Q. What is the deifinition of Riba according to the Holy Quran and Sunnah of the Holy Prophet ( Sallaho Alaihai Wasallam ). Does it cover the simple and compound interest existing in the present day financial transactions?
A. The word, Riba as understood from the Holy Qur’an and Sunnah, is any extra payment received over and above the prin- cipal amount, regardless of the fact that extra amount is significant or insignificant. Islam, therefore, considers the Riba Haraam, in all of its forms.
The Fuqaha have given two interpretations of the word, Riba, : Riba-al-Nasia and Riba al Fadl.