Riba is not merely interest. Interest itself can take a numbers of forms, remove or change the English term, and the entire issue cannot simply be dismissed. For, whatever term is used, the actual application of this phenomena exposes the real use of Riba itself – a percentage number, applied to a principle amount, which continues to generate more and more of this result over time, a self feeding and ever-increasing to infinity.

Albert Einstein once commented…

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it 

An earlier blog entry showing the ticking debt clocks for many nations public debt shows a profound example of this constantly increasing compound effect, it is a wonder how much more debt will be added to the total by the time you stop reading this piece?

From the above link one can see clearly the overriding effect of compounding interest. Un-payable amounts, totals which need to be serviced regularly just to keep your head slightly above water. Whether it’s a third-world nation spending large proportions of its tiny revenue to make monthly repayments, to some of the strongest economic power houses of today, the debt burden will never disappear, that is not even the intention. The true purpose of debt is to show you can afford the repayments, and that the proportion of it is ‘reasonable’ as compared to the size of your economy. Why would a government choose to waste precious funds on clearing the principle debt? They can easily just generate higher inflation, and erode the value of the loan over time…..there are many tricks of this trade.

Turning our attention to the Islamic Banking industry, their trick is to call interest ‘Rent’ or ‘Profit’. But see that both of these terms appear as percentage rates, applied to principle amounts….giving us clear instances of compounding, ie RIBA by any other name.

Now consider this verse from the Qur’an, and others like it;


O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful.

And contrast the language with ayahs such as this


Who is it that would loan Allah a goodly loan so He may multiply it for him many times over? And it is Allah who withholds and grants abundance, and to Him you will be returned.

The concept of compounding is evidently shown in such signs in the Qur’an, proving that Riba must be linked and concerned with avoiding this particular form which exacerbates the problems it causes.

Expanding upon this, the natural order that has been created gives an element of entropy in everything. All things must decay at some rate and reach the end of their useful life. However the effect of compounding is directly opposite to this fact, it continues to grow and grow, never-ending. It goes well beyond the bounds set by our Maker.

Notice too, how the Qur’an contrasts the negative effects of Riba with the positive attributes of giving for the sake of Allah/charity, not expecting a material reward, but deferring your compensation to a point in time not necessarily of your choosing

For further analysis of the Arabic terms in use in these verses, please refer to the RRMCR journals here. Note the links given to works by El-Diwany, Vadillo and others.

  1. Ammar says:

    Wonderful article. With greek crisis in picture one sees the effects directly.

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