Riba al-fadl
Riba of excess: an unequal exchange of the same kind of certain goods, such as gold for a larger quantity of gold.
Riba al-fadl arises in exchange rather than lending, and IFSB-24 refers to it as riba in an exchange contract. It occurs when certain items of the same kind, classically gold, silver and staple foodstuffs such as wheat, barley, dates and salt, are exchanged in unequal quantities. The rules on these ribawi items are the basis for how Islamic finance treats currency exchange, which must be on the spot and, for the same currency, at par.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
RibaAn increase over principal that Shariah prohibits: extra stipulated on a loan, or an unequal exchange of certain like-for-like goods.Riba al-nasiahRiba of deferment: an increase stipulated in return for extra time, most commonly on a loan.Bay al-sarf (currency exchange)An exchange of money for money, of the same or a different currency, which must be settled on the spot.Islamic FX forwardA currency hedge built on a binding promise to exchange at an agreed rate on a future date, with the exchange itself done at spot.