Main Objective of Allah SWT’s Message on Riba

By Muhammad Rizwan-ul Haque

Founding Chairman, Dawood Family Takaful | CEO of an Investment Bank | Director of a Trust

Originally published: June 29, 2015

Introduction

The central objective behind Allah SWT’s message on Riba is the eradication of exploitation and the establishment of balance and equilibrium within society. Islam does not merely prohibit Riba in isolation; rather, it presents a comprehensive framework aimed at ensuring justice, fairness, and socioeconomic harmony.

Direct Guidance from Quran & Sunnah

To truly understand the wisdom behind the prohibition of Riba, it is essential to seek guidance directly from the Quran and Sunnah. Without this foundation, we risk being influenced by modern theories of Islamic Banking and Finance, many of which are only a few decades old and remain experimental in nature.

A Timeless Divine Lesson

The prohibition of Riba is not a recent concept. It was revealed thousands of years ago, with its final and complete message conveyed more than 1,500 years ago. This alone highlights its timeless relevance and its critical importance in shaping a just economic order.

Limitations of Islamic Banking & Finance

Despite decades of trial and error, modern Islamic Banking and Finance (IB&F) models have struggled to deliver the outcomes envisioned by Islamic economics. While the terminology may differ, many practices continue to mirror conventional systems in substance rather than spirit.

The Issue of Benchmarking

One of the most concerning practices is the benchmarking of Islamic financial transactions to prevailing interest rates. This linkage, regardless of how it is framed contractually, continues to replicate the very essence of Riba and therefore contradicts the core objective of Islamic finance.

Same Causes, Same Outcomes

Because the foundational causes, such as exploitation, concentration of wealth, and indifference toward the economically vulnerable—remain unaddressed, the results are also the same. Socioeconomic injustice continues to persist, reinforcing why Allah SWT has emphasized trading and prohibited Riba.

Trading as Real Economic Activity

Islam promotes genuine trade and business activity, which leads to real economic output. Such activity engages all segments of society: farmers, laborers, workers, and small entrepreneurs, thereby distributing wealth more equitably and creating meaningful employment.

The Menace of Riba-Based Transactions

In contrast, interest-based and artificially structured “Islamic” transactions often involve massive paper contracts executed in corporate offices, with no tangible economic activity on the ground. Billions may circulate, yet farmers and laborers see no employment or benefit.

Unemployment and Inflation

These practices result in rising unemployment among lower-income groups, while the money supply continues to expand through interest-based mechanisms. This imbalance fuels inflation, steadily increasing the cost of living without a corresponding rise in productivity.

Low Productivity and Rising Poverty

As profits are generated primarily through financial instruments rather than real production, productivity declines. The combined effects of unemployment, inflation, and low output place immense pressure on vulnerable communities, leading to increased poverty.

Social Consequences

Persistent economic stress inevitably gives rise to social evils. When people are unable to meet basic needs through dignified work, societal harmony begins to erode.

Charity Is Not a Substitute for Justice

While zakat, charity, and sadaqah are vital pillars of Islam, they are not substitutes for a just economic system. A healthy and capable youth population seeks honorable employment, not long-term dependency. Sustainable justice comes through opportunity, not perpetual charity.

Exploitation Embedded in Interest-Based Systems

The exploitation inherent in interest-based capitalism continues to push economies into cycles of recession and inequality. This systemic flaw is precisely what Islam seeks to eliminate.

An Immaculate Economic System

How remarkable it is that Allah SWT has provided a system capable of addressing major economic challenges: unemployment, inflation, poverty, low productivity, and social instability, through a single, powerful principle: the prohibition of Riba and the promotion of real trade.

Our Collective Responsibility

It is our responsibility to resist flawed economic practices and strive to rediscover an immaculate path guided by the Quran and Sunnah. Without this effort, societies will continue to face recurring economic crises and injustice.

May Allah SWT guide us all toward understanding and implementing this divine wisdom (Aameen).