Allah has permitted trade and forbidden interest. Learn what the Quran and authentic Sunnah say about every banking product marketed as “Islamic.”
Authentic Hadith Only
Sahih & Hasan Graded
Dawn in the market. Gold for gold, like for like, hand to hand.
An illustrated story plays behind this introduction. Two guides watch traders exchange gold for gold and dates for dates, hand to hand. A lender lends one coin; the debt ticks upward, towers of coins climb and a thread becomes a chain. A storm breaks over the ledger, recalling the verse “then be informed of a war from Allah and His Messenger” (2:279), and the towers fall to dust. At dawn the chain breaks and fair trade returns to the market.
Sahih — Muttafaq alayh (Agreed Upon)
“Riba exists only in deferment.”
لا ربا إلا في نسيئة
Sahih al-Bukhari / Sahih Muslim|2178 / 3869|Sahih (Muttafaq alayh)
03Historical Timeline
The Gradual Prohibition
(al-Tahrim al-Tadriji) — التحريم التدريجي
The Qur'an revealed the prohibition of riba in four distinct stages — from gentle moral hint to categorical declaration of war. This is how seriously Allah treated the matter.
“And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah, desiring the countenance of Allah — those are the multipliers.”
Stage 1 — Moral disapproval. Indirect indication only, not a prohibition. The first whisper about riba.
“And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.”
Stage 2 — Historical reference. Mentions the Jews' prohibition, not yet a direct command to Muslims.
“O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allah and His Messenger.”
Stage 4 — Comprehensive prohibition with WAR DECLARATION. The final legislative message of the Qur'an. Ibn Abbas confirmed this was the last verse revealed.
The pedagogical sequence — from "will not increase" (30:39) to “war from Allah and His Messenger” (2:279) — demonstrates the gravity of the prohibition escalates from moral to existential to divine-declared war.
04The ForbiddenRIBA
Surah al-Baqarah 2:275
“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is [just] like interest.’ But Allah has permitted trade and has forbidden interest...”
“...those are the companions of the Fire; they will abide eternally therein.”
Sahih al-Bukhari 3814
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
Sahih
Musnad Ahmad 21957
“One dirham of riba which a man consumes knowingly is worse with Allah than thirty-six acts of fornication.”
Sahih (graded Sahih by al-Albani, Sahih al-Jami' 3375)
05The Severity
Among the Seven Destructive Sins
(al-Sab' al-Mubiqat) — السبع الموبقات
Sahih al-Bukhari / Sahih Muslim 2766 / 89
“Avoid the seven great destructive sins... to join others in worship with Allah, to practice sorcery, to kill the life which Allah has forbidden, to eat up riba...”
Sahih (Muttafaq alayh)Narrated by Abu Hurayrah
Joining others in worship with Allah1
Practicing sorcery2
Killing the life which Allah has forbidden3
Eating up riba (usury/interest)RIBA4
Eating up the property of an orphan5
Fleeing from the battlefield6
Accusing chaste women7
Notice: Riba is listed alongside shirk (associating partners with Allah), murder, and sorcery. Its severity is not a matter of fiqh opinion — it is a matter of divine declaration.
06Products
The Modern Facade
(al-Wajh al-Hadith) — الوجه الحديث
Every product marketed as “Islamic banking” — examined against the Quran and authentic Sunnah. Tap each to see the textual refutation.
The Claim
Usmani permits Murabahah lil-Amir bi-l-Shira' as the principal financing product: the bank acquires a commodity at the client's request and resells it at a disclosed cost-plus mark-up payable on deferred basis.
The Refutation
Sahih (Muttafaq alayh)Sahih al-Bukhari / Sahih Muslim 2178 / 3869
“There is no riba except in nasi'ah (deferment).”
Narrated by Usamah ibn Zayd
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1231
“The Messenger of Allah (peace be upon him) forbade two sales in one sale.”
