Interest (riba)

In Islamic terminology Interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. " Riba` is a loan with the condition that the borrower will return to the lender more than and better than the quantity borrowed." Typically this would include conventional loans, finance, mortgages, etc. Islam recognises trade and commerce not only as a lawful profession but also as a moral duty.
However there is a distinction between trade and usury. In trade there is an exchange of the commodity for another commodity whereas in usury there is no exchange in the commodity only an increase in the units of the commodity. For example, the sale price for a particular book is 10 units of currency (Dinar,£, $, etc). The commodities here are the particular book and the 10 currency units. Let's assume that the cost of selling the book is only 8 units of currency, the sale price being a 25% markup. When the book is sold for the 10 units there is an exchange and a profit of 2 units of currency. This is termed as Trade and the profit is Halaal.
If however the commodities were just the same types of currency there would not be an exchange of commodities and any increase or decrease in the units would be deemed as Riba, (Usury/Interest). A typical example is the lending of Money on commercial terms. For example 8 units of currency are lent and then the re-payment of 8 units back to the lender plus an additional 2 units (25% increase totalling 10 units) as Riba/Interest. This is not Trade it is Usury and is Haraam.
"Those who devour usury will not stand except as stands one whom the Satan by his touch has driven to madness. That is because they say, "trade is like usury", but Allah has permitted trade and has forbidden usury" Quran: Surah 2 verse 275
Hazrat Jabir radiyallahu anhu has reported that the Messenger of Allah cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said that they were equal (in sin).
Also referred to as: Usury, Ribaa, Al-Riba, Sood