Riba

Riba (Arabic: ربا, literally 'increase' or 'excess') is the prohibition of interest, usury, or any unjustified increase in a loan or exchange transaction. It is the most fundamental prohibition in Islamic finance and the primary reason for the existence of the entire Islamic banking industry. Riba takes two forms: Riba al-Nasiah (interest on loans, where the lender receives a predetermined return regardless of the outcome of the borrower's use of funds) and Riba al-Fadl (excess in the exchange of ribawi commodities such as gold, silver, wheat, barley, dates, and salt). The prohibition is explicitly stated in the Quran (2:275-280, 3:130, 4:161, 30:39) and Hadith. All IOF contracts and rails are designed to avoid riba by structuring returns as profit from trade (Murabaha), rental income (Ijarah), or profit-and-loss sharing (Musharakah, Mudarabah) rather than interest on principal.