Why is Ribā Forbidden?
Economic Issues
Question asked by .
Answered by Dr. Shehzad Saleem

What is the basis of forbidding Ribā? Also, if it is accepted that it is prohibited, is there a way allowed by Islam to earn money through money lent? I ask this question since investing money on the basis of profit and loss sharing is not at all feasible these days given the economic situation of our country and the moral conditions of our nation.


According to Islam, a contract between a lender and borrower should be an equitable one. It should ensure justice to both parties and safeguard their rights on equal footings. If one party’s interest is protected more than the other even minutely, injustice creeps in. In a Ribā contract, justice to both parties is not ensured. While the lender is ensured a safe return, the borrower is not and the lender is least bothered with it. This seems unethical. Various measures have been suggested by economists that reduce risk for the lender. All said and done, these measures may be efficient but the fact remains that they do not ensure equal justice to both parties. Injustice, you’ll agree, is something very objectionable and cannot be tolerated at any level.

The only just arrangement in which a person or institution does not want to enter into a profit and loss agreement and wants to ‘earn money through lending’ seems to be that in the contract agreement the lending entity gives an undertaking to the borrower that it will be entitled to a percentage share in the profit only if the borrower does earn profit on the investment made.

For Questions on Islam, please use our