It is the amount of money one receives for lending their money to someone else. This is in addition to the actual amount you had lent to the other person. Interest is also charged when you delay the payment of money that you borrowed from someone. Banks also give interest in exchange for the money you deposit with them.

Example:
If you deposit 2000 in your savings bank account every month and your bank gives you 3% interest rate per annum then by the end of year you will have saved 24000 rupees and additional 720 rupees as interest. This will make your total savings 24720 rupees by the end of the year.