Conventional Banking and Interest (Riba)
Conventional Banking and Interest (Riba)
The essential features of conventional banking is the fact that money creates money or money has a premium known as usury or interest. This is known as Riba in Islam. This practice is prohibited and denounced in Islam because based on the view of Islamic law, money as a medium of exchange, a unit of measurement or a store in value. Money has never been perceived as commodity where there is a price for its use. It is an antithesis of Islamic finance
In Islamic banking, as money cannot make money,( from the interest incurred from borrowing or lending money) a link need to be established in generating profit from the money. This is usually achieve by trading, fee based activities, leasing and investment activities.
The essential features of conventional banking is the fact that money creates money or money has a premium known as usury or interest. This is known as Riba in Islam. This practice is prohibited and denounced in Islam because based on the view of Islamic law, money as a medium of exchange, a unit of measurement or a store in value. Money has never been perceived as commodity where there is a price for its use. It is an antithesis of Islamic finance
In Islamic banking, as money cannot make money,( from the interest incurred from borrowing or lending money) a link need to be established in generating profit from the money. This is usually achieve by trading, fee based activities, leasing and investment activities.
