Why Is Usury (Riba) Prohibited In Islam and What Are the Alternatives?

Islam forbids usury, or Riba, viewing it as a practice that breeds inequality by exploiting the needy for the lender’s gain. The Quran is clear in its stance against Riba, with verses like in Surah Al-Baqarah, 2:275-276 condemning its use and equating it to declaring war against Allah and His Messenger. The Prophet Muhammad (peace be upon him) also warned that Riba has seventy segments, the least of which is like committing adultery with one’s own mother. This stark condemnation illustrates the gravity of engaging in usury. Instead, Islam recommends ethical financial alternatives like Mudarabah, a profit-sharing investment, and Murabaha, cost-plus financing. These structures encourage a fair and just economic system where the risk is shared and both lenders and borrowers work together towards mutual benefit, embodying principles of shared responsibility and community welfare.