PROHIBITION OF INTEREST
(a) Definition of Interest:
Interest is essentially the price of capital. In the Holy Quran, interest is referred to as "Riba." The
word "Riba" denotes increase, growth, addition, excess, or raise. Allah emphasizes in the Quran
that Allah deprives interest of all blessings and encourages charity. These verses clarify that any
increase in capital is termed "Riba." However, not all increases are deemed unlawful, as capital
also grows in trade. The Quran specifically prohibits a certain type of increase, hence the term
"Riba." This term was recognized even before Islam, in this period people regarded interest law
full like the profit in the trade
(B) Understanding Riba or Interest in Islam:
When someone lends money to another with the condition that they'll receive more back after a
certain time, that extra amount is called interest. It's essentially the price for borrowing the money.
Interest is when a fixed sum is charged on loaned money for a specific period, making it an interest-
based transaction. This extra charge over the loaned amount is known as interest. This concept of
interest applies regardless of whether the loan is for investment or personal use, and whether the
borrower is wealthy or not. In essence, any transaction with three elements—addition to the capital,
a fixed additional amount based on the loan period, and this condition being integral to the
transaction—is considered interest-based and thus, prohibited.
(d) Types of Interest:
(a) Definition of Interest:
Interest is essentially the price of capital. In the Holy Quran, interest is referred to as "Riba." The
word "Riba" denotes increase, growth, addition, excess, or raise. Allah emphasizes in the Quran
that Allah deprives interest of all blessings and encourages charity. These verses clarify that any
increase in capital is termed "Riba." However, not all increases are deemed unlawful, as capital
also grows in trade. The Quran specifically prohibits a certain type of increase, hence the term
"Riba." This term was recognized even before Islam, in this period people regarded interest law
full like the profit in the trade
(B) Understanding Riba or Interest in Islam:
When someone lends money to another with the condition that they'll receive more back after a
certain time, that extra amount is called interest. It's essentially the price for borrowing the money.
Interest is when a fixed sum is charged on loaned money for a specific period, making it an interest-
based transaction. This extra charge over the loaned amount is known as interest. This concept of
interest applies regardless of whether the loan is for investment or personal use, and whether the
borrower is wealthy or not. In essence, any transaction with three elements—addition to the capital,
a fixed additional amount based on the loan period, and this condition being integral to the
transaction—is considered interest-based and thus, prohibited.
(d) Types of Interest:
