Riba means "interest" or "usury" and it is the most fundamental prohibition in Islamic finance. The Quran explicitly forbids riba in multiple verses, and the Prophet Muhammad condemned both the giver and receiver of interest.
Why is interest prohibited? Because it guarantees a return to the lender regardless of whether the borrower's venture succeeds or fails. The lender bears zero risk while the borrower carries all the burden. Islamic finance considers this fundamentally unjust.
The entire Islamic banking industry — worth over $4 trillion globally — exists because of this prohibition. Every Islamic financial product is designed to replace interest with profit-sharing, trade-based returns, or rental income. — exists because of this prohibition. Every Islamic financial product is designed to replace interest with profit-sharing, trade-based returns, or rental income.