Layth Archive, segment wCe73zqCi_I/s/26. https://muftiabulayth.org/r/wce73zqci_i/s/26/

Not a fatwa: these answers were given to specific people at specific times. Ask a qualified scholar about your own situation.