Usury

In: Social Issues

Submitted By jsmith1234
Words 1475
Pages 6
Tianna Browne
December 11, 2014
MA311 Essay: Usury
According to the Merriam-Webster Dictionary, usury is the lending of money with exorbitant interest rates. “If you lend money to any of My people, even the poor with thee, thou shalt not be to him as a creditor, neither shalt thou lay upon him interest.” (Exodus 22:24) When it comes to religious beliefs and usury it is seen as something negative. The early teaching of the Church clearly prohibited usury and yet now it seems that this position has changed somewhat. In today’s society, usury is a part of everyday life. People take out loans for school, to purchase cars, houses, etc. For all the money borrowed, ample amounts of interest is placed upon it.
From the beginning of time, many Jews were merchants. This provided a base as they began expanding into money lending activities, including usury. In medieval times, it was disapproved of and an immoral act by the Christian church. The act of usury was believed to be a mortal sin, and those who practiced such greed were understood to end in eternal damnation in Hell. The idea of profiting from someone else’s' need for money was believed by medieval Christianity to be the antithesis of compassion, generosity, and charity. Christ was upheld as an example of poverty, non-materialism, and abstinence. Those who had a large quantity of money to lend were obsessed with extreme greed for material things and didn’t need any of those things. Making money for doing absolutely nothing went against Christian medieval understandings of decency, justice, honest work, and morality. In essence, usury was perceived as an insensitive system of exploitation by which the already wealthy could get increasingly wealthier when in fact they already have more than enough wealth.
In Islam interest rates are prohibited. The Islamic perspective on interest rates is that they are a kind of…...

Similar Documents

Islamic Economy

...Islam is an entire way of life, and Allah's Guidance extends into all areas of our lives. Islam has given detailed regulations for our economic life, which is balanced and fair. Muslims are to recognize that wealth, earnings, and material goods are the property of God, and that we are merely His trustees. The principles of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly. The fundamental principles of the Islamic economic system are as follows: Muslims are not to deal in interest. "Those who devour usury will not stand....Allah has permitted trade and forbidden usury.... Allah will deprive usury of all blessing, but will give increase for deeds of charity..." (Qur'an 2:275-6). "O you who believe! Devour not usury, doubled and multiplied. But fear Allah, that you may really prosper" (Qur'an 3:130) This prohibition is for all interest-based transactions, whether giving or receiving, whether dealing with Muslims or non-Muslims. It is reported that the Prophet Muhammad (peace be upon him) cursed those who pay interest, those who receive it, those who write a contract based on it, and those who witness such a contract. It is forbidden to gain property or wealth by fraud, deceit, theft, or other falsehoods. "...Give just measure and weight, and do not withhold from people the things that are their due. And do not do mischief on the earth after it has been set in order. That will be best for you, if you have faith" (Qur'an......

Words: 696 - Pages: 3

Leadership

...non interest or Usury. Absolutely, business management that interacts with its environment must use the norms, rules and paradigms that clearly should prevent business from a base usury. In fact in the economic system that continues until now, usury has become the most factor in the economic life people both nationally and internationally. As a consequence the business certainly faced with a situation complexity of the economic system that affected by the prevailing economic system today. Therefore, it is relatively difficult to avoid business Muslims in doing business without interest or usury. But it doesn’t have means that the business doing can’t attempt free of elements rate. The release will be determined by the individual each business. It's depends the individual and each business that are internally committed to achieving our welfare by application business system without usury in the middle of the existing economic system. In this assignment, it's more discussing detail about the basic elements that are prohibition in Islamic business, deviate from the Shariah, ad become null and void (fasid) such as Riba (usury), Gharar (uncertainty), and Maysir (gambling). Actually in this assignment will be focusing on the Riba or Usury that take up the understanding about definition of Riba, Evidence (dalil) for its prohibition, and the impact of Riba in daily life. Moreover it will be supported by the journal articles stated about Riba. Definition Riba' (Usury) Actually......

