Riba Al Fadl: Prof. Dr. Muhammad Hanif Akhtar

Riba Al Fadl
Prof. Dr. Muhammad Hanif Akhtar

What is Riba Al Fadl?
• Also known as Riba Al Hadees, as its prohibition has been
established on Sunnah.
• Riba Al Fadl actually means; excess which is taken in exchange
of specific homogenous commodities and encountered in their
hand-to-hand purchase & sale.
Hadith
• The Prophet said, "Sell gold in exchange of equivalent gold, sell silver in
exchange of equivalent silver, sell dates in exchange of equivalent dates,
sell wheat in exchange of equivalent wheat, sell salt in exchange of
equivalent salt, sell barley in exchange of equivalent barley, but if a
person transacts in excess, it will be usury (Riba). However, sell gold for
silver anyway you please on the condition it is hand-to-hand (spot) and
sell barley for date anyway you please on the condition it is hand-to-hand
(spot).”
The six commodities (Amwal-e-Ribawiya).
• 1) Gold
• 2) Silver
• 3) Dates
• 4) Wheat
• 5) Salt
• 6) Barley
These six commodities can only be bought and sold in equal quantities and on spot. An
unequal sale or a deferred sale of these commodities will constitute Riba.
Different School of thoughts.
• 1. Imam Abu Hanifa: sees only two common characteristics namely:
• a) Weight
• b) Volume
• Meaning all the six goods are sold by either weight or volume. Therefore
all those commodities, which have weight or volume and are being
exchanged, with the same commodity will fall under the rules of Riba Al
Fadl.
• 2. Imam Shafi: The two characteristics observed are:
• a) Medium of Exchange or
• b) Eatable
• Therefore this law will apply on everything edible or having the natural ability of
becoming a medium of exchange (currency).
• 3. Imam Maalik: identified the following two characteristics:
• 1) Eatables and
• 2) Preservable
• 4. Imam Ahmad Bin Hanbal:
• a) conforms to the opinion of Imam Abu Hanifa.
• b) conforms to the opinion of Imam Shafai.
• c) includes three characteristics at the same time namely edible, weight and volume.
An overview of all school of thoughts.
• It has been declared by Islamic scholars that if a commodity bears both of the two
characteristics namely; it has weight and can be used as a medium of exchange, then
the following two kinds of transactions are not allowed when the same goods are
being exchanged:
• A deferred sale of goods (A deferred sale is when the goods are returned/or paid for after some
undetermined period)
• A sale of unequal quantities of the same goods
• However, when only one of the two characteristics is present to term the sale as Riba
Al Fadl, then exchange of unequal goods are allowed but deferred sale is not allowed.
Wisdom behind the prohibition of Riba Al
Fadl.
• To ensure justice and remove all forms of exploitation through ‘unfair’
exchanges,
• to close all back-doors to Riba An Nasiyah because in the Islamic
Shariah, anything that serves as a means to the unlawful is also unlawful.
The laws of Riba Al Fadl.
• It is evident that the exchange of homogeneous commodities will only be required
if they differ in quality and characteristic.
• The exchange of any of the six commodities with itself but differing in
types/quality, even when considering market rate, is prohibited in unequal amount.
• The reason being that by exchanging these commodities in unequal amounts there
is a fear of developing the rationale in a person eventually leading to interest
(sood) based earnings and illegal benefits. Such transactions might also lead to
defrauding.
Shariah law.
• The Shariah has made it a law that exchange of any of the six commodities with
itself but differing in quality, is allowed in only one of the following forms:
• the commodities should be exchanged in equal weight and volume.
• A person should sell his commodity against cash at the market value and buy someone else’s
commodity in exchange of cash proceeds at the market value.
• Different commodities can be unequally exchanged but deferred payment is not allowed.
Shariah law.
• One way includes a person having raw material and someone else having
a product made of that material and both decide to exchange their product.
In this case, one has to see whether:
• The characteristics of this product have been totally changed by the industry.
• Little difference has been made to its original form after its formulation.
Examples of Riba Alfadl
• A shrewd trader may claim that a kilogram of a specific brand of wheat is
equivalent to 3 kilograms of the other kind because of the excellence of its
quality, or this unique piece of gold ornament is equivalent in value to twice its
weight in gold; in such transactions there undoubtedly is defrauding of people
and harm to them.
• One kg wheat can be sold against 2 kg date or one gram of gold can be
exchanged against 4 grams of silver on the condition that they are spot
transactions reason being that such a transaction will surely be carried on the
market rate.
Concluding remarks
• The general conditions of sale should be borne in mind while making a trade
transaction so that the goods are specified in addition to the cash aspect of the
transaction.
• The correct way of specifying is that gold and silver should be under the
possession of the sellers or delivered at the place of contract because both goods
have the original (natural) price, which cannot be specified until they are delivered.
• This rule applies to only exchange of gold and silver. Other goods can be
exchanged against each other without delivery and can be specified any other way
but will be restricted to cash transaction.
Concluding remarks
• The Hanafi jurists maintain that in case of commodities that weigh or
measure, it is illegal to transact unequally or on credit.
• But in case of different commodities unequal exchange is legal but credit
remains illegal; the transaction in this case too should be spot.
Conditions of sale example.
• Zaid made a spot sale of one kg wheat to Bakar with 2 kg salt against
future delivery after having identified their goods, this transaction is
allowed in Shariah since it meets both conditions: the transaction is on
spot and it is also specified.
• However, if Zaid was selling one tola gold to Bakar against 40 tola silver,
then it is necessary that both take delivery of their purchased goods at the
place of contract because without delivery, goods cannot be specified.
Thank you


Riba Al Fadl: Prof. Dr. Muhammad Hanif Akhtar

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