Interest

Understanding RIBA (Interest) in Islam

What is Riba?

Riba, often translated as "interest" or "usury," is any guaranteed interest on loaned money. In Islamic finance, Riba is strictly prohibited as it is considered exploitative. The prohibition of Riba is rooted in the Quran and the Hadith, emphasising fairness and justice in financial transactions.

What is Considered as Interest in Islam?

In Islam, Riba encompasses all forms of interest on loans, whether small or large, fixed or variable. Any additional amount over the principal of a loan, regardless of the reason or necessity, is considered Riba. This includes:

• Interest on Personal Loans: Charging extra on a personal loan is Riba.
• Interest on Commercial Loans: Any interest charged on business loans is also considered Riba.
• Inflation-Adjusted Interest: Even if the interest is adjusted for inflation, it is still considered Riba in Islam.

Difference Between Riba and Interest

While "interest" in conventional banking is seen as a fee for borrowing money, in Islamic finance, Riba refers to the same concept but with a negative connotation. Here are the key differences:

• Conventional Interest: Seen as a normal part of banking, where the lender earns interest on the loan amount.
• Riba: Considered exploitative and unjust, strictly prohibited in Islamic finance.

Is Riba a Sin?

Yes, Riba is considered a significant sin in Islam. The Quran explicitly condemns Riba, equating it with defying Allah and His Messenger. The prohibition of Riba is mentioned in several verses of the Quran, such as:

• Surah Al-Baqarah (2:275): "Those who devour Riba will not stand except as one stands whom the devil has driven to madness by (his) touch."
• Surah Al-Imran (3:130): "O you who have believed, do not consume Riba, doubled and multiplied, but fear Allah that you may be successful."

Types of Riba

There are two primary types of Riba in Islamic finance:

1. Riba al-Nasiah: This is the most common type, where interest is charged on a loan or debt.
2. Riba al-Fadl: This occurs in barter transactions where unequal quantities or qualities of commodities are exchanged. It ensures fair trade practices and prohibits exploitation.

How KORT UtiliSes Riba Donations

At KORT, we are committed to ensuring that all donations, including those derived from Riba, are used in a manner that aligns with Islamic principles. Here are some of the key projects funded by Riba donations:

• Infrastructure Development: Building and maintaining essential infrastructure such as schools, hospitals, and community centers to support the less fortunate.
• Public Welfare Projects: investing in projects that benefit the community as a whole, such as clean water initiatives, sanitation facilities, and public health campaigns.
• Non-Personal Charity: Ensuring that Riba funds are used for non-personal charitable causes, including disaster relief and rebuilding efforts in affected communities.
• Educational Support: Providing resources and facilities for educational initiatives that empower communities and promote long-term development.

By utilising Riba donations for these purposes, KORT ensures that these funds contribute to the welfare and betterment of society without conflicting with Islamic teachings.

Join Us in Promoting Fairness and Justice

At KORT, we strive to uphold these values in all our financial dealings. Your support helps us continue our mission of providing equitable and just assistance to those in need. Donate today and be part of a compassionate community dedicated to uplifting the less fortunate.