Why Is Interest Considered Haram?

CategoriesTrade, Business & All Things Money [548]

Fatwa ID: 05066


Answered by: Imam Abdul-Malik Sheikh




Why is interest considered haram? Are there any other financial practices that are considered haram as well?



In the name of Allah, the Most Gracious, the Most Merciful




A Riba (interest/usury) mode of transaction leading to oppression and injustice and thus is one of the many reasons for its prohibition.


Riba requires taking a person’s money without compensation and this is a great injustice.


Riba is prohibited as it prevents people from working and earning and seeking lawful livelihood.


However, the most important reason for its impermissibility is because Allāh has declared it to be unlawful. Every other reason is secondary.


…Allah has allowed trading and forbidden usury…” (Al-Baqarah: 275)


“That which you give as an interest to increase the people’s wealth increases not with Allāh; but that which you give in charity, seeking the goodwill of Allāh, multiplies manifold.” (Ar-Rum: 39)


“And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other people’s property. We have prepared for those among them who reject faith a grievous punishment” (Nisa:161)


To earn wealth in a manner that is in compliance with Sharia is obligatory for all Muslims. All our dealings must be Halal and in compliance with the Sharia.


I would recommend that you read the books I would recommend is ‘Introduction to Islamic Finance’ by Shaykh Taqi Usmani, in order to gain a better understanding of shariah-compliant transactions.




Only Allah knows best

Written by Imam Abdul-Malik Sheikh

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham



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