Why interest must be paid?

Interest must be paid as a compensation to lenders for the risk they take when providing loans and for the opportunity cost of not using the funds elsewhere. It reflects the time value of money, where money available today is worth more than the same amount in the future due to its potential earning capacity. Additionally, interest serves to incentivize saving and investing, promoting economic activity. Without interest, the financial system would lack the motivation for lenders to provide capital.