Narrated by Abu Hurayrah
Hasan (graded Hasan Sahih by al-Albani in Mishkat al-Masabih 2868)Sunan Abi Dawud 3461
“Whoever conducts two transactions in one transaction, then [either] he must take the lesser of the two, or it is riba.”
Narrated by Abu Hurayrah
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234; Sunan al-Nasa'i 4611
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
SahihSahih al-Bukhari 2126
“I saw people, in the lifetime of the Messenger of Allah (peace be upon him), being beaten when they bought foodstuff in bulk and then sold it on the spot, before transporting it to their own places.”
Narrated by Ibn Umar
SahihSahih Muslim 1525
“We used to buy foodstuff from the caravans by approximation, and the Messenger of Allah (peace be upon him) forbade us from selling it on the spot until we had transported it to our own places.”
Narrated by Ibn Umar
SahihSahih Muslim 1526
“Whoever buys foodstuff, let him not sell it until he takes possession of it. And I consider everything to be like foodstuff.”
Narrated by Ibn Abbas
The Claim
Usmani permits classical individual tawarruq while expressing reservations about 'organised tawarruq' arranged by banks. In practice, bank-arranged tawarruq remains a core liquidity instrument.
The Refutation
Sahih (graded Sahih by al-Albani, Silsilat al-Ahadith al-Sahihah 11)Sunan Abi Dawud 3462; Musnad Ahmad 4825
“When you transact through 'inah, and you take hold of the tails of oxen, and you become content with agriculture, and you abandon jihad — Allah shall impose upon you a humiliation which He shall not lift from you until you return to your religion.”
Narrated by Ibn Umar
HasanSunan Abi Dawud 3461
“Whoever conducts two transactions in one transaction, then [either] he must take the lesser of the two, or it is riba.”
Narrated by Abu Hurayrah
SahihSahih al-Bukhari 1; Sahih Muslim 1907
“Actions are but by intentions, and every man shall have only that which he intended.”
Narrated by Umar b. al-Khattab
The Claim
Usmani conceded that approximately 85 percent of GCC sukuk were not Shariah-compliant due to capital and return guarantees. Yet the structures he certified continue to mimic the cash-flow profile of conventional bonds.
The Refutation
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1285; Sunan Abi Dawud 3508; Sunan Ibn Majah 2243
“Profit [from a thing] is by [bearing] liability for it (al-kharaj bi-l-daman).”
Narrated by A'ishah
SahihSahih Muslim 1513
“The Messenger of Allah (peace be upon him) forbade the pebble-throw sale and the sale involving uncertainty (gharar).”
Narrated by Abu Hurayrah
SahihSahih Muslim 1598
“The Messenger of Allah (peace be upon him) cursed the one who consumes riba, the one who pays it, the one who records it, and its two witnesses. They are all equal.”
Narrated by Jabir b. Abdullah
The Claim
Usmani permits a lease contract paired with a unilateral binding promise of sale or gift at the end of the lease period, treating the lease and transfer of ownership as legally distinct.
The Refutation
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1231
“The Messenger of Allah (peace be upon him) forbade two sales in one sale.”
Narrated by Abu Hurayrah
SahihSahih al-Bukhari 1; Sahih Muslim 1907
“Actions are but by intentions, and every man shall have only that which he intended.”
Narrated by Umar b. al-Khattab
SahihSahih al-Bukhari 2051; Sahih Muslim 1599
“The lawful is clear, and the unlawful is clear, and between them are doubtful matters which many people do not know. So he who guards himself against doubtful things keeps his religion and his honour blameless; and he who falls into doubtful matters falls into the unlawful — like a shepherd who pastures around a sanctuary. Indeed every king has a sanctuary, and indeed Allah's sanctuary in His earth is His prohibitions. Indeed in the body there is a piece of flesh — if it is sound, the whole body is sound; and if it is corrupt, the whole body is corrupt. Indeed, it is the heart.”
Narrated by al-Nu'man b. Bashir
The Claim
Usmani permits home financing through diminishing partnership: the bank and client co-own the asset; the bank's share is leased and the client purchases the bank's share in instalments at predetermined prices.
