The ruling on stipulating a financial penalty for one who delays the repayment date

Question:
May Allah reward you with good and do you well. He says: There are people in our area who lend to projects, but they write in the contract that whoever delays repayment at the specified time must pay a penalty. Is this considered riba (usury or interest)?

Answer:
If they lend to the project owners loans to finance their projects, and this is a type of good loan intended to be kind, then this is a good deed. However, it is not permissible to take an increase on it, because an increase on it is riba, and this is by the consensus of the Muslim scholars.
This is riba-based lending. Included in this is that if repayment is delayed, an increase in the debt is not permissible, whether it is a loan or otherwise, because this is the riba of the pre-Islamic age of ignorance (jahiliyyah), about which the Noble Qur'an came with prohibition and warning. They used to say to the debtor when the debt's term arrived: either you pay, or you satisfy me. If he paid immediately, fine; otherwise, they would increase the debt and give him more time. This is the riba of the pre-Islamic age of ignorance that Allah and His Messenger forbade, and the Muslims agreed on its prohibition. Yes.