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Interest (Usury or Riba) in Islam

Whether it is one per cent or 50 per cent, Islam forbids taking of interest in all its forms.

In Islam, interest comes under the category of “riba”, or usury. A Muslim is not allowed to receive, pay or witness interest payments. However, the concept of interest has been twisted and abused to such an extent that many Muslim countries have allowed financial institutions to engage in interest-based activities.

Muslims should be aware of the seriousness of interest and other forms of riba, by referring back to Allah and his messenger, Muhammad (may Allah’s peace and blessings be upon him).

  • War – Allah has declared war on those who consume interest. In Surah al-Baqarah, verses 278-27 of the Quran, He says: “O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (usury) (from now onward), if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger . . .”
  • The scope of forbidding Interest – the Prophet has clearly told us those who are parties to an interest-based contract. Jaabir reported that the Prophet cursed “the one who consumes riba, the one who gives it to others, the one who writes it down and the one who witnesses it. They are all the same.” (Muslim, 3/1219).
  • Trade – Allah has made a clear distinction between riba and trade, to quash the arguments of those who say they are merely engaging in trade. In the Quran, surah al-Baqarah, verse 275, He says: Those who eat riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: ‘Trading is only like riba,’ whereas Allah has permitted trading and forbidden riba. So whosoever receives an admonition from his Lord and stops eating riba shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to riba), such are the dwellers of the Fire - they will abide therein.”


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