The Refutation
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1285
“Profit [from a thing] is by [bearing] liability for it (al-kharaj bi-l-daman).”
Narrated by A'ishah
Sahih (graded Sahih by al-Albani, Sahih al-Jami' 1554)Sunan Abi Dawud 3383
“Allah, Most High, says: I am the third of two partners as long as one of them does not betray the other; but when he betrays him, I depart from between them.”
Narrated by Abu Hurayrah
SahihSahih Muslim 1608
“Pre-emption (al-shuf'ah) applies in every joint property which has not yet been divided. It is not lawful for one [partner] to sell his share until he informs his partner.”
Narrated by Jabir b. Abdullah
SahihSahih al-Bukhari 3814
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
Narrated by Abu Burda
The Claim
Usmani permits the use of LIBOR as a reference rate for pricing Murabahah mark-up, Ijarah rental, and Musharakah profit share, on condition the underlying contract is structurally compliant.
The Refutation
SahihSahih al-Bukhari 1; Sahih Muslim 1907
“Actions are but by intentions, and every man shall have only that which he intended.”
Narrated by Umar b. al-Khattab
SahihSahih al-Bukhari 2051; Sahih Muslim 1599
“He who guards himself against doubtful things keeps his religion and his honour blameless; and he who falls into doubtful matters falls into the unlawful — like a shepherd who pastures around a sanctuary.”
Narrated by al-Nu'man b. Bashir
Sahih (graded Sahih by al-Albani)Sunan Ibn Majah 2278
“There shall come upon mankind a time in which no one will remain who has not consumed riba; and whoever has not consumed it, its dust shall reach him.”
Narrated by Abu Hurayrah
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 2518; Sunan al-Nasa'i 5711; Musnad Ahmad 1723
“Leave that which makes you doubt for that which does not make you doubt. For indeed truthfulness is tranquillity, and lying is doubt.”
Narrated by al-Hasan b. Ali
The Claim
Usmani argues that the prohibition of 'two sales in one' does not engage when two contracts are documented separately and executed at distinct moments, even though one is the commercial premise of the other.
The Refutation
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1231
“The Messenger of Allah (peace be upon him) forbade two sales in one sale.”
Narrated by Abu Hurayrah
HasanSunan Abi Dawud 3461
“Whoever conducts two transactions in one transaction, then [either] he must take the lesser of the two, or it is riba.”
Narrated by Abu Hurayrah
SahihSahih al-Bukhari 1; Sahih Muslim 1907
“Actions are but by intentions, and every man shall have only that which he intended.”
Narrated by Umar b. al-Khattab
SahihSahih al-Bukhari 2051; Sahih Muslim 1599
“He who falls into doubtful matters falls into the unlawful — like a shepherd who pastures around a sanctuary; he is on the verge of grazing in it.”
Narrated by al-Nu'man b. Bashir
The Claim
Usmani permits a late-payment penalty against the defaulting client, on condition the proceeds be donated to charity rather than retained as bank income, on the basis that this deters wilful default.
“O you who have believed, fear Allah and give up what remains [due to you] of interest... And if you do not, then be informed of a war [against you] from Allah and His Messenger.”
SahihSahih al-Bukhari 2400; Sahih Muslim 1564
“Procrastination [in repayment] by a wealthy man is injustice; and when one of you is referred [for repayment] to a wealthy man, let him follow up the referral.”
Narrated by Abu Hurayrah
SahihSahih al-Bukhari 3814
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
Narrated by Abu Burda
The Claim
Usmani classifies fiat currencies as ribawi assets analogous to gold and silver, yet permits structured products in which money is effectively rented through a commodity wrapper.
The Refutation
SahihSahih Muslim 1587
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt — like for like, equal for equal, hand to hand. If these categories differ, then sell as you wish, provided it is hand to hand.”
Narrated by Ubadah b. al-Samit
SahihSahih Muslim 1584
“Do not sell gold for gold except like for like, and do not make one greater than the other; and do not sell silver for silver except like for like, and do not make one greater than the other.”
