84.Is there permission in Islam to collect small amounts as interest?

In this verse (3:130) we find the phrase “Do not eat from interest money that grows manifold”. Some misunderstand this verse to be construed as small amounts of money as interest is permissible, and not exorbitant amounts as interest. 

This is entirely wrong. 

In verse 2:278, Allah says men to forego the interest money that is due to them from then onwards. 

We come to understand from this verse that Allah commanded men to give up the entire interest money that was due to them from that point of time, and not the exorbitant part alone.

 Verse 2:279 says “For those who reform themselves from interest money is the principle amount theirs”. The Quran didn’t say “a small amount of interest money along with the principal amount is theirs”. May the interest amount be insignificant, the verse says only the loan amount has to be collected back.

Then why does the Quran say, “Do not eat from the multiply grown interest money”.

In general, interest money multiplies exponentially, this is the difference between money earned in business and interest money. 

Even a loan given at an insignificant rate of interest will grow into a huge amount after a period of time. A loan at a small rate of interest resulting in an exponential growth of interest alone within a period of two years can be seen on calculations. 

When we sell a thing with a fixed amount of profit, we gain only once from that transaction. But when a certain amount of money is lent to interest, we keep on earning continuously till the money is returned. 

This is the reason we conclude the phrase ‘the interest money that grows multiple times’ is quoted. It does not bring into focus the rate or quantum of interest.