Riba, and why it matters
What riba is, the two classical categories, and why the prohibition shapes everything else in this guide.
The prohibition
Riba is usually rendered as interest, though the classical category is wider: an unjustified increase taken in an exchange. The prohibition is stated directly in the Qur'an — 2:275-279 is the passage most often cited — and it is one of the few commercial rules on which the schools do not substantially differ.
What follows from it is structural rather than cosmetic. A contract cannot be made permissible by renaming the interest; the question is always whether the return is earned by taking real risk on a real asset, or simply by lending money against time.
Two categories
Classical works divide riba into riba al-nasi'ah — the increase tied to deferral, which covers conventional lending — and riba al-fadl, an unequal exchange of the same commodity. Most contemporary discussion concerns the first.
The practical consequence is that a Muslim assessing a financial product asks what the counterparty is being paid for. Rent on an asset, a profit share, or a mark-up on a genuine sale are treated differently from a charge for the use of money.