Narrated by Abu Sa'id al-Khudri
SahihSahih al-Bukhari 2177; Sahih Muslim 1586
“Do not sell gold for gold except like for like, and do not sell silver for silver except like for like; but sell gold for silver, and silver for gold, as you wish.”
Narrated by Abu Bakra
SahihSahih Muslim 1588
“Gold for gold, weight for weight, like for like; and silver for silver, weight for weight, like for like. Whoever increases or seeks an increase has engaged in riba.”
Narrated by Abu Hurayrah
The Claim
Usmani defends much of contemporary Islamic banking by appeal to formal contract validity: if the contractual form is correct under classical fiqh, the substance — even if it economically replicates conventional banking — is permitted.
The Refutation
Sahih (graded Sahih by al-Albani, Silsilat al-Ahadith al-Sahihah 11)Sunan Abi Dawud 3462; Musnad Ahmad 4825
“When you transact through 'inah, and you take hold of the tails of oxen, and you become content with agriculture, and you abandon jihad — Allah shall impose upon you a humiliation which He shall not lift from you until you return to your religion.”
Narrated by Ibn Umar
SahihSahih al-Bukhari 2236; Sahih Muslim 1581
“May Allah destroy the Jews. Verily, Allah forbade upon them the fat [of carcasses], so they melted it down, then sold it, then consumed its price.”
“And when a community among them said, 'Why do you advise a people whom Allah is going to destroy or to punish with a severe punishment?' they said, '[We do so] to be absolved before your Lord and perhaps they may fear Him.' So when they forgot that by which they had been reminded, We saved those who had forbidden evil and seized those who wronged, with a wretched punishment, because they were defiantly disobeying. So when they were insolent about that which they had been forbidden, We said to them, 'Be apes, despised.'”
SahihSahih al-Bukhari 1; Sahih Muslim 1907
“Actions are but by intentions, and every man shall have only that which he intended.”
Narrated by Umar b. al-Khattab
SahihSahih al-Bukhari 2051; Sahih Muslim 1599
“He who falls into doubtful matters falls into the unlawful — like a shepherd who pastures around a sanctuary; he is on the verge of grazing in it.”
Narrated by al-Nu'man b. Bashir
The Claim
Usmani permits the bank to charge a fee for issuing guarantees and letters of credit, distinguishing the fee as remuneration for service rendered rather than interest.
The Refutation
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
SahihSahih al-Bukhari 3814
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
“And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal — [thus] you do no wrong, nor are you wronged.”
The Claim
Usmani structures depositor relationships as Mudarabah: the depositor is capital-provider and the bank is working partner. In practice, depositors are smoothed against losses through reserves and sponsor support.
The Refutation
Sahih (Muttafaq alayh)Sahih al-Bukhari / Sahih Muslim 2178 / 3869
“There is no riba except in nasi'ah (deferment).”
Narrated by Usamah ibn Zayd
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
Hasan Sahih (per al-Tirmidhi)Jami' al-Tirmidhi 1285
“Profit [from a thing] is by [bearing] liability for it (al-kharaj bi-l-daman).”
Narrated by A'ishah
SahihSahih Muslim 1513
“The Messenger of Allah (peace be upon him) forbade the pebble-throw sale and the sale involving uncertainty (gharar).”
Narrated by Abu Hurayrah
Sahih (graded Sahih by al-Albani, Sahih al-Jami' 1554)Sunan Abi Dawud 3383
“Allah, Most High, says: I am the third of two partners as long as one of them does not betray the other; but when he betrays him, I depart from between them.”
Narrated by Abu Hurayrah
SahihSahih al-Bukhari 3814
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
Narrated by Abu Burda
The Claim
Usmani argues that the Islamic bank is fundamentally distinguishable from a conventional bank in that it acts as an asset trader — purchasing and reselling real commodities — rather than as a lender of money against interest.