Words: 2118 - Pages: 9

Fatwah on Banking

...backing, but only State legal compulsion .......................................................................................... 61 6. The Islamic Mu’amalat.......................................................63 6.1 The Islamic business contracts .......................................... 65 6.1.1 Shirkat (Partnership).................................................. 67 6.1.2 Qirad (business loan) ................................................. 73 7. Conclusion: What to do? ....................................................76 7.1 Practical Steps ................................................................ 77 Umar Ibrahim Vadillo 2 Fatwa on Banking | The Use of Interest Received on Bank Deposits 1. Introduction Riba (usury) has been clearly and explicitly prohibited in the Qur’an and Sunna. Allah and His Messenger, sallallahu alayhi wa sallam, have declared war on those who do not abstain from it. These are some of the relevant ayats regarding Riba. Allah says in the Qur'an: Those who practice riba will not rise from the grave except as someone driven mad by Shaytan's touch. That is because they say, "Trade is the same as riba." But Allah has permitted trade and He has forbidden riba. Anyone who receives a warning from his Lord and then desists, can keep what he received in the past and his affair is up to Allah. But any who return to it will be the Companions of the Fire, remaining in it timelessly, forever. Qur'an (2, 274) Allah obliterates......

Words: 24329 - Pages: 98

Fatwah on Banking

...backing, but only State legal compulsion .......................................................................................... 61 6. The Islamic Mu’amalat.......................................................63 6.1 The Islamic business contracts .......................................... 65 6.1.1 Shirkat (Partnership).................................................. 67 6.1.2 Qirad (business loan) ................................................. 73 7. Conclusion: What to do? ....................................................76 7.1 Practical Steps ................................................................ 77 Umar Ibrahim Vadillo 2 Fatwa on Banking | The Use of Interest Received on Bank Deposits 1. Introduction Riba (usury) has been clearly and explicitly prohibited in the Qur’an and Sunna. Allah and His Messenger, sallallahu alayhi wa sallam, have declared war on those who do not abstain from it. These are some of the relevant ayats regarding Riba. Allah says in the Qur'an: Those who practice riba will not rise from the grave except as someone driven mad by Shaytan's touch. That is because they say, "Trade is the same as riba." But Allah has permitted trade and He has forbidden riba. Anyone who receives a warning from his Lord and then desists, can keep what he received in the past and his affair is up to Allah. But any who return to it will be the Companions of the Fire, remaining in it timelessly, forever. Qur'an (2, 274) Allah obliterates......

Words: 24329 - Pages: 98

Lone Disbrusment

...Message From the Holy Qur’an Bismillahir Rahmanir Raheem Those who take Riba (usury) will not stand (on the day of resurrection) except like the standing a person beaten by Shaitan (Shatan) leading him to insanity. That is because they say: “Trading is only like Riba (usury)”, whereas Allah has permitted trading and forbidden Riba (usury).So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past: his case is for Allah (to judge); but whoever returns [to Riba (usury)], such are the dwellers of the fire- they will be abide therein. −Surah Al-Baquarah, verse-275 Allah will destroy Riba (usury) and will give increase for Sadaqaat (deeds of charity, alms etc.)And Allah likes not the disbelievers, sinners. −Surah Al-Baquarah, verse-276 O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba [(usury) (from now onward)], if you are (really) believers. −Surah Al-Baquarah, verse-278 And if you do not do it, then take a notice of war from Allah and His Messenger; but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums). −Surah Al-Baquarah, verse-279 1. Introduction Of The Report Bangladesh is one of the largest Muslim countries in the world. The people...

