All terms
Glossary
Riba
Interest / usury
A prohibited increase — most commonly interest — where a guaranteed return is charged on money lent, regardless of outcome.
Riba is the prohibited, predetermined increase on a loan or exchange. A guaranteed return on capital — interest — is the classic example, because the lender profits regardless of whether the underlying venture succeeds.
Shariah-compliant structures avoid riba by tying returns to real risk and realized profit. In a Mudarabah, profit is a share of what the venture actually earns, capital is at risk, and there is no guaranteed return — the structural firewall that separates it from a loan.
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