The Refutation
Sahih (graded Sahih by al-Tirmidhi and al-Albani)Sunan Abi Dawud 3503; Jami' al-Tirmidhi 1232; Sunan al-Nasa'i 4613
“I said: O Messenger of Allah, a man comes to me wanting to buy from me what I do not possess. May I sell it to him and then buy it for him from the market? He said: 'Do not sell what is not with you.'”
Narrated by Hakim b. Hizam
SahihSahih al-Bukhari 2126
“I saw people being beaten when they bought foodstuff in bulk and then sold it on the spot, before transporting it to their own places.”
Narrated by Ibn Umar
SahihSahih Muslim 1525
“We used to buy foodstuff from the caravans by approximation, and the Messenger of Allah (peace be upon him) forbade us from selling it on the spot until we had transported it to our own places.”
Narrated by Ibn Umar
SahihSahih Muslim 1526
“Whoever buys foodstuff, let him not sell it until he takes possession of it. And I consider everything to be like foodstuff.”
Narrated by Ibn Abbas
SahihSahih al-Bukhari 2135
“Whoever buys foodstuff should not sell it before taking possession of it (and bringing it into his place).”
Narrated by Ibn Umar
The Claim
Usmani extends classical Salam (forward sale with full advance payment) into modern structured financings, including parallel Salam contracts used as hedging or financing instruments.
The Refutation
SahihSahih al-Bukhari 2240; Sahih Muslim 1604
“The Messenger of Allah (peace be upon him) came to Madinah, and the people were paying in advance for fruits one and two years in advance. So he said: 'Whoever pays in advance for anything, let him pay in advance for a specified measure and a specified weight, to a specified term.'”
Narrated by Ibn Abbas
HasanSunan Abi Dawud 3461
“Whoever conducts two transactions in one transaction, then [either] he must take the lesser of the two, or it is riba.”
Narrated by Abu Hurayrah
Hasan Sahih (per al-Tirmidhi)Sunan Abi Dawud 3504; Jami' al-Tirmidhi 1234
“It is not permissible to have a loan along with a sale, nor two conditions in one sale, nor profit on what is not in your possession, nor the sale of what is not with you.”
Narrated by Amr b. Shu'ayb
SahihSunan Abi Dawud 3503; Jami' al-Tirmidhi 1232
“Do not sell what is not with you.”
Narrated by Hakim b. Hizam
0712 Claims Examined
The Claims vs. The Text
(al-I'tiradat wa'l-Rudad) — الاعتراضات والردود
Every major claim used to justify modern Islamic banking — directly refuted with Quranic verses and authentic Hadith. Click each to see the ruling.
The Refutation
Rejected — Qur'an 2:275 rejects the equation of trade with interest. Sahih al-Bukhari 2178 / Sahih Muslim 3869 (Muttafaq alayh): 'There is no riba except in nasi'ah (deferment).' Deferment is the essence of modern financing. Qur'an 2:279 limits recovery to principal alone (ru'us amwalikum).
The Refutation
Rejected — guaranteed markup over cost is guaranteed excess over capital; violates ru'us amwalikum (2:279). Violates 'do not sell what you do not possess' (Sahih, Abu Dawud 3503).
The Refutation
Rejected — capital-guaranteed mudarabah severs the profit-loss linkage; al-kharaj bi al-daman (Hasan, Abu Dawud 3508). A 'mudarabah' that guarantees principal is a loan with benefit — riba per Bukhari 2178 / Muslim 3869.
The Refutation
Rejected — bank bears no genuine ownership risk; rent without risk-bearing is consumption of wealth bi'l-batil (4:29). Nominal title without possession is invalid.
The Refutation
Rejected — four-stage revelation culminating in war-declaration (2:279) admits no circumvention. Umar testified the Prophet died before explaining all details (Sahih Muslim).
The Refutation
Rejected — riba IS zulm (2:279, 4:161); justice is divinely instituted via the Mizan (57:25), not subjective. Allah has forbidden zulm for Himself (Hadith Qudsi, Sahih Muslim).
The Refutation
Rejected — asbab al-nuzul (al-Baghawi) confirm the verse addresses pre-agreed debt-doubling at inception. The Prophet abolished ALL riba categorically (Sahih Muslim 1218).
