Difference between interest and profit? Writer - Md Firoj Kobir.

 Here’s the difference between Interest (Usury) and Profit in English:

1. Definition:

• Interest (Usury):
  Interest is the extra money charged by a lender over the principal loan amount. It is typically determined by a fixed percentage of the loan amount and is required to be paid by the borrower. In Islamic finance, interest (referred to as Riba) is forbidden, as it is considered exploitative and unjust.

• Profit:
  Profit is the gain obtained from business or investment activities, calculated as the difference between total income and expenses. It comes from productive activities such as selling goods, providing services, or making investments. Profit is considered lawful and permissible in Islam, provided it is earned through fair and ethical means.

2. Source:

• Interest:
  Interest comes from lending money, where the borrower agrees to repay the loan along with a certain percentage of extra money (interest). The lender makes money solely from the loan itself, without any productive activity involved.

• Profit:
  Profit comes from business activities or investments. It is generated through the sale of goods or services, or through returns on investments. It is the result of value creation or entrepreneurial effort.

3. Islamic Perspective:

• Interest:
  In Islam, interest (Riba) is strictly prohibited because it is seen as exploitative and unfair. It creates a burden on the borrower without any effort or productive activity, leading to unjust enrichment.

• Profit:
  Profit is permissible in Islam as long as it is earned ethically and through legitimate means, without any form of exploitation, deceit, or Riba. Islamic finance encourages fair trade, honesty, and transparency in business.

4. Nature of Activity:

• Interest:
  Interest is a financial transaction based on lending, where the borrower must repay more than the original amount, with no risk or entrepreneurial activity involved. The lender earns a guaranteed return regardless of any business or productive activity.

• Profit:
  Profit is derived from business or investment activities, where success or failure depends on the market, the entrepreneur’s efforts, and the risks involved. It is the result of production, trade, or value creation.

5. Ethical Aspect:

• Interest:
  Interest is generally considered unethical or exploitative, especially in cases where it leads to excessive debt burdens on borrowers, often impacting their financial stability and well-being.

• Profit:
  Profit is considered ethical as long as it is earned in a lawful and just manner. It is viewed as a fair reward for entrepreneurship, investment, and productive activity, without taking advantage of others.

6. Risk:

• Interest:
  Interest carries no risk for the lender since the return is fixed and guaranteed regardless of the borrower’s ability to pay back or the success of the borrower’s activities.

• Profit:
  Profit involves risk, as it depends on the success or failure of a business or investment. It reflects the entrepreneur’s ability to manage risks, invest wisely, and create value.

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Summary:

• Interest is a fixed amount charged on a loan, where the lender earns without taking any business or investment risk. It is forbidden in Islam due to its exploitative nature.
• Profit is the gain earned from business or investment activities, which is lawful in Islam as long as it is obtained ethically and fairly through value creation and not through exploitation.

Thus, the key differences lie in their sources, ethics, and whether they are considered permissible or forbidden in Islamic finance.