ISLAMIC CONCEPT OF INTEREST

THEORY OF PROFIT FROM ISLAMIC PERSPECTIVE 1. Price theory the core of economics cannot stand firm without the assumption of profit maximization.

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It promotes trade as an occupation and regards profit as a bounty from God.

ISLAMIC CONCEPT OF INTEREST. Self-interest is a natural motivating force in all human life. Seeing the above narrations it would be a shame for anyone who could justify interest in Islam. This of course need not be the case except under conditions of perfect.

The reason why Quran has used such harsh decree against Riba or Interest is because Islam wishes to establish a system that is just and where all forms of misuse and exploitation are eliminated. Consumer Behaviour 14 51 Consumerism. Islamic Laws on Riba Interest and Their Economic Implications 5 such self-investment5 Clearly what is implicit in this argument is the assumption that the degree of risk involved in alternative uses of funds is the same in all cases.

Ii ISLAMIC ECONOMICS 5. Interest Riba Interest Riba. On the concept of interest there is no doubt or dispute among Muslims that it is absolutely prohibited.

From the Islamic perspective with its bias towards fair distribution of wealth and social justice. Thus Riba is the Quranic word for interest mark up or usury which means. Despite effects to evade it The prohibition of interest remain a key element In the Islamic vision of a socially responsible economy an important element in Islamic business practice.

Private property and private enterprise are affirmed as inalienable rights and a natural mode for economic activity. In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. 5 Islamic Concept of Money 13 4.

While the modern view of economic rationality emphasizes maximization the Islamic view is one of justice defined as giving each person or thing its due. Interest today is merely used as a tool to regulate the economy and also to control the supply of money. Introduction Islam prohibits interest but allows profit.

Mainstream economics too revolves around the notion of profit. This definition restricts the concept of interest just to debt and gives special status to costs as compare to other assets. But self-interest has to be linked to the overall concept of good and justice 3.

Using money as a commodity is selling just a forged artificial transaction. Muslim perspective interest is that excess amount which a creditor receives from the debtor on expiry of loan subject to the condition this increment is pre-decided and part of the agreement. In particular this understanding is predicated on the Islamic concept of the vicegerency of man and the purpose of creation.

Interest is an artificial profit which does not enter in legal trading. In a modern economy in which interest is a fundamental part this can lead to a necessary change of objectives and perspectives when working within the framework of Islamic economics. 42 Interest and Foreign Exchange Instability 12 43 Interest and Environment 12 4 4 Interest and Inflation 12 4.

Money has to be used as a means of sale and purchase and a measurement of a commodity to be sold or purchased. 6 Banking in Islamic Economy 13. In 1983 the Islamic Ideology Council of Pakistan reported that there is consensus on the concept of riba among the Muslims and is equal to all kinds of usury and interest.

In the Islamic terminology interest means effortless profit or that profit which comes free from compensation or that extra earning obtained that is free of exchange. Hazrat Shah Waliullah Dehlvi a great scholar and leader has given a very concise and precise definition of interest. So if you say Interest is haram you automatically imply that Islam is against the capitalistic econmies prevalent today and we being a part of it are all sinners no matter if we work in banks or other organisations.

The concept of interest and riba usury in Islamic perspective is that interest additional charge on the loan transaction money al-qardh were calculated from loon capital without considering the utilization outcome of the capital based on certain time advance and.

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