The Refutation
Rejected — pedagogical complexity across two decades of revelation (30:39 -> 4:161 -> 3:130 -> 2:275-279) does not equal textual ambiguity. The core prohibition is explicit.
The Refutation
Rejected — darurah consumes only what is strictly necessary; Islamic banking is a preference, not survival. No darurah overrides a war-declaration from Allah and His Messenger (2:279).
The Refutation
Rejected — temporary title without risk-bearing is form without substance. La riba illa fi al-nasi'ah (Sahih, Bukhari 2178 / Muslim 3869). Two prices (cash vs credit) in one transaction is riba (Hasan, Abu Dawud 3461).
The Refutation
Rejected — gold-for-gold and silver-for-silver are monetized transactions; the hadith (Sahih, Muslim 1587) establishes riba al-fadl as an objective prohibition regardless of medium.
The Refutation
Rejected — form does not override substance; identical cash flows expose identical riba substance. Severity precludes all stratagems (Sahih, Bukhari 2766 / Muslim 89).
08Verses
The War of Allah
(Harb Allah) — حرب الله
Swipe or scroll through the foundational Quranic verses and Sahih Hadith that address every banking structure.
“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, 'Trade is [just] like interest.' But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] — those are the companions of the Fire; they will abide eternally therein.”
“Indeed, those who believe and do righteous deeds and establish prayer and give zakah will have their reward with their Lord, and there will be no fear concerning them, nor will they grieve.”
“And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal — [thus] you do no wrong, nor are you wronged.”
“And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew.”
“For wrongdoing on the part of the Jews, We made unlawful for them [certain] good foods which had been lawful to them, and for their averting from the way of Allah many [people]. And [for] their taking of usury while they had been forbidden from it, and their consuming of the people's wealth unjustly. And we have prepared for the disbelievers among them a painful punishment.”
“And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah, desiring the countenance of Allah — those are the multipliers.”
HadithSahih al-Bukhari / Sahih Muslim 2178 / 3869Sahih (Muttafaq alayh)
“There is no riba except in nasi'ah (deferment).”
Narrated by Usamah ibn Zayd
HadithSahih Muslim 1598Sahih
“The Messenger of Allah (peace be upon him) cursed the one who consumes riba, the one who pays it, the one who records it, and its two witnesses. And he said: They are all equal.”
Narrated by Jabir b. Abdullah
HadithSahih al-Bukhari 2086Sahih
“The Prophet (peace be upon him) forbade the price of a dog, the price of blood, the lady-tattooist and the tattooed lady, the consumer of riba and the giver of riba, and he cursed the maker of images.”
Narrated by Abu Juhayfah
HadithSahih Muslim 1584Sahih
“The Messenger of Allah (peace be upon him) said: Do not sell gold for gold except like for like, and do not make one greater than the other; and do not sell silver for silver except like for like, and do not make one greater than the other; and do not sell that which is absent of it for that which is present.”
Narrated by Abu Sa'id al-Khudri
HadithSahih Muslim 1587Sahih
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt — like for like, equal for equal, hand to hand. If these categories differ, then sell as you wish, provided it is hand to hand.”
Narrated by Ubadah b. al-Samit
HadithSahih al-Bukhari 3814Sahih
“You are in a land in which riba is widespread. If you have a right [a debt] upon a man, and he presents to you a load of straw, or a load of barley, or a load of fodder, then do not take it, for indeed it is riba.”
Narrated by Abu Burda
HadithMusnad Ahmad 21957Sahih (graded Sahih by al-Albani, Sahih al-Jami' 3375)
“One dirham of riba which a man consumes knowingly is worse with Allah than thirty-six acts of fornication.”
Narrated by Abdullah b. Hanzalah (Ghasil al-Mala'ikah)
HadithSunan Ibn Majah 2274Sahih (graded Sahih by al-Albani, Sahih Ibn Majah)
“Riba is seventy-three doors. The least of them is the like of a man having intercourse with his mother. And the worst of riba is the violation of a Muslim's honour.”
