refers to the practice of lending money for any length of time on the
understanding that the borrower would return to the lender at the end of the
period the amount originally lent together with an increase on it, in
consideration of the lender having granted him time to pay.
Interest, in all
modern banking transactions, falls under purview of
money in present banking system is exchanged for money with excess and
delay, it falls, under the definition of riba.
A general accord reached among
scholar about its prohibition.
Goods subject to Fiqh rules on Riba in sales, variously
defined by the schools of Islamic Law: items sold by weight and by measure,
Al- Rahn (
Pledge, Collateral; legally, Rahn means to pledge or
lodge a real or corporeal property of material value, in accordance with the
law, as security, for a debt or pecuniary obligation so as to make it possible
for the creditor to recover the debt or some portion of the goods or property.
In the pre-Islamic contracts, Rahn implied a type of earnest money which
was lodged as a guarantee and material evidence or proof of a contract,
especially when there was no scribe available to put it into writing. The
institution of earnest money was not accepted in Islamic law and the
common Islamic doctrine recognized Rahn only as a security for the
payment of a debt.
or Loan / Debt
literally means a loan which draws forth no profit for
the creditor. In wider sense, it includes loans for specified periods, i.e.
short, intermediate and long-term loans.
Salaf is another name of
Salam as well wherein price of the commodity is paid in advance
while the commodity or the counter value is supplied in future; thus
the contract creates a liability for the seller. Amount given as Salaf
cannot be called back, unlike Qard, before it is due. (see
Basically, in pre-Islamic times it was exchange of
gold for gold, silver for silver and gold for silver or vice versa.
law such exchange is regarded as ‘sale of price for price’ (Bai al Thaman bil
Thaman), and each price is consideration of the other.
It also means sale of
monetary value for monetary value – currency exchange.
The term Shariah refers to divine guidance as given
by the Holy Qur’an and the Sunnah of the Prophet Muhammad (PBUH) and
embodies all aspects of the Islamic faith, including beliefs and practice.
A contract between two or more persons who launch a
business or financial enterprise to make profits.
In the conventional books of