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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
has been build up, and this concept is widely accepted and recognized. According to this concept
riba is that excess amount of money which a creditor receives from the debtor on redemption of
his / her loan and this additional amount should be the part of agreement. A prominent Muslim
scholar has defined it in these words riba is the loan given for a specified period on condition
that, on expiry of the period the borrower will pay it with some excess amount. Al-Jasses Abu
Baker (1935) p. 470. It means that riba is possible only in debt transactions with that this
addition should be part of agreement and received on redemption of loan, S. Abul A’ la Maududi
(1997) p. 20. It doesn’t matter how small or large this excess amount may be and what is the
purpose of loan and where this transaction has taken place PLD (1992) p.1.
According to this school of thought just excess amount on any debt transaction is termed as riba,
whereas the reward of all other assets like houses, machines, offices and shops etc., is considered
as lawful in the form of rent, M.N. Siddiqui (1968) pp.126-130. This situation gives a special
status to cash and bifurcate it from other assets, because according to this concept rent of cash
(which is one form of asset) is considered as unlawful and rent of rest of the assets is assumed to
be lawful. This situation certainly raises questions about this special treatment. The supporters of
this concept produce five reasons, for its justification. These arguments are as follows:
1.1 Depreciation
It is said that, depreciation is the main cause of rent. It is claimed that, due to depreciation
rent of all assets, becomes lawful. All those items which lose their value due to use can be given
on rent, whereas the consumable things cannot be given on rent, M.N. Siddiqui (1968) p.p. 178-
181.
1.2 Changes in Ownership
It is assumed that rent of all those items is lawful whose ownership is not changed during
transaction, e.g. ownership of all assets like houses, machines and offices etc., is not changed
during the transaction hence these assets can be given on rent. Whereas in case of cash when it is
given to others as loan then its ownership is changed hence its rent cannot be justified A.R.
Killani (1991) p. 96.
1.3 Changes in Nature
Third arguments in this regard is that, rent of all those items is lawful which kept intact
their nature during period of rent, e.g. machines, houses and offices, etc., remains in the same
condition before and after letting, hence their rent is lawful. On the other hand if the situation is
reverse then the rent of such items is prohibited, M. Taqi Usmani (1999)p.47.
1.4 Concept of Badal (Exchange)
A big argument in the favour of rent is badal. Under this concept it is agreed that since in
case of letting any asset e.g. machines, houses, building, etc, the person who let these items
receives rent in the form of cash and in exchange the person who hired these items get the
temporary possession of these things. In this way they exchange the items or there is badal in the
transaction. On the other hands in case of debt there is not any badal creditor pays a certain
amount to debtor in the form of debt and did not receive anything in exchange, it means badal
(exchange) is not completed hence this transaction is unlawful.
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