Riba is a central concept underlying the entire structure of Islamic finance. The prohibition concerns income arising from the mere fact of payment deferral or lending, regardless of how it is named in the contract.
The prohibition is justified by the principle that money is not a commodity and does not create value by itself. Income is permitted when it arises from participation in a real transaction—purchase and sale, lease, joint venture—and is accompanied by assumption of corresponding risk.
A key consequence follows: a markup on goods sold on installment is permissible, while interest on a loaned amount is not, even though the monetary result for the parties may appear similar. The difference lies in transaction structure and risk distribution, not in the amount of payment.
Along with riba, gharar—excessive uncertainty in contract terms—and maysir, an element of gambling, are excluded. These three prohibitions explain the structure of all Islamic instruments: each represents a method of financing without interest.