The wisdom in Islam’s economic system
All the sections of the society can progress only when wealth and money are not concentrated in the hands of a few people and/or a particular section of the society, but freely circulate through all sections of the society. It should not be that the wealthy keep on increasing their wealth and the poor people perish in their poverty. With this objective, Islam interest (Usury) has prohibited in Islam and is considered a grave sin. Zakaat is obligatory (Fardh) on wealthy and they are encouraged to give other charity also. For some sins, omissions and mistakes, expiation (Kaffara) is Wajib (compulsory) and even in war booty, the fifth part has been reserved, so that wealth circulates freely through all sections of the society.
In this connection, these words of the Holy Prophet are the guide for us:
Lo! All interest-based transactions of the days of ignorance (before Islam) are declared null and void, but your principal amount belongs to you.