Which kind of financial trading is permissible in Islam?

Sources

• ✓ 4:29 · An-Nisaa

  4:29 · Muhammad Marmaduke Pickthall

  يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوٓا۟ أَمْوَٰلَكُم بَيْنَكُم بِٱلْبَٰطِلِ إِلَّآ أَن تَكُونَ تِجَٰرَةً عَن تَرَاضٍۢ مِّنكُمْ ۚ وَلَا تَقْتُلُوٓا۟ أَنفُسَكُمْ ۚ إِنَّ ٱللَّهَ كَانَ بِكُمْ رَحِيمًۭا

  O ye who believe! Squander not your wealth among yourselves in vanity, except it be a trade by mutual consent, and kill not one another. Lo! Allah is ever Merciful unto you.

• ✓ Tafsir Ibn Kathir on 4:29

  Sunni

  Tafsir Ibn Kathir · 4:29

  Ibn Kathir explains that Allah the Exalted forbids His believing servants from consuming one another's wealth unjustly, by means that are unlawful in Islamic law, such as usury (riba) and gambling, and similar deceptive schemes designed to circumvent the prohibition of riba. He cites Ibn Jarir's narration from Ibn Abbas that this prohibition includes transactions like a man buying a garment but reserving the right to return it along with money if he is dissatisfied, which Allah refers to in this verse. Ibn Abi Hatim reports from Ali ibn Harb that this command is an unaltered, decisive ruling that will stand until the Day of Resurrection. Ali ibn Abi Talhah relays from Ibn Abbas that when this verse was revealed, the Muslims initially thought that since Allah forbade consuming wealth unjustly even among themselves, it would be impermissible even to partake of food at someone else's house. Thus, the next verse about exemption for the blind and others was revealed. Qatadah agrees with this understanding. Regarding the phrase "except that it be a trade by mutual consent among you," Ibn Kathir notes that the word 'trade' here can be read with both nominative and accusative case endings; essentially, it is a categorical exception meaning lawful sales done with mutual agreement are permitted. This clearly excludes all prohibited reasons for owning wealth but allows lawful commerce undertaken by mutual agreement between buyer and seller. He compares this to other divine prohibitions that include exceptions made by God's explicit permission. Ibn Kathir mentions that Imam Shafi'i used this verse as proof that a sale is only valid when both parties consent, as it requires mutual agreement explicitly. However, there was scholarly disagreement—some jurists, including Malik, Abu Hanifa, Ahmad, and their followers, held that barter exchanges (mu'ata) are valid without explicit verbal consent, based on other evidence. Some say consent is implicit in acts in certain circumstances. Mujahid explained the exception here includes both sales and gifts given by mutual consent. Ibn Jarir and others narrate a hadith from the Prophet Muhammad (peace be upon him) stating, "Trade is by mutual agreement and there is the option for both parties after the sale; it is not lawful for a Muslim to deceive another Muslim," presenting this as a broad principle. This hadith further emphasizes that good faith and fairness are essential in trade. Concerning "do not kill yourselves," Ibn Kathir explains that this forbids destroying one’s soul by committing major sins and unlawful behavior, including unjustly consuming others' wealth. Allah's mercy is manifested in His commands and prohibitions for the believers' benefit. He relates the authentic report about Amr ibn al-As, who once prayed in a state of ritual impurity out of fear for his health in very cold weather. He intended to rely on the verse "Do not kill yourselves; indeed, Allah is to you Merciful" and performed dry ablution (tayammum) to pray. The Prophet smiled but did not object, showing the mercy and flexibility in the Shariah. Ibn Mardawayh and others narrate from Abu Hurayrah a hadith warning that suicide leads to severe punishment in Hellfire, emphasizing the grave prohibition against self-harm. Allah further warns that whoever transgresses in forbidden matters unjustly and knowingly will suffer severe punishment in Hellfire, a stern threat to deter sinful indulgence. Then Ibn Kathir elaborates on the phrase applying to avoiding major sins, explaining that if believers avoid grave sins prohibited by Allah, He will forgive their lesser misdeeds and admit them into honorable entry (Paradise). He supports this by citing early scholars and numerous hadiths enumerating the major sins (kaba'ir), which include associating partners with Allah, unjustly killing, magic, consuming riba, misusing orphan wealth, fleeing battle, slandering chaste believing women, and others. He reports various chains of transmission where the Prophet described seven major sins threatening, and that the list may include more; some traditions mention up to seventy or more major sins. Ibn Abbas and others say that a major sin is any that Allah has warned of with fire, anger, curse, or punishment. Ibn Kathir adds that scholars differ on exact definitions and lists of major sins, but the principle that major sins lead to severe consequences, whereas repentance can remove minor sins, is clear. He provides many hadiths showing the gravity of these sins, the Prophet's repeated emphasis on avoiding them, and the spiritual consequences, including exclusion from Paradise if one dies without repenting from major sins. He mentions that the concept of mutual consent in commerce, forbidding cheating or exploitation, applies throughout the Shariah; unapproved transactions are unlawful. Additionally, he discusses various traditions illustrating Allah's mercy toward those who avoid major sins and uphold acts of worship like prayer, fasting, and zakat, promising Paradise for them. Ibn Kathir cites reports about cursing or insulting a Muslim's parents as a grave sin, equating it with some major sins, and that fighting or cursing Muslims is tantamount to disbelief in some narrations. He also highlights prohibitions against combining prayers without valid reasons, abandoning prayer altogether, despairing of God's mercy, and other major sinful acts detailed in prophetic sayings. The tafsir includes extensive citations of the sayings of the companions and early scholars about major sins, the meanings of the verse, and elaborations on lawful commerce. In summary, this verse forbids unlawfully consuming another's wealth in any illegitimate manner, allows lawful trade based on mutual agreement, forbids self-destruction and other major sins, warns against wrongful transgressions with severe punishment, and encourages avoidance of major sins with the promise of forgiveness for minor wrongs and an honorable place in Paradise. The commentary roots these principles in hadiths, scholarly opinions, and examples from the companions, emphasizing the seriousness of the prohibition and the mercy enclosed in obedience.