Interest that is earned on lending money to another party (or interest that is paid on borrowing money from another party). This interest (riba), also known as riba al-dain, appears in debts (duyun– plural of dain) as a percentage or a fixed amount added to the principal amount of debt (asl al-dain). It is the most commonplace and most debated type of interest. In general, riba al-dain is any excess or additional benefit charged or paid as consideration in a lending/borrowing transaction. Shari’a strictly prohibits all types and sources of riba, including riba al-dain. An example of riba al-dain is the transaction in which one party pays $12,000 after one year for an amount of $10,000 received today. Riba al-dain may take so many forms including: an amount of money, some benefit or service (rendered in association to a lending transaction), and so on.
Islamic Finance
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