Words: 2534 - Pages: 11

Application Form

...venture. Not only does the doctrine of “riba” prevent the exploitation of someone in a weak bargaining position, but it also forbids “all forms of gain or profit which were unearned in the sense that they resulted from speculative or risky transactions and could not be precisely calculated in advance by the contracting parties.” The prohibition of interest is meant to design an economy and society based on risk-sharing, fair dealing, and equity. In Islamic law, the justification that interest is the cost of using money or that a loan is an investment is rejected in favor of ethics. Islamic economic theory criticizes the conventional financial industry for speculation, consumerism, volatility, “unnecessary products,” large corporations, and usury. These traditional capitalistic means of profit-making are not compatible with Islamic values. Islamic law therefore creates a culture where people only spend what they have, a theory in direct opposition to consumer driven models. Investment regulations are implemented to avoid “sinful” activity. Currency hedging, futures contracts, day trading, and credit cards are all prohibited under Islamic law. In addition, companies with excessive debt, interest-bearing securities and accounts-receivables in their assets are screened out. Islamic law further prohibits support of industries such as alcohol, gambling, pork-related products, tobacco, weapons, conventional financial services and other “immoral” activities. In response to this......

Words: 2609 - Pages: 11

The Comparison Between Interest and Usury

...THE COMPARISON OF INTEREST AND USURY Interest is the money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt, as stated in Oxford Dictionaries. This is means as it is increase in money paid back for the loan or the money that we borrow from creditor in the monthly payment at certain rates. As for the example when our business borrows money from creditor, they commonly will charge us interest. The interest rate is determined by developing the loan contract with certain regulations that a creditor must followed. However, he has committed usury if charged on interest rate higher than the rate allowed by law or regulations. Usually interest rate is depend on the loan or the amount of money that you borrowed. It should be noted here that interest is profit earned by the company and the bank, because its services lend money to launch the company to borrow. The financial intermediaries like bank is appreciated that lend money to the company prospered. As for these services, the bank gets a decent profit, called interest or benefit. It is differ from usury. Usury is the practice of lending money at unreasonably rate or amount of interest which exceeds those permitted by law. As for example, we can seen usury in the situation of extortion to the shortness of his life. The lender who take an advantage against those who are inability to pay back the money borrowed. The poor seek the help from lender to save him......

Words: 1019 - Pages: 5

Prohibition of Interest in Islamic Banking

...as such implies a profit based on no risk or effort. Muslims stay away from usury because: • Allah has forbidden it. • Money earns money without creating anything. • It is considered a big sin because the rich exploit the poor. • It leads to bankruptcy. • It causes injustice and oppression. • It spreads hatred and destroys social cohesion. • It leads to economic collapse. • The person who asks for interest will have no real blessings in his earnings. PROOF: Allah says in the Quran: {O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (usury) (from now onward), if you are (really) believers{} And if you do not do it, then take a notice of war from Allâh and His Messenger[] but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums)} [2:277, 278] 275. Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has permitted trading and forbidden Ribâ (usury). So whosoever receives an admonition from his Lord and stops eating Ribâ (usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns [to Ribâ (usury)], such are the dwellers of the Fire - they will abide therein. These......

Words: 663 - Pages: 3

Merchant of Venice Antonio

...generosity foreshadows how Antonio is going to be indebted for Bassanio further on in the play. Antonio never uses usury, but he does this just for his friend, Bassanio, showing how loyal he is. Antonio tells Shylock how he “neither lend nor borrow by taking nor by giving of excess, yet to supply the ripe wants of {his}friend {he’ll} break a custom.” He states that he would never “lend or borrow by taking nor giving of excess” showing his clarity on what he would never associate himself with. This sentence also ends with a sneering note, because “taking and giving excess” is something Antonio and Christian never practice and despise, so one can see this line as mocking Shylock’s practice of usury. “Yet” is a strong word in this quotation, because it starts off at the start of a line and it leads onto the strong reason behind Antonio’s exception on the use of usury this time. Antonio’s only reason to trade with Shylock is to “supply the ripe wants of {his} friend”, showing how he is doing this just for his friend and just to make sure he supples the “ripe wants” of Bassanio, meaning something excess and additional. “I’ll break a custom” also shows the seriousness of the matter, where Antonio is breaking a sort of rule and religious practice just for Bassanio. This shows his good intentions on using usury and loyalty to his friend. However, this exception of using usury leads onto devastating consequences on Antonio’s part, as his loyalty for his friend is much more......

Words: 858 - Pages: 4

Legality & Capacity

...statutes • Federal and State legislatures have enacted statutes that prohibit certain types of conduct. Contracts to perform activities that are prohibited by statute are illegal contracts. • Ex. An agreement between two companies to engage in price fixing in violation of federal antitrust statutes is illegal and therefore void. Thus, neither company to this illegal contract can enforce the contract against the other company. Usury Laws • State usury laws – set an upper limit on the annual interest rate that can be charged on certain types of loans. • Vary from state to state, Lenders who charge a higher rate that the state limit is guilty of usury. • Laws intended to protect unsophisticated borrowers from loan sharks and others who charge exorbitant rates of interest. • Most states have criminal and civil penalties for making usurious loans. o Some states make lenders remit the difference between the interest rate charged on the loan and the usury rate to the borrower. Other States say lenders can collect any interest at all. o Usury Loan = Void contract. • Ex. State has a usurious rate of interest as any interest rate above 15%. Chris borrows 1,000 from tony which require paying 4000 in one year to pay off loan. This is a usurious loan because that amount of interest -3000$- calculates a 300% annual interest rate. • Exceptions o Loans made by banks o Other financial institutions o Loans above certain dollar amounts. o Loans made by corporations and......

Words: 1934 - Pages: 8

State vs. Helm

...the same time: the defendant knowingly passed the check for the payment of the money and knew at the time she gave the check over to Mrs. Williams that it would not be honored by the bank. IV Reasons: The reasons why the State must prove this things the Judge found is to help support that Kelm was committing a fraudulent act. V. Rule of Law: As the trial judge noted in denying defendant's motion for a judgment of acquittal as to the theft count, her conduct after the delivery of the check permitted the inference that she created a false impression as to her anticipation of funds which would enable her to repay the $6000 and that she never intended to repay Ms. Williams. Defendant did not seek to employ usury as a defense, nor did she seek a jury instruction as to usury. Moreover the subject was irrelevant. The sentence is unexceptionable...

Words: 430 - Pages: 2

The Comparison Between Islamic Loans and Conventional Loans in Relation to Market Power

...The German University in Cairo Faculty of Management Technology Research Methodology “The Comparison between Islamic loans and Conventional loans in relation to Market Power” Submitted By Ahmed el-Farnawany 16-2641 Tutorial Number: T13 Professor: Raghda El-Ebrashi Teaching Assistant: Hadeer Shawky January, 6th, 2011 Table of contents 1. Introduction 1 2. Literature Review 2 2.1 Conventional loans 2 2.1.1 Interest and loan pricing 2 2.1.2 Types of conventional loans 3 2.1.2.1 General loan types 3 2.1.2.2 Business loans 4 2.1.2.3 Consumer loans 4 2.2 Islamic loans 5 2.2.1 Interest prohibition. 5 2.2.1.1 Riba (Usury) 5 2.2.1.2 Why is riba prohibited 6 2.2.2 Types of loans in Islamic banking 6 2.2.2.1 Qard al-hasan 7 2.2.2.2 Ijara 7 2.2.2.3 Murabaha 8 2.2.2.4 Musharaka 8 2.3 Effect of Islamic loans objective and economic incentives on its market power in relation to conventional loans 9 2.3.1 The effect of Islamic Loan Objective on its Market Power 9 2.3.2 The effect of Islamic Economic Incentives on its Market Power. 10 2.4 Research gap 11 3. Methodology 12 4. References 17 1. Introduction Islamic economics and Islamic banks have grabbed the attention of millions of people around the world. That is because Islamic banks have assets that can be estimated as 300 billion USD around 75 countries in the world with 15 % annual...

