what is riba

Riba is an Arabic word that means "to increase" or "to exceed" and is commonly used in reference to unequal exchanges or charges and fees for borrowing. In Islamic finance, riba refers to interest charged on loans or deposits. Riba is prohibited under Sharia law for a couple of reasons. It is meant to ensure equity in exchange and to ensure that people can protect their wealth by making unjust and unequal exchanges illegal. Riba is mentioned and condemned in several different verses in the Quran and is defined as unjustified increment in borrowing or lending money, paid in kind or in money above the amount of loan, as a condition imposed by the lender or voluntarily by the borrower. Riba is forbidden because it goes against the principles of social justice and equitable transactions that are at the center of Islamic finance.