Riba and why we avoid it
What riba means, the Quranic basis for its prohibition, and how it shapes every contract we run.
Updated
Riba is any predetermined increase charged on a loan of money for the mere fact of deferment. Its prohibition is the single most consequential principle in our work: it rules out interest-bearing lending entirely and pushes us toward trade-based and partnership-based contracts.
The pivotal verse draws a sharp line between trade, which is permitted, and riba, which is forbidden.
Arabic text for 2:275 pending verified import.
Those who consume interest cannot stand except as one driven to madness by Satan's touch. That is because they say, "Trade is just like interest." But Allah has permitted trade and forbidden interest…
Al-Baqarah 2:275 · Saheeh International
The prohibition then escalates: believers are told to give up outstanding riba, and warned of the gravity of persisting in it.
Arabic text for 2:278 pending verified import.
O you who have believed, fear Allah and give up what remains due to you of interest, if you should be believers.
Al-Baqarah 2:278 · Saheeh International
Arabic text for 2:279 pending verified import.
And if you do not, then be informed of a war from Allah and His Messenger…
Al-Baqarah 2:279 · Saheeh International
Classical jurists treated the ruling as settled and detailed its scope across the schools.
The prohibition covers both riba of excess (in hand-to-hand exchange of like commodities) and riba of deferment, each with its own conditions drawn from the six-commodities hadith.
For a modern treatment of how these principles translate into contracts, we follow Mufti Taqi Usmani’s framework closely.
References
- Al-Baqarah 2:275-281
- Mufti Taqi Usmani, An Introduction to Islamic Finance
- Ibn Qudamah, al-Mughni