What Is Riba (Interest)?

Riba (Arabic: ربا) is pronounced RI-ba.

Meaning

The word literally means increase or growth. In Islamic law, riba mainly refers to any guaranteed extra amount a lender demands in return for a loan — what English calls interest or usury. The Qur’an draws a sharp line between the two ways of making money: God has permitted trade and forbidden riba (Qur’an 2:275). In trade, both sides take a risk and exchange real value; in riba, the lender’s profit is fixed, while the borrower carries all the risk.

Islam is not alone in this. The Torah forbids charging interest to a poor fellow Israelite (Exodus 22:25), and for centuries Christian teaching condemned usury too. The concern is the same: lending should help people in need, not trap them in debt.

How Muslims use it

Muslims try to avoid paying or receiving interest, for example in loans, mortgages and savings accounts. Islamic banks offer alternatives such as profit-sharing partnerships, leasing and cost-plus sale contracts. Muslim scholars agree that riba is forbidden, but they discuss how it applies to some modern financial products and to Muslims living where interest-free options are limited — see Where Muslims Differ. Islam also strongly encourages generous, interest-free loans to friends and neighbours who are struggling.

Example

“They saved for a few more years so they could buy their home with an Islamic mortgage and avoid riba.”

For the bigger picture, read Wealth and Money in Islam.