In a session titled “Delay Interest: Is It Absolutely Prohibited?” of the Egyptian Arbitration Days, help in Cairo from 13-16 October 2025, delay interest was discussed from both the Sharia perspective and the legal perspective. That was in an enriching conversation between Mr. Tarek El-Ghamrawy, Director of AlMajna Advisors and Dr. Mohamed Abu Al-Soud, Director of MAS law office, moderated by Mr. Abdallah El Shehaby, FCIArb, and attended by a large number of legal professionals.
Some key points raised in the discussion from the Shariah perspective were:
- Riba (usury) is of two types: Riba in debts and Riba in sales.
- Riba in debts refers to any increase over the principal amount of the debt, whether stipulated from the beginning of the contract or imposed at the time of insolvency or delay. There is a unanimous agreement on this type of Riba among scholars.
- Riba in sales concerns the exchange of gold, silver, and currencies with one another, as well as the exchange of certain food commodities. This is also agreed upon, except for some details.
- Default interest in obligations that constitute a debt is a fundamental form of Riba in debts, and is therefore absolutely prohibited under Shariah.
- Delay interest in obligations that do not constitute debts is permissible.
- Shariah has provided alternative solutions to default interest for addressing the issue of a procrastinating debtor, such as: restructuring installments, compensating for actual damages and proven losses resulting from the debtor’s delay in payment, and the mandatory charitable penalty (gharamat al-tasaddoq).
- Shariah allows remedies for extreme inflation when repaying debts and when the value of the currency drops sharply—especially when there is procrastination or wrongdoing by the debtor.
- Paper money retains the characteristic of medium of exchange “thamaniyya” even after the removal of the gold standard, due to its wide acceptance and circulation as a medium of exchange. This is what grants it the status of currency, makes it analogous to the gold dinar and silver dirham in the past, and makes it subject to zakat and the rules of riba.
