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Those who devour riba do not stand except as one whom the Shaitaan has driven to insanity with (his) touch. That is so because they say: ‘Trade is only like riba’, whereas Allah has made lawful trade and has made riba haraam.” (Qur’aan, Surah Baqarah, Aayat 275)


“Allah eliminates riba and He increases (the barakaat of) Sadaqaat (Charities). And Allah does not love any ingrate sinner.” (Qur’aan, Surah Baqarah, Aayat 276)


“O People of Imaan! Fear Allah (in the matter of riba), and shun (waive) what remains of riba (charges), if indeed you are Mu’mineen.” (Qur’aan, Surah Baqarah, Aayat 277) 


And, if you do not (shun riba), then take notice (of an ultimatum of) war from Allah and His Rasool. Then, if you repent (and desist), then for you is the capital amounts of your wealth. You shall not oppress (the hard-pressed with interest), and you will not be dealt with oppressively (with Allah’s Punishment).” (Qur’aan, Surah Baqarah, Aayat 279


The Cover Question:

Is it permissible to charge riba (interest) on a late-payment made by a debtor? The debtor is unable to pay his instalment on due date. The standard practice of the kuffaar capitalist system of banks and business enterprises is to charge a percentage of the instalment as a penalty for late payment. Is this riba (interest) lawful in the divine immutable Shariah of the Qur’aan and Sunnah?

The Reply:

The four Qur’aanic aayaat appearing on page 2 [above] constitute an adequate response to this question. Further elucidation for the prohibition of this form and all forms of riba is really superfluous. The Sunnah and the 14 century Ijma’ (Consensus) of the Ummah on the prohibition of all forms of riba make it unnecessary for elaborating what is obvious and self-evident in terms of the Shariah of the Qur’aan. The straightforward answer is that it is haraam to charge any riba on late payments of instalments.


The present discussion in this booklet has been prompted by the view of permissibility of riba on late payments —the view which Hadhrat Mufti Taqi Uthmaani Saheb had published in his book, An Introduction to ISLAMIC FINANCE.

In his article captioned: Penalty of Default, Hadhrat Mufti Saheb propounded the view of permissibility. For this permissibility, Hadhrat Mufti Taqi Saheb resorted to a labirynthal discussion in which he presented extremely far-fetched arguments to render such riba permissible. In view of the gravity of the error of Hadhrat Mufti Taqi Uthmaani Saheb pertaining to the exceptionally grave crime and sin of riba, we deem it necessary to respond and to state the correct view of the Shariah.

Pork, wine, fornication, shirk and riba are such evils on whose prohibition the Ummah never differed. Every Muslim, be he illiterate, as long as he is not a lost modernist, knows and understands the prohibition of these evils. It is only the influence of the western capitalist system which has induced modernist Muslims and those who consort with them to soften the attitude against Islam’s harshness in prohibiting riba. Muslim modernists who have acquired credentials in western secular institutions have set themselves up as ‘authorities’ of the Shariah which they subject to their whimsical interpretations which are invariably devoid of Shar’i substance. They are perennially engaged in the baseless pursuit of finding Qur’aanic and Sunnah credibility and acceptance for all practices of the capitalist economic system.

This pernicious exercise of the modernists has gained some momentum in recent years by virtue of the association and support of some Ulama. This is a destructive trend which threatens to scuttle the immutable Shariah of Allah Ta’ala. The process of erosion of the Shariah has been subtly initiated and is being subtly pursued by highlighting the names of prominent Ulama who we believe have failed to understand and detect the plot which has been organized to dig the foundations of Islam. The plot envisages the effecting of gradual change by abrogating the Ahkaam of Islam while retaining the technical names or by labelling the new haraam mutants with terms which are designed to lull unwary Muslims into acceptance.

This short treatise [“The Penalty of Default”] is an attempt in the endeavour to stop the process of erosion of the Deen of Allah Ta’ala. By the fadhl of Allah and the taufeeq He bestows, we present here the Shar’i arguments in refutation of the view of permissibility of the riba penalty which Hadhrat Mufti Taqi Uthmaani Saheb has erroneously expounded. And, hidaayat comes from only Allah Azza Wa Jal.

[Maulana A S Desai, Mujlisul Ulama]


Penalty of Default – Part One

Penalty of Default – Part Two

←Back to Section on Mufti Taqi Saheb’s Serious Error on “Islamic” Banking

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