Question: Some people argue that only usury (interest at such an exorbitant rate that it exploits the debtor) has been declared unlawful by Islam. Therefore, interest at a mutually acceptable rate can be charged, which is usually the case in loans given for commercial purposes. It is in loans given for the purposes of personal needs that the possibility of exploitation exists. The following verse of Qur’an is presented to support this point of view:

Believers! Do not devour interest, doubling and redoubling. (3:130)

    I am really confused. Please advise. 

   Answer: I am afraid this is not correct. This verse does not support the argument. It merely indicates the gravity of the failing of those who, at a time when infaq (spending in the way of Allah) in relation to jihad (holy war) was affording great opportunities to the Muslims to earn Allah’s forgiveness, were busy earning interest. This style is used in a language to reprimand a person for the heinousness of his attitude of not only doing something wrong but also showing total disregard for values in doing so.¹ For example, when one says (in English) ‘For God’s sake, [at least] don’t flirt with another woman in front of your wife’, it does not mean that one is suggesting that one should flirt with another woman while one’s wife is not around. To take an example from the Qur’an, consider the following verse: 

Force not your slave-girls into prostitution that you may seek pleasures of the life of the world, if they would preserve their chastity. (24:33) 

    Obviously, this verse does not mean that if the slave-girls are willing, prostitution may be allowed. It merely points out the intensity of the sin of those who force such slave-girls to prostitution as wish to avoid the despicable crime.
    The Qur’an has not defined Riba (interest). It didn’t have to. The meaning of the word was already clear to those who understood the Qur’anic Arabic. Just as the Qur’an did not have to define Khamr, it did not have to define Riba. It merely prohibited both. In Qur’anic Arabic, Riba refers to the gain which the lender demands at a predetermined rate from the borrower on the loan that he gives him for a specific period of time. Moreover, it is also clear from the following verse of the Qur’an that those people gave interest for commercial purposes as well, for it is this form of interest which increases ‘in other’s wealth’, not the interest on loans given for personal needs of the debtor: 

And the interest bearing loan that you give that it may increase in the wealth of others does not increase with Allah; and the Zakah that you give to earn Allah’s pleasure, these are the people who shall get manifold [in the Hereafter]. (31:39)

    Therefore, if anyone advocates that the word is also used in a sense different from its denotation, the onus of proof is on him.
Furthermore, the following verses of the Qur’an leave no room for the argument that only such interest was declared unlawful as put the debtor in difficult circumstances:

O you who believe! Observe your duty to Allah, and give up what remains [due to you] from the interest, if you are [in truth] believers. (2:278) 

And if the debtor is in straitened circumstances, then [let there be] postponement to the time of ease... (2:280) 

    These two verses have the same context and therefore can be taken together to show that interest has not been prohibited merely in cases where the debtor is in difficult circumstances. The words ‘And if the debtor is in straitened circumstances’ indicate an exceptional case, and point out that the prohibition in the previous verse (2:278) is of interest at a normal mutually acceptable rate.
    According to Farahi, the particle ‘idha’ (when) would have been used instead of ‘in kana’ (if), if the words were not indicative of an exceptional case.²
    To take an example from the English language, let us assume that a police officer says to his subordinates ‘free all these culprits tomorrow. And if a culprit has helped the police, free him today’. As the context of the two sentences is the same, the second sentence makes it obvious that not all the culprits have helped the police. Similarly, when the Qur’an says: Give up what remains [due to you] from interest... and if the debtor is in difficult circumstances [let there be] postponement to the time of ease....’, it is clear from the second portion that the case of the debtor being in difficult circumstances has been mentioned as an exceptional one. In other words, the prohibition of interest in the first portion pertains to the general cases of loans given to such people as are not in straitened circumstances Amin Ahsan Islahi concludes his discussion on this verse by saying: 

Obviously, the affluent would have turned to the money-lenders not to fulfill their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today?³

    Therefore, it is evident from the Qur’an that interest of all kinds has been prohibited, including that which does not necessarily put the debtor in distressing circumstances, as is the case with interest on commercial loans.