The literal meaning of interest or Al-RIBA as it is used in the Arabic language means to excess or increase. These are the True definitions of Riba in Islam:
"In the 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."
If we explore the Qur’an we will come across at least four places where Allah has mentioned interest.
The first one is in Surah Al-baqarah verse no.275
"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",
In the next verse verse 276 in the same place he says,
"Allah will deprive usury of all blessing, and will give increase for deeds of charity, for he does not love any ungrateful sinner."
Two verses later in verse 278 he says,
"Oh you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers."
In verse 279 he says,
"If you do not, take notice of war from Allah and his Messenger sallallahu alaihe wasallm but if you repent you shall have your capital sum. Deal not unjustly and you shall not be dealt with unjustly."
In the second place in Surah Aal-Imran, verse no.130 Allah says,
"Oh you who believe! Devour not usury doubled and multiplied; but fear Allah that you may prosper."
In the third place in Surah Al-Nisaa’ Allah states in verse 161,
"That they took usury though they were forbidden and they devoured peoples wealth wrongfully; we have prepared for those amongst them who reject faith a grievous chastisement."
In the fourth place, Surah Al-Room, verse no.39 Allah mentions
"That which you give in usury for increase through the property of people will have no increase with Allah: but that which you give for charity seeking the countenance of Allah, it is these who will get a recompense multiplied."
Ahaadith Concerning Interest
These ahaadith have been taken from Mishkat-ul-Masabih.
Hazrat Jabir radiyallahu anhu has reported that the Messenger of Allah sallallahu alaihe wasallm cursed the devourer of usury, its payer, its scribe and its two witnesses. He also said that they were equal (in sin). (Muslim)
Hazrat Abu Hurairah radiyallahu anhu reported that the Holy Prophet sallallahu alaihe wasallm said: A time will certainly come over the people when none will remain who will not devour usury. If he does not devour it, its vapour will overtake him.
(Ahmed, Abu Dawood, Nisai, Ibn Majah.)
Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said : Usury has got seventy divisions. The easiest division of them is a man marrying his mother. (Ibn Majah)
Hazrat Abu Hurairah radiyallahu anhu reported that the Messenger of Allah sallallahu alaihe wasallm said: I came across some people in the night in which I was taken to the heavens. Their stomachs were like houses wherein there were serpents, which could be seen from the front of their stomachs. I asked: O Gabriel! Who are these people? He replied these are those who devoured usury. (Ahmed, Ibn Majah)
Hazrat Ali radiyallahu anhu reported that he heard the Messenger of Allah sallallahu alaihe wasallm cursing the devourer of usury, its giver, its scribe and one who refuses to give Zakat and he used to forbid mourning. (Nisai)
Hazrat Umar bin Al-Khattab radiyallahu anhu reported: the last of what was revealed was the verse of usury. The Messenger of Allah sallallahu alaihe wasallm was taken and he had not explained it to us. So, give up usury and doubt. (Ibn Majah, Darimi)
Hazrat Abdullah bin Hanzalah radiyallahu anhu (who was washed by the angels) reported that the Messenger of Allah sallallahu alaihe wasallm said: A dirham of usury that a man devours and he knows is greater than 36 fornications. (Ahmed, Darqutni)
Baihaqi reported from Ibn Abbas radiyallahu anhu in shuabul iman. He added and said: (as for) one whose flesh has grown out of unlawful food, the fire is more suitable for him.
After narrating all these verses from the Qur’an and relating all the Ahaadith it is apparent to us that interest could never be legal and halal. How could anybody even take the time out to think about a matter in which Allah has declared war on the user and his Beloved Prophet sallallahu alaihe wasallm has cursed him? As sensible people we can understand that what our creator has chosen for us is for our own prosperity only.