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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
Prevailing Concept of Interest (Riba) in Islamic Perspective: A Critical Analysis.
Dr. Farooq Aziz (Corresponding Author)
Assistant Professor
Department of Business Administration
Federal Urdu University Arts, Science and Technology
Karachi, Pakistan.
Hussain Abbas
Lecturer, Department of Economics
Federal Urdu University Arts, Science and Technology
Abdul Haq Campus Karachi, Pakistan
Muhammad Aqil
Assistant Professor
Department of Economics, Defense Degree College
Defense Housing Authority, Karachi, Pakistan.
Farrukh Usman Shah
Lecturer
Department of Business Administration
Federal Urdu University Arts, Science and Technology
Karachi, Pakistan.
Abstract
In Qur’an the term riba is used for interest which is strictly prohibited by this wholly book.
Muslim thinkers normally claