Interest, Riba, and War

1. Is charging a percentage equal to the rate of inflation on loans haram (i.e. considered riba?). For example, if I lend someone $10,000 and they repay me $10,000 10 years later they actually repaid me less than what I gave them. so if the inflation rate was say 5%/yr than they would have to repay me $15,000 to repay the value of the loan. is it haram to except the value and not the amount of the loan as repayment.

Loans may not be adjusted for the rate of inflation directly, because this is riba without doubt. If you pegged the loan to something like gold or silver, this would be valid.

2. Is there any differentiation in Islam between interest and usury. In western cultures, unlawful usury was usually determined to be rates that were very high. So small interest rates were not considered one and the same as usury.

This is a big issue. What is important is that bank interest, whether a little or a lot, is definitely riba, and this is the position of the scholars of our times, and bank interest certainly fits the description of riba in the Qur’an and Sunna, and its definition according to the fuqaha.

One of the best discussions available on the impermissibility of bank interest is that of Mufti Taqi Usmani in his article on the Supreme Court of Pakistan’s declaration, available on http://albalagh.net, in the articles section.

Make dua, please, because I am working on a work about the impermissibility of riba, and answers to the various arguments about taking riba in the West.

Riba and showing enmity to the Friends of Allah are the only two things that Allah Most High has declared war on. And whoever Allah declares war on has lost…

Wassalam,

Faraz Rabbani