Words: 5400 - Pages: 22

What Is Usury in Nehemiah 5

...LIBERTY UNIVERSITY SCHOOL OF DIVINITY What is usury in Nehemiah 5? Submitted to Dr. Daniel S. Steffen, in partial fulfillment of the requirements for the completion of the course 2015 RTCH 500-B01 Introduction to Seminary Studies by James E. Thomas October 1, 2015 Introduction to Usury in Nehemiah 5 Usury was a practice of charging interest on money that was loan to God's people. God forbade usury and, Nehemiah hastily took care of the dilemma by uniting the people to do what was right. In Nehemiah 5:14-19, Nehemiah is blessed for rebuilding the wall and is made governor. He does not use his position for his personal gain. He says, in verse nineteen "Remember, me O my God, for good, according to all that I have done for this people." Usury was the sum paid for the use of money, hence interest; not, as in the modern sense, exorbitant interest. The Jews were forbidden to exact usury (Lev. 25:36, 37), only, however, in their dealings with each other (Deut. 23:19, 20). The violation of this law was viewed as a great crime (Ps. 15:5; Prov. 28:8; Jer.15:10). After the return, and later, this law was much neglected" (Nehemiah 5:7, 10). What is usury in Nehemiah 5 ? Nehemiah 5 was an "offensive practice before God." Charlie Summers gives a clear understanding of just exactly what usury was and how it came about that point in time. The definition of usury meant the charging of interest on loans. Usury in Judaism has its roots in several......

Words: 1974 - Pages: 8

The Secret History of the Credit Card

...of the Credit Card 1. What is the main purpose of a usury law? Be specific. The purpose of usury laws was to regulate the maximum interest rates of loans. This law was created to protect borrowers from excessively high interest rates. It insured that lenders could not put the borrower in a situation where they were not able to fully pay off their debt. However, as said on investopedia.com, “In the United States, individual states are responsible for setting their own usury laws.” 2. Why did South Dakota decide to eliminate its cap on interest rates? South Dakota use to have very strict laws on the amount a lender could charge a borrower. Interest rate charges were highly regulated and because of this banks did not want to loan out any money. For example, an illustration from the article said “you could charge 9 percent, but money cost 11 percent”, so they would not issue a loan. This lead to South Dakota removing there cap on interest rates (usury laws). 3. Why were the usury laws strangling the banking industry? Be specific. Usury Laws were causing banks to be broke. As stated in the frontline video, “If you are lending money at 12 percent and paying 20 percent, you don't have to be Einstein to realize you're out of business.” Banks were losing billions in the credit card business. The rate of inflation surpassed the amount of interest banks were allowed to charge credit card borrowers. The usury laws were literally strangling the banking industry. ......

Words: 629 - Pages: 3

Review Paper Laws on Riba

...to derive and allow rulings based on the principles of Quran & Sunnah. Riba (Usury) is one of the most hatred things in the eye of Allah SWT. In Quran, Allah SWT has mentioned very clearly that those who are dealing in Riba are actually in war against the Almighty. Thorough out the recent years, Islamic financial institutions are one of the most growing industries that has been accepted and appreciated by society whether Muslims or non-Muslims across the globe. Riba in financial transaction is considered as to charge a specified profit or amount within a certain period of time for a loan given to anyone. Riba is actually not limited to it. It has way broader spectrum than just limiting it to the financial transactional Riba. It is considered among seven most disliked sins. The Islamic fundamentalist doctrine on riba states that the rate of interest is zero, a doctrine based upon the Quranic injunctions against it. 1) The word 'riba' means 'increase' as interpreted by Imam Razi, 2) which corresponds to the word 'interest' as defined by Webster's New World Dictionary. In both cases the increase refers to the amount beyond what is owed. Thus, the strictest interpreta­ tion that can be given to the word riba is that it means interest-an amount, or rate, due above the principal of a loan. The word riba, however, is commonly translated as usury' which is defined by Webster's Dictionary as "an excessive or unlawfully high......

Words: 2082 - Pages: 9