Allah, the Exalted, mentions interest on loans in the following way:

«O you who believe, fear God and forgive usury, if you are believers. If you do not, then war has been declared upon you from God and His Messenger. But if you turn back, then you may keep your original capital. Do not wrong, and you shall not be wronged. If anyone is in difficulty, then give respite until things improve. But to forgive as a gift is best for you, if you but knew.» [2:278-80]

And in Surah Al-Baqarah:

«Those who live on usury will stand on the Day of Resurrection as one whom Satan has struck with his touch. That is because they say: «Trade is like usury.» But God permits trade and forbids usury. Whoever receives a reminder from his Lord and then desists, let him keep what is past, and his matter is with God. But those who turn back, they are the people of the Fire, and they will abide therein.» [2:275]

Despite Allah’s clear and rather frightening statement on interest, this is one of the most debated and contentious topics in the Muslim world today. In Muslim countries, there is consensus on the prohibition of all forms of involvement in interest. However, there are a handful of scholars who allow it for Muslims residing in non-Muslim countries (in limited cases).

The evil of interest is primarily noticeable for the economically weaker part of the world. According to a report from the United Nations Development Programme (UNDP) from 2000, it is clear, among other things, that poor countries spend more money on debt repayment than on basic social services. Economic calculations with repayment periods of several decades due to the problem of interest and compound interest, turn the disadvantaged into eternal debt slaves, while creditors secure themselves a steady source of income. There is no doubt that the abolition of interest would help developing countries considerably and the imbalances in the world would be reduced.

Azhar M.