---
title: "What is Riba? | IslamicOpenFinance™"
description: "An increase over principal that Shariah prohibits: extra stipulated on a loan, or an unequal exchange of certain like-for-like goods."
url: https://islamicopenfinance.com/glossary/riba/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Shariah fundamentals](https://islamicopenfinance.com/glossary/#fundamentals)

Shariah fundamentals

# Riba

An increase over principal that Shariah prohibits: extra stipulated on a loan, or an unequal exchange of certain like-for-like goods.

Riba is the increase that Islamic finance treats as prohibited. The IFSB describes it as an increase in return for deferment in a qard, or loan, contract, known as riba al-nasiah, or in an exchange contract, known as riba al-fadl. Avoiding riba is why Islamic banks earn returns through sales, leases, partnerships and fees instead of interest on loans.

## Sources

- [IFSB-24 Guiding Principles for Investor Protection in Islamic Capital Markets, 2020: Islamic finance principles, prohibition of interest (riba)](https://www.ifsb.org/wp-content/uploads/2023/10/IFSB-24_En.pdf)

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

[**Riba al-nasiah** Riba of deferment: an increase stipulated in return for extra time, most commonly on a loan.](https://islamicopenfinance.com/glossary/riba-al-nasiah/) [**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.](https://islamicopenfinance.com/glossary/riba-al-fadl/) [**Qard** A loan of money to be repaid in an equivalent amount; any benefit stipulated for the lender is riba.](https://islamicopenfinance.com/glossary/qard/) [**Murabaha** A sale at cost plus an agreed, disclosed profit; the seller must own the asset first. Payment is often deferred in instalments.](https://islamicopenfinance.com/glossary/murabaha/) [**Al-ghunm bil-ghurm** The legal maxim that entitlement to gain comes with liability for loss: whoever takes the profit must also bear the risk.](https://islamicopenfinance.com/glossary/al-ghunm-bil-ghurm/)

**Shariah fundamentals**

1. [Gharar](https://islamicopenfinance.com/glossary/gharar/)
2. [Maysir](https://islamicopenfinance.com/glossary/maysir/)
3. [Shariah](https://islamicopenfinance.com/glossary/shariah/)
4. [Fiqh al-muamalat](https://islamicopenfinance.com/glossary/fiqh-al-muamalat/)
5. [Maqasid al-Shariah](https://islamicopenfinance.com/glossary/maqasid-al-shariah/)
6. [Riba al-nasiah](https://islamicopenfinance.com/glossary/riba-al-nasiah/)
7. [Riba al-fadl](https://islamicopenfinance.com/glossary/riba-al-fadl/)
8. [Al-ghunm bil-ghurm](https://islamicopenfinance.com/glossary/al-ghunm-bil-ghurm/)

[All 221 terms](https://islamicopenfinance.com/glossary/)