Interest, known as “riba” in Islam, has been explicitly prohibited in the Quran and Hadiths (sayings and actions of Prophet Muhammad, peace be upon him).
The concept of riba extends beyond traditional usury to encompass any unjust gain derived from financial transactions.
In this article, we will explore the meaning of riba, its prohibition in Islam, and the evidence provided in the Quran and Hadiths.
Glory to Allah.

Riba: What is it?
Riba denotes a rise in a specific item. The word comes from a root that means expansion or growth. According to one reading of the verse [ar-Rum 30:39], Allah, may He be glorified, states:
“Whatever you pay as interest so that it may increase (li yarbu) the wealth of people does not increase (fa la yarbu) in the sight of Allah.” In other words, it does not rise in status before Allah.
The history of Riba
The origin of riba dates back to at the time of Jahiliyyah people. When a debt was due, they would tell the borrower to give them the hundred that was due right away or raise it to one hundred and fifty (and pay later).
They would then demand payment of either one hundred and fifty (now) or two hundred (and pay later) when the one hundred and fifty were due, and then so on.

Defining Riba:
Riba, in its simplest form, refers to an increase or excess that is added to the principal amount in a financial transaction. This increase is considered unjust and exploitative in Islam. There are two main types of riba: riba al-fadl (excess in kind) and riba al-nasi’ah (excess in delay).
The two types of Riba Explained with Example
- Riba al-Fadl (Excess in Kind):
- Definition: This type of riba involves individuals exchanging goods of the same kind but in unequal quantities.
- Example: If two individuals exchange gold, the transaction becomes impermissible if one party receives more gold than the other for the same value.
- Riba al-Nasi’ah (Excess in Delay or Time):
- Definition: Riba al-nasi’ah occurs when additional amounts or interest are charged for the delay in the repayment of a debt.
- Example: Charging extra money for a loan or extending the repayment period with an additional financial burden is considered riba al-nasi’ah.
It’s crucial to note that these classifications cover various manifestations of interest, whether in the context of financial transactions, loans, or exchanges.
The prohibition of riba in Islam is comprehensive, aiming to ensure fairness, equality, and ethical conduct in economic dealings.
Clear guidance from the Quran and Hadiths directs followers to avoid all forms of riba, promoting economic justice and social equity.

Prohibition in the Quran:
The prohibition of riba is explicitly mentioned in several verses of the Quran. One of the key verses is found in Surah Al-Baqarah (2:275-279), where Allah says:
“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is just like interest.’ But Allah has permitted trade and has forbidden interest.
So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein.”
This verse emphasizes the stark difference between trade, which is permissible, and interest, which is forbidden. It also warns of severe consequences for those who persist in engaging with riba.
Prohibition in Hadiths:
The prohibition of riba is further reinforced by the sayings of Prophet Muhammad, peace be upon him. Numerous hadiths highlight the gravity of dealing with interest and its detrimental impact on both individuals and society.
The Prophet, peace be upon him, said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, same for same, hand to hand. If the types are different, sell as you wish, provided that the exchange is hand to hand.
But if it is delayed, then sell however you like, as long as it is a spot transaction.” (Sahih Muslim)

This hadith emphasizes the principle of equality and immediacy in transactions, discouraging any form of delay or inequality that might lead to the imposition of interest.
Conclusion:
Interest, or riba, is unequivocally prohibited in Islam due to its unjust nature and potential for exploitation.
The Quran and Hadiths provide clear guidance on the prohibition of riba,emphasizing the importance of fair and just financial transactions in a society guided by Islamic principles.
Muslims are encouraged to seek alternative financial arrangements that adhere to these principles, fostering economic justice and ethical business practices.
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