Literally, riba means “increase”, “extra”, “addition”, “accretion”, or “growth”. It also implies anything more in measure, amount, quantity, etc, as manifested in different places in the Quran like the following verses:

“Lest one group/ party should be more abundant than another” (Al-Nahl, 16:93)

In its technical (transactional or financial) meaning, riba is typically defined as a surplus of any type without due countervalue or rightful consideration (‘iwadh) in a commutative transaction in which one asset/ good/ value is exchanged for another. Therefore, any increase in value of what one party presents over what he receives (unless in a permissible type of sale) would be inferred as riba. This definition covers both types of riba: riba from credit or payment deferment (riba al-nasi’ah) and riba from fasid (defective) sales (riba al-buyu’). In other words, riba arises even if the additional benefit of one counterparty is not tangible (riba arising from postponement or the difference between the time of payment and the time of receipt, or vice versa).

The prohibition of riba, in all its guises, is one of the fundamentals of Islamic banking and finance.