Quranic basis
The Quran addresses riba in four primary passages: 2:275-280 (the strongest condemnation), 3:130 (warning against doubled and multiplied riba), 4:161 (placing riba alongside other condemned transactions), and 30:39 (contrasting riba with zakat). The prohibition is absolute and consistent across the scholarly tradition.
The two types of riba
Riba al-nasiah is interest on a loan, the form most familiar in modern finance. Any increase on a loan, regardless of size or contractual sophistication, falls under this prohibition.
Riba al-fadl is unequal exchange of fungible commodities at the same time, or unequal exchange of different commodities at different times. The Hadith specifies the six commodities (gold, silver, dates, wheat, barley, salt) and their analogs in modern finance (currencies, basic foodstuffs).
How Islamic finance avoids it
Murabaha replaces the loan with a sale. The financier buys the asset, marks it up transparently, and resells to the customer. The markup is profit on a real transaction, not interest on money.
Musharakah replaces lending with partnership. Both parties contribute capital and share profit and loss in proportion to their contribution and risk. Return follows from real economic activity, not from time value of money.
Ijara replaces lending with leasing. The financier owns the asset and earns rent for its use. Rent is a payment for usufruct, not interest.
What this looks like in practice
The headline number on a halal mortgage often resembles a conventional rate. The structure underneath is what differs: who bears the asset risk, what happens at default, whether late fees flow to the financier as profit. Mufti review verifies the structure, not just the number.