Glossary
Riba
رباDefinition
Interest or usury — any predetermined, time-based return on a loan of money or fungible goods.
Riba is one of the most explicitly prohibited transactions in Islamic law, condemned in the Quran (2:275–279) and the Sunnah. It splits into two broad types: riba al-nasi'ah (interest accruing over time on a deferred payment) and riba al-fadl (an unequal exchange of the same ribawi commodity in the same sitting).
In modern finance, riba covers conventional bank interest, credit card interest, overnight swap fees on forex positions, and the interest leg of any margin or financing facility. Removing riba is the central design problem of every Islamic financial product.