Riba literally means increase, addition, expansion or growth. It is however, not every increase or growth, which has been prohibited by Islam. In hadiths we find different kinds of unethical gains have been termed as RIBA.

Chapter 1. The Meaning of RIBA

Islam is “Din-e-Kamil” a perfect religion. Islam is also “Din-e-Fitrat”, a religion of the nature as its laws and commandments are in conformity with laws of nature. Islam is a complete code of life for salvation and welfare of mankind in this world and afterlife. Famous English writer H.G. Wells (1866-1946) wrote:

“Islam established in the world a great tradition of dignified fair dealing and created a society more free from wide spread cruelty and social oppression than any society had been in the world before”.

There are a number of commandments and prohibitions in Holy Quran and the sayings of the Holy Prophet regarding various financial matters. They relate to Zakat, bequests and inheritance, rights of widows and orphans, blood-money, trusts, compensation for work, virtues of charity, spending in the way of Allah for welfare or help of the poor and needy, slavery, trade, weights and measures, loans, trusts, contracts, prohibition for professional beggary, misrepresentation, profiteering and hoarding etc.

Nature of Riba: The word ‘riba’ as appearing in Holy Quran is translated in English as ‘usury’ by many translators and as ‘interest’ by few. Literally ‘riba’ means “excess or addition”. The punishment (burning in the fire in hell) for usury is mentioned in Surah # 2 Al-Baqarah - verse 275 after the verses advising charity and spending in the way of Allah. In verse 276, it is shown that Allah has blighted usury and made alms giving fruitful. Verses 278 & 279 order giving up what remains from usury or else have war with Allah and his messenger. Verses 280 to 283 of Surah 2 are also relevant to loans and agreements.

Nature of Riba is described and prohibited in Surah # 3 Al -i- Imran in verse 130. A painful doom is indicated in the verse 161 of Surah # 4 Al Nisa for those who take usury as also those who devour people's wealth by false pretenses.

In Surah # 30 Ar Rum - verse 39, it is indicated that charity is rewarding manifold and usury has no actual increase.

When delivering the last sermon at Hajjatul Wida, the Holy Prophet abolished all usury.

Although usury is condemned in Christianity and Zionism, in 7th century it had become a lucrative business as poor and needy could not find any other way except to acquire goods on credit from greedy traders on exorbitantly high rates of interest. It was a cruel exploitation of the needy that was abolished by Islam.

The question often debated is that whether the interest as charged in the modern banking and financial institutions can be regarded as “riba” which is

strictly forbidden in Islam. Federal Shariat Court in 1999, declared all forms of interest based banking un-Islamic.

Hundreds of articles and books have been published during the last century. The majority view of the experts, scholars and Ulemas (at home and abroad) remains that the interest as employed in the modern banking and financial institutions is "riba" which is forbidden in Islam.

The view of very small minority is that banking interest is not riba and must be regarded as the price paid for use of money and a business deal.Quite a few Muslim economists, bankers, actuaries and insurers who have intensely studied Quran and hadiths find that among most of the ulema (clerics of Islam) and Muslim jurists considerable misunderstanding and misconceptions are found about modern instruments of credit, banking interest and insurance. It is predominant opinion of the economists that technically and ethically  the interest regulated by the government cannot be regarded as usury. Quran like Bible prohibits usury and refers to it as a kind of Riba, but the word riba itself is not defined in Quran.