Is the ‘Riba’ Identical to Bank Interest? Towards Understanding the Quranic Term ‘Ar-Riba’

Abstract

The Quranic term ‘ar-Riba’ is not explicitly defined in the Holy Quran or the Sunnah but has distinct characteristics in Quranic verses. It originates from the Arabic term ‘Raba,’ meaning ‘to grow’ or ‘to increase.’ Traditionalists and revivalists, adhering strictly to this literal meaning, equate ‘ar-Riba’ with contemporary bank interest, arguing that it is prohibited. This study challenges such interpretations by analyzing English translations of the Holy Quran from 1649 to 2023 using a quantitative approach with SAS. The findings indicate that the most accurate English equivalent of ‘ar-Riba’ is ‘usury,’ which inherently implies exploitation. Without this exploitative nature, equating ‘ar-Riba’ with bank interest is misleading. To reinforce these findings, the study examines Quranic commentaries, which align with this interpretation. Despite this, traditionalists, revivalists, and certain academic scholars strongly advocate for Islamic Banking and Finance (IBF), even though IBF institutions can be more costly than conventional banks. The $4 trillion IBF industry is largely based on the assumption that ‘ar-Riba’ equates to bank interest. This paper critically evaluates the exploitative elements of ‘ar-Riba’ through the lens of social justice theory and scrutinizes IBF institutions using legitimacy theory. In conclusion, the study urges scholars to avoid literal translations of ‘ar-Riba,’ as Quranic verses have historically been interpreted within their contextual framework.