Reinterpreting the Ratio legis of the Prohibition of Usury

M. Anton Athoillah, M. Anton and Sofyan Al-Hakim, Sofyan (2013) Reinterpreting the Ratio legis of the Prohibition of Usury. Middle-East Journal of Scientific Research, 14 (10). pp. 1390-1400. ISSN 1990-9233

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Abstract

One of the differences of the sharia finance and the conventional counterpart is that the former doesn’t allow any kinds of interest. Interests applied in the conventional finance are identified as usury. Whatever the size of a debt is, if the payment is calculated based on the quantity of the debt and the duration of the payment, any payment excess is categorized as usury and it is forbidden. Descriptively, upon examining classic and contemporary sources, the interpretation of usuryis not singular. Classical scholars have different opinions on the ratio legis (‘illah) of the sinfulness of usury and the kinds of forbidden usury. The usury definition developed by the contemporary financial institutions is taken from some of the many scholars’ opinions. The argument being chosen tends to be legal-formal, so it also tends to ignore the deepest essence of the usury prohibition, that is to prevent exploiting attitudes (dhulm). This legal-formal approach opens possibilities for sharia financial products to have exploitative characteristics. Taking these facts as background, this essay proposes a reinterpretation of usury, not only seen as a loan interest, but as a process of the embodiment of sharia financial institution that is just and humanistic. Key words:Ratio-legis (‘illah) Usury Interest Profit and loss sharing

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