Document Type : Science - Research (Islamic Finance Jurisprudence)

Authors

• Saeid Nazari Tavakkoli ¹
• Mohammad Zobdeh ²

¹ Professor, Department of Jurisprudence and Fundamentals of Law, University of Tehran, Tehran, Iran.

² Ph.D. Student, Department of Jurisprudence and Fundamentals of Islamic Law, Faculty of Theology and Islamic Studies, Tehran of University, Tehran, Iran, guest lecturer at Bozorgmehr University of Qaenat.

Abstract

Introduction: Banks function as financial intermediaries, collecting deposits from financial markets and engaging in monetary resource mobilization and allocation based on interest-bearing loan models. This mechanism prevents the hoarding and inefficient use of individual capital. However, charging bank interest may be equated with usury (ribā) in Islamic jurisprudence, which the Quran explicitly prohibits, and some Muslim jurists consider it a fundamental tenet of Islam. This study seeks to answer whether the prohibition of ribā is limited to financial transactions between individuals (natural persons) or whether it also encompasses bank-customer (natural/legal persons) loan relationships. Specifically, does the Quranic and jurisprudential evidence on ribā apply universally to all entities—private, public, or governmental?

Methods: This research employs a descriptive-analytical methodology, drawing on jurisprudential (fiqh), legal principles (uṣūl al-fiqh), and banking-economic sources through library-based research.

Findings: Citing the "restriction of ribā’s prohibition to private capital" and the "removal of exceptions to ribā’s prohibition," Shahid Motahhari argues that the evidence for ribā’s prohibition pertains only to transactions between individuals. He contends that interest charged by state banks is permissible because the revenue is spent on public welfare, reducing class disparities. Moreover, the stated exceptions to ribā are merely illustrative; thus, bank interest can be exempted from the prohibition.

Conclusion: The Quranic verses prohibiting ribā encompass any financial excess, without distinction between natural or legal persons (private, public, or governmental). No valid justification exists to exempt banking contracts from this prohibition. Furthermore, there is no corroborating evidence that bank interest serves public welfare (maṣlaḥa).

Keywords

• Riba
• Shahid Motahari
• banking activity

Main Subjects

• Islamic Finance Jurisprudence