Ruling on Bank Interest (A Comparative Study between Islamic Jurisprudence and Positive Law)

Abstract

This study examines the legal status of bank interest by defining the concept of *riba* (usury/interest) within both Islamic jurisprudence (*fiqh*) and Libyan law, highlighting their points of convergence and divergence. The study concludes that Islamic Sharia prohibits *riba* in all its forms and manifestations, as established by the Holy Quran, the Prophetic Sunnah, and the consensus (*ijma'*) of the Muslim community. Furthermore, the majority of contemporary Islamic jurists classify bank interest as *riba al-nasi'ah* (interest-based delay), which is religiously prohibited. The study also traces the evolution of the legal regulation of interest in Libya—from its initial permissibility under the Civil Code, through its restriction and prohibition under Law No. (1) of 2013, to the legislative amendment introduced by Law No. (35) of 2023, which established a dual banking system. The research reveals a discrepancy between certain judicial practices and the jurisprudential classification of interest—notably regarding "late-payment interest" (*fawa'id ta'khiriyyah*), which the Supreme Court has, in some instances, characterized as compensation for damages. The study concludes by emphasizing the need to develop effective Islamic banking alternatives and to achieve greater alignment between financial legislation and the provisions of Islamic Sharia.