and for their barring many people from the path of Allah, and for their taking usury although they had been forbidden it, and for their consuming people’s wealth without right. And for the disbelievers among them We have prepared a painful punishment.” (Q 4:160–161)

The wisdom behind the prohibition of usury is that it entails devouring people’s wealth unlawfully, for the usurer collects an increment while those who pay it receive nothing in return. It also harms the poor and the needy by multiplying their debts when they are unable to repay; it severs mutual benevolence among people, closes the door to the interest-free benevolent loan, and opens the door to interest-bearing loans that burden the poor. In addition, it paralyzes commerce, trade, crafts, and industries—without which the world’s affairs cannot be properly ordered—for once a money-lender can increase his wealth effortlessly through interest, he will not seek the more demanding avenues of lawful earning. Allah, Exalted is He, has ordained that people’s dealings rest on each party benefiting from the other in exchange for a service rendered or a commodity delivered; usury is bereft of this, for it is merely one party handing over an increased sum of money to another without any counter-value in goods or labor.

Linguistically, riba means increase. In the Sacred Law it refers to an increase confined to certain specified commodities and is divided into two categories: riba al-nasiʾah (usury of deferment) and riba al-faḍl (usury of surplus).

Explanation of riba al-nasiʾah:

The term riba al-nasiʾah is derived from the root nasaʾa, meaning delay or deferment, and it occurs in two forms: