Changing money (same currency)

Suppose a person has, for example, a currency note with a face value of 50, and he wants to change it into five 10’s, and asks another person to provide the change for him, but this person has only three 10’s. Is it permitted for the first person (i.e. the one who wants the change) to give him the 50 and take the three 10’s, leaving the remaining 20 as a loan to be collected by him later?

Since such a practice is widespread nowadays, most people would be taken aback if they are informed that this is riba (usury). The reason (for such a practice being usury) is that the amount each one of the two took is different, whereas the condition in selling and changing currency notes is that if they belong to the same type of currency (e.g., dollars in exchange for dollars, or dinars in exchange for dinars, etc.) then they must be the same in monetary value and exchanged “cash down” (hand in hand, not deferred). This is because the Prophet (peace and blessings of Allaah be upon him) said:

“Do not sell gold for gold unless the two are equivalent, and do not sell a lesser amount for a greater amount or vice versa. Do not sell silver for silver unless the two are equivalent, and do not sell a lesser amount for a greater amount or vice versa. Do not sell gold and silver that is not present at the moment of exchange (i.e. a deferred amount) for gold or silver that is present.” (Saheeh al-Bukhaari, No. 2068)

This hadeeth prohibits both riba al-fadl (usury of surplus) and riba an-nasee’ah (usury of credit or delayed payment).

So the way for people to avoid this, as they are always in need of exchanging currency notes, is as follows: the one who has a currency note of 50 should give it to the other as collateral and take the 30 from him as a loan. Later he should repay the loan and take his 50 back. (N.B. Although the net result may appear the same, there is a difference in the way the transaction takes place.)

(From the oral fataawa of Shaykh ‘Abd al-‘Azeez ibn Baaz).

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