Narrated by Abu Hurayrah
09Interactive Scenario Explorer
What About Me?
Real situations that real Muslims face every day. Click your situation to see what the Quran and Sahih Hadith say about it.
All evidence drawn from Sahih al-Bukhari, Sahih Muslim, Sunan Abi Dawud, Jami' al-Tirmidhi, and other authenticated sources.
10The Conclusion
The Textual Verdict
(al-Hukm al-Nassiy) — الحكم النصي
The verses and Hadiths reproduced in full above — all of them Sahih or Hasan in grading — address every load-bearing argument upon which the contemporary Islamic banking model has been constructed.
The textual prohibitions encompassed are not limited to a particular Jahiliyyah form of loan with interest; they reach the prohibition of:
Combining a loan with a sale
Two sales in one
Two conditions in one sale
Profit on what is not under one's liability (daman)
Selling what one does not possess
Benefit accruing to a creditor from a debtor by reason of the debt
Any increase imposed on the principal
Stratagems by which prohibited transactions are made formally lawful
Each prohibition, severally and jointly, is engaged by the structures upon which contemporary Islamic banking operates. The verses and Hadiths stand on their own.
Summary of Refutations
ProductPrincipal RefutationGrade
MurabahahBukhari 2178 / Muslim 3869; Tirmidhi 1231; Abu Dawud 3461, 3504Sahih Muttafaq / Hasan Sahih / Hasan
TawarruqAbu Dawud 3462; Ahmad 4825Sahih (Albani)
SukukTirmidhi 1285; Muslim 1513, 1598Hasan Sahih / Sahih
Ijarah Muntahiyah bi-l-TamlikAbu Dawud 3504; Tirmidhi 1231Hasan Sahih
Diminishing MusharakahTirmidhi 1285; Abu Dawud 3504, 3383; Bukhari 3814Hasan Sahih / Sahih
LIBOR BenchmarkingBukhari 2051 / Muslim 1599; Ibn Majah 2278Sahih
Sequential Dual ContractsBukhari 1 / Muslim 1907; Tirmidhi 1231Sahih / Hasan Sahih
Late-Payment PenaltyQuran 2:278-280; Bukhari 3814Quran / Sahih
Fiat Currency ProductsMuslim 1587, 1584, 1586, 1588Sahih
Hiyal-Based StructuringBukhari 2236 / Muslim 1581; Quran 7:163-166Sahih / Quran
Guarantee & LC FeesAbu Dawud 3504; Bukhari 3814Hasan Sahih / Sahih
Mudarabah Without LossBukhari 2178 / Muslim 3869; Tirmidhi 1285; Bukhari 3814Sahih Muttafaq / Hasan Sahih / Sahih
Bank as Asset TraderAbu Dawud 3503; Bukhari 2126; Muslim 1525, 1526Sahih
Parallel SalamBukhari 2240; Abu Dawud 3461, 3504, 3503Sahih / Hasan
Authentication Methodology
In compiling the textual evidence above, the following authentication standard was applied:
Tier 1
Universally accepted Sahih: All narrations from Sahih al-Bukhari and Sahih Muslim are included without further authentication, in accordance with the consensus of the ummah.
Tier 2
Sahih / Hasan by the compiler: Narrations from the Sunan al-Arba'ah are included only where the compiler himself explicitly graded them as Hasan or Sahih.
Tier 3
Contemporary verification: Where Tier 1 and Tier 2 do not apply, the grading of Shaykh Muhammad Nasir al-Din al-Albani was consulted.
Excluded
All narrations graded da'if (weak) have been removed. Mawquf (Companion-attributed) reports have been excluded.
Content sourced exclusively from the Quran and authenticated Hadith.
Sahih al-Bukhari, Sahih Muslim, Sunan Abi Dawud, Jami' al-Tirmidhi, Sunan al-Nasa'i, Sunan Ibn Majah, Musnad Ahmad.