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There are basically three different kinds of Riba:
1. Ribal-Nasee'ah ربا النسيئة which means a traditional loan given from a lender to a borrower of a certain amount on the condition that the borrower will give back this loan after a certain amount of time with an extra interest (usury). This kind also includes the situation where the lender gives a loan to a borrower for a certain amount of time and the contract states that if the borrower returns back the loan within this time frame, there will be no interest paid, but if the borrower becomes late in paying the loan, then the lender charges a certain amount of interest. These two situations refer to Ribal-Nasee'ah.
Example: A gives B a 100 dollar loan for one year on the condition that B will return this loan with an extra 10 dollars which will make the total amount 110 dollars. Another example if A gives B a 100 dollar loan for one year stating that if B repays the loan within the agreed time frame, there will be no interest charged but if B becomes late in the payment a certain amount will be charged as interest.
2. Riba that involves the acquisition of a certain benefit to the lender even if it's not money (Ribal-Manfa^ah) ربا المنفعة . For example if A gives B a 100 dollar loan for 6 months and he makes a condition that B facilitates another different transaction for A in order to get this loan. Or if A gives B a 100 dollar loan for 6 months and A puts a condition that B will write a research paper for A or gives A a certain gift for this loan. This is not allowed.
3. Ribal-Fadl ربا الفضل which happens if specific commodities which are similar in essence are exchanged for different amounts and those commodities are from the ones mentioned in the Hadith related by Imam Muslim; example gold for gold, silver for silver, dates for dates, wheat for wheat, barely for barely and salt for salt. If those commodities are being exchanged, the same amount (weight) of each should be exchanged without excess or shortfall. If excess or shortage takes place, this becomes Ribal-Fadl. Also if dollars are exchanged for dollars, although these paper dollars are not commodities but they also must be exchanged equal for equal otherwise, it will be a Ribal-Fadl case.
Another condition for this kind of exchange of those commodities mentioned in the Hadith related by Imam Muslimto be valid, the exchange should take place hand to hand (meaning on the spot without deferment). If one commodity of those specific ones mentioned is exchanged for a similar quantity of the same but one is being delayed in handing this becomes Ribal-Nasee'ah ربا النسيئة. Nasee'ah means (delay) language wise.
If the commodities being exchanged are similar in ^illah (utilization / reason of using) (example gold for silver or wheat for dates or barely for salt or US dollars for Japanese Yen), then excess or shortfall of the weight / quantity is allowed but still the transaction must be made hand to hand (meaning on the spot without deferment). Example: 100 grams of gold could be exchanged for 700 grams of silver but the exchange has to be made on the spot without delay (similar ^illah here is being precious metals used as money) 1 kilo of dates can be exchanged for 2 kilos of wheat but the exchange has to be on the spot without delay (Similar ^illah is edibility) . 100 US dollars can be exchanged for 800 Egyptian pounds, but the exchange has to be on the spot without delay (similar ^illah is being medium of exchange). If a delay of handing one commodity for the exchange of another one from those types happen, then it's a case of Ribal-Nasse'ah.
If the ^illah (utilization / reason of using) is different then excess / shortfall and delay are both permissible. For example the exchange of gold for wheat or dollars for dates or silver for barely or dollars for a car.
What is the definition of riba? If we take into account the fact that in most countries the economy is based on the principle of the circulation of capital, which includes lending, is accepting payment in that particular currency for any work regarded as an action that supports the riba-based system ? Is using the currency of a state that is based on riba regarded as contributing to the usurious economy? Undoubtedly the employee in a riba-based bank plays a part in riba-based transactions one way or another, even if he is a security guard for the bank. Could you offer him a better job if you have anything to offer?
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Riba means an increase in a particular item. The word is derived from a root meaning increase or growth. Allah, may He be exalted, says (interpretation of the meaning): “Whatever you pay as interest so that it may increase (li yarbu) the wealth of people does not increase (fa la yarbu) in the sight of Allah” .
Riba originated among the people of the Jaahiliyyah; if a debt became due, they would say to him (the borrower): Give us one hundred (that is due, now), or increase it to one hundred and fifty (and pay later). Then when the one hundred and fifty became due, they would say: Give us one hundred and fifty (now), or increase it to two hundred (and pay later) -- and so on.
Islam also forbade another kind of riba, namely riba al-fadl, which means adding to the amount when exchanging one item for another of the same type. So if gold is sold for gold, that is not permissible except like for like, hand to hand. Islam stipulated that the exchange should be done hand to hand and that the items or goods should be of the same quality. Whoever gives more or asks for more has engaged in riba. If he sells a saa‘ of wheat for two saa‘s (of the same commodity), even if it is hand to hand, he has engaged in riba.
The principle of the circulation of capital exists in both the Muslim world and the non-Muslim world. What it means is circulating capital so that it will increase. The same applies to lending; they give money as a loan provided that it will increase when they get it back. Such transactions are undoubtedly riba.
There is nothing wrong with the principle of the circulation of capital if the capital is invested in trade or business, and the profit is shared between the owner of the capital and the worker. This is called mudaarabah (profit sharing), and there is nothing wrong with it if the capital is kept distinct from the profit. If this money is deposited in a riba-based bank, then taking the interest is haraam and it is not permissible to consume it. It is not permissible to deal with these banks, and loans based on interest are not permissible. It is also not permissible to accept payment in that currency for any job if that job helps to support a system that is based on riba.
With regard to using this currency (such as the dollar), there is nothing wrong with doing so in the case of necessity, even if that leads to helping to advance the economy of that country. That is because the dollar is accepted in most Muslim and other countries, so it is permissible to deal with it because of necessity. But if there is an Islamic currency that is used, then we can do away with the dollar.
And Allah knows best.
agree with ur answer and ms. maha
Thanks for the invitation, regarding Riba and types you have already explained with the examples and I completely agree on that. Riba is Arabic word means Interest which is Haram in Surah Al Baqra it is clearly mentioned "Trading is Halal and Riba is Haram". We should know all the reason of declaring Riba is Haram. Jazak Allah khair
From an Islamic standpoint, any riba is haram (forbidden). The answers that have been provided, though, are the most concise and in-depth answers I have ever read about riba. Jazakum Allah Khair for that. Seeing as how I am not a finance specialist, this question was best answered by those with the experience.
Thanks for the invite, you has fulfilled the full the answer
There are three kinds of Riba for save the future and decrease the rate of inflation.
