Short answer
Islam forbids interest because God (﷾) forbade it, and the Bible forbade it among God's (﷾) people too. The Qur'an says Allah (﷾) "hath permitted trade and forbidden usury", which means lending money at interest. It tells lenders to take back only their original sum: "Deal not unjustly, and ye shall not be dealt with unjustly". The Prophet (ﷺ) counted eating interest among the seven sins that destroy a person. The Torah, the Law of Moses, forbids Israelites to lend to one another at interest. The prophet Ezekiel counts lending at usury among the sins of a man who "shall surely die". For centuries the Church called usury a grave sin. In 1311-1312 the Council of Vienne, a gathering of Church leaders, ordered that anyone who stubbornly denied this be punished as a heretic. Today the main churches accept moderate interest. The Qur'an still forbids it, as it did in the seventh century.
Full explanation
What the Qur'an says
Some people said trade is just like usury (lending money at interest). The Qur'an answers them: Allah (﷾) has permitted trade and forbidden usury. It orders believers to give up whatever interest is still owed to them. It warns those who refuse of war from Allah (﷾) and His Messenger (ﷺ). A lender who stops may keep his capital, the sum he first lent, and no more. So the ban covers any interest on a loan, not only high rates. Riba is the Arabic word for this gain.
“Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).”
“O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.”
“If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.”
What the Prophet (ﷺ) taught
The Prophet (ﷺ) named consuming riba among the seven destructive sins. The others include associating partners with Allah (﷾) and unjust killing. He forbade both taking interest and paying it. At the Farewell Pilgrimage, his last Hajj, he declared the interest of the pagan years abolished. The first he cancelled was the interest owed to his own uncle, al-'Abbas. The ban applies to every Muslim. It is not limited to the poor or to high rates.
Abu Huraira reports that the Prophet (ﷺ) told people to avoid the seven destructive sins. Among them he named associating others with Allah, sorcery, unjust killing, consuming riba (interest), and consuming an orphan's wealth.
Abu Juhaifa reports that the Prophet (ﷺ) forbade, among other things, both receiving and giving riba (interest).
In his Farewell Sermon the Prophet (ﷺ) declared the usury of the pre-Islamic period abolished, and said the first usury of his own people that he abolished was that owed to al-'Abbas ibn 'Abd al-Muttalib, for all of it is abolished.
What the Bible says
The Torah forbids lending at interest to a poor man among God's (﷾) people, and to a brother. Leviticus says to take no usury, "but fear thy God". The Psalms, the Hebrew prayer-songs, describe the man who may dwell with God (﷾) as one who does not put out his money to usury. Ezekiel, a prophet of the sixth century BC, lists usury among the abominations of a man who "shall surely die". Where Jesus speaks about lending, he says to lend "hoping for nothing again".
“If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.”
“Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee. Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase.”
“He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth these things shall never be moved.”
“Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him.”
“But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.”
What the Church once taught
For most of the Middle Ages the Church condemned lending at interest as a grave sin. In 1311-1312 the Council of Vienne decreed that anyone who obstinately held that usury is no sin should be punished as a heretic. A heretic is someone who stubbornly denies a teaching of the Church's faith. The same countries now run on interest, and the main churches accept moderate interest. The Qur'an forbade it in the seventh century and forbids it still.
The council decrees that anyone who obstinately maintains that practising usury is not a sin is to be punished as a heretic.
“Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).”
| Source | On interest |
|---|---|
| The Torah | No interest on loans among God's (﷾) people |
| Ezekiel | Usury is among the sins of a man who shall surely die |
| Jesus | Lend, hoping for nothing again |
| Council of Vienne, 1311-1312 | Whoever stubbornly denies that usury is a sin is punished as a heretic |
| The main churches today | Moderate interest is accepted |
| The Qur'an | Trade is permitted and usury forbidden; a lender takes back only his capital |
Verse by verse
Deuteronomy 23:19-20 — Torah, Devarim, chapter 23, verses 19-20
“Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury: Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.”
Cited for
Christians read this as showing the ban was only about fellow Israelites, so interest is not wrong in itself.
The response
The verse still forbids interest between brothers among God's (﷾) people. The medieval Church read "brother" as every Christian. It condemned usury among Christians as a grave sin. The Council of Vienne ordered anyone who obstinately denied that to be punished as a heretic. The Qur'an's ban names no exception for foreigners. It tells believers to give up whatever interest remains owed and take back only their capital.
Where it lands — Even here the Torah forbids interest among the people of God (﷾). The Qur'an's ban names no such exception.
Matthew 25:26-27 — Gospel of Matthew, chapter 25, verses 26-27
“His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury.”
Cited for
Christians read the parable of the talents as Jesus accepting that money may earn interest.
The response
In the parable the master judges the servant by the servant's own words. In Luke's version he says, "Out of thine own mouth will I judge thee". He also calls himself a man who reaps what he did not sow. A story about a hard master is not a ruling on lending. Where Jesus teaches directly about lending, he says to lend "hoping for nothing again".
Where it lands — The parable uses the servant's own terms against him. It gives no teaching that interest is lawful.
Perspectives
Mainstream Christian
The Bible's ban protected poor Israelites from being exploited by their neighbours. Moderate interest on commercial loans is a different thing and is not sinful. Only excessive or exploitative interest is wrong.
The Torah allowed Israelites to charge interest to a foreigner, so interest is not wrong in itself.
Rebuttal
Grant that Deuteronomy lets an Israelite lend to a foreigner at interest. The same verses still forbid it between brothers, so the Torah treats it as wrong among God's (﷾) people. The medieval Church read "brother" as every Christian. What harms a brother harms a stranger too, and the Qur'an's ban names no exception.
In Jesus' parable of the talents, the master says the servant should have earned interest with his money.
Rebuttal
Grant that the master says this. He is judging the servant by the servant's own words, and in Luke's version he says so. A story about a hard master is not a ruling on lending. Where Jesus teaches directly about lending, he says to lend "hoping for nothing again".
The Islamic perspective
Interest is forbidden because God (﷾) forbade it. The Qur'an and the Prophet Muhammad (ﷺ) forbid it to every Muslim, and the Qur'an names no exception and no expiry. The Bible forbade it too, but the main churches now accept moderate interest.
The four schools of Islamic law agree that any agreed increase on a loan is riba and forbidden.
The Qur'an permits trade and forbids usury, and allows the lender only his capital.
The Prophet (ﷺ) counted consuming riba among the seven destructive sins.
The Torah forbids lending at interest among God's (﷾) people. Ezekiel lists usury among the sins of a man condemned to die.
The Council of Vienne decreed that anyone who obstinately denied that usury is a sin be punished as a heretic.
Only God (﷾) can change His law, through His prophets. A society's habits cannot.