Riba (Ψ±Ψ¨Ψ§) means "increase" β any unjustified excess in a loan or exchange. It is among the most strictly forbidden things in Islam.
Allah says: "Allah has permitted trade and forbidden riba." (2:275)
"O you who believe! Fear Allah and give up what remains of riba, if you should be believers. And if you do not, then be informed of a war from Allah and His Messenger." (2:278-279)
These are some of the strongest words in the entire Quran. The Prophet ο·Ί cursed the one who takes riba, the one who pays it, the one who records it, and the two witnesses to it β saying they are all equal in sin.
Riba al-Nasiah (Interest on Debt)
The most common form today. You borrow Β£1,000 and repay Β£1,100. The extra Β£100 is riba.
Examples: bank loans, mortgages, credit card interest, government bonds, savings accounts that pay interest.
Riba al-Fadl (Excess in Exchange)
Exchanging the same commodity in unequal amounts simultaneously. E.g., 100g gold for 110g gold β prohibited even without delay.
1. It creates wealth from nothing β money should grow through real economic activity, not mere time
2. It concentrates wealth β the rich get richer simply by lending; the poor are burdened with growing debt
3. It disconnects risk from reward β the lender profits regardless of whether the borrower succeeds or fails
4. It leads to exploitation β historically and today, debt slavery is a consequence of interest systems
β Conventional bank mortgage
β Credit card interest charges
β Personal loans with interest
β Fixed-rate savings bonds
β Most government securities
β Diminishing Musharakah (Islamic mortgage)
β Murabaha financing
β Profit-sharing bank accounts