Clarifying Ambiguity on Riba

Many people try to twist words or throw doubts upon the clear forbiddance of certain things so that they seem permissible or, at least, controversial in the Shari`ah. One such thing is riba. Allah Almighty does not forbid a thing that may be a subject of controversy. Riba refers in the Shari`ah to every rate of interest stipulated in advance on lending money. Some types of riba may be ambiguous to some people, but their being riba is clear-cut in the Shari`ah, especially in the case of loans borrowed from banks.
The eminent Muslim scholar Sheikh Yusuf Al-Qaradawi, states the following: Some people argue that jurists derived the definition of riba from the Prophet’s hadith “Any loan by which the lender obtains some benefit is riba,” while this hadith is unauthentic as mentioned in the book Kashf Al-Khafa’ and other books.

People who argue this way attribute to their opponents a weak statement of evidence—that has not been said at all by them—in order to refute their opinion on the point in question.
With regard to the jurists’ definition of riba, it, in fact, is not based on the hadith referred to above, though some juristic books that have not paid attention to documenting the statements referred to therein made mention of it.
The jurists’ disregard of this weak hadith in their handling the issue of riba is far more obvious when we find that they all agree to the permissibility of loans that bring about benefit to the lender, so long as this benefit has not been stipulated in the loan contract (or verbally). The borrower may pay extra money on repaying his debt to express gratitude to the lender for helping him. The Prophet (peace and blessings be upon him) did so. He once borrowed some money and on repaying it, he (peace and blessings be upon him) paid the lender an additional amount of money as a means of expressing gratitude to him. He (peace and blessings be upon him), furthermore, said in this regard: “The best among you is the one who pays the rights of others generously.”
Hence, the literal meaning of the statement “any loan by which the lender obtains some benefit is riba” is not right. To correct this statement, it should be said instead “any loan by which the lender obtains some benefit that is stipulated in advance is riba.”
The most authenticated source for forbidding riba is the Qur’an itself, as Almighty Allah says: (O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed Believers. If ye do it not, take notice of war from Allah and His Messenger: but if ye turn back, ye shall have your capital sums; deal not unjustly, and ye shall not be dealt with unjustly) (Al-Baqarah 2:278-279).
According to these verses, any interest stipulated in advance to be paid to the lender in excess of the capital sum of the debt is riba.
Besides, the meaning of riba as forbidden by the Qur’an is clear-cut and does not need detailed explanation to be understood. It is not tenable that Almighty Allah forbids His servants to do something and threatens those who commit it with a severe punishment without clarifying the matter to them. Allah Almighty says clearly: (Allah permitteth trading and forbiddeth usury) (Al-Baqarah 2:275).
The word “usury” [used to translate riba] in this verse is unidentified, which means that all kinds of riba are forbidden. Had there been anything ambiguous in this respect, Almighty Allah would have clarified it.
Needles to say that riba is a long-known transaction among people, Arabs and non-Arabs, especially the Jews whom Almighty Allah forbade good things that were lawful unto them because of their wrongdoing, including (their taking usury when they were forbidden it) (An-Nisaa’ 4:161). Had riba been ambiguous to them, they would have asked about it, for they were earnest in knowing the teachings of their religion.
As for what is reported that some of the Prophet’s Companions were confused regarding some kinds of riba, this is pertinent to usurious gain in sales, not to the interest gained from loans. It is the riba gained from loans that is the subject of controversy nowadays, though its forbiddance is clearly established in the Shari`ah. It is this kind of riba that banks deal in with their clients. Hence, applying the controversial points with regard to the riba of sales to this kind of riba is a matter of twisting the truth about it.