Riba al-Nasi'ah
Riba al-nasi'ah is riba arising from deferment: any increase stipulated in return for time on a loan, and the deferral of delivery in an exchange of like commodities that must be settled on the spot.
Also called: riba al-nasiah · riba an-nasiah · deferment riba · riba of delay
This is the form of riba that maps most closely onto conventional interest. Any benefit a lender stipulates in return for allowing time to repay is prohibited, whether it is called interest, a time fee or a penalty that accrues to the lender. It is the reason an Islamic bank cannot simply lend money at a rate.
The same category reaches exchanges. Where two commodities in the same class — gold for silver, or one currency for another — are traded, delivery on both sides must be immediate. Deferring one leg introduces riba al-nasi'ah even if the amounts are fair. That rule is why currency exchange in Islamic finance has to be spot, and why forward foreign-exchange cover is built from a wa'd rather than a forward contract.
In practice
A deferred price in a genuine sale is not riba al-nasi'ah. Selling goods for payment in a year at a higher price than the cash price is permitted; what is prohibited is increasing a debt in return for more time once it exists.
Example
A customer owes an Islamic bank US$50,000 under a murabaha due today and asks for three more months. The bank may grant the extension, but it may not add US$1,000 to the debt for the extra time — that is riba al-nasi'ah.
Commonly confused with
| Term | How it differs |
|---|---|
| Riba al-fadl | Riba al-fadl concerns unequal quantities in a same-kind exchange; riba al-nasi'ah concerns delay. A spot exchange of 10g of gold for 11g of gold is riba al-fadl; an equal exchange with one side delivered next month is riba al-nasi'ah. |
See also
- RibaRiba is the prohibited increase at the centre of Islamic finance: an unjustified excess in a loan or in certain exchanges. It is broader than the English word "interest" and is not limited to excessive rates.
- Riba al-FadlRiba al-fadl is the unlawful excess in a same-kind exchange of specified commodities — originally gold, silver, wheat, barley, dates and salt — which must be traded in equal amounts and hand to hand.
- QabdQabd is possession or control of an asset. Islamic law uses it to decide when a sale is complete, when an asset may be resold, and whether a currency or gold exchange has been settled on the spot as required.
- QardQard is a loan of fungible property — usually money — that the borrower must repay with its equivalent, with no stipulated benefit to the lender. Any benefit the lender requires as a condition of lending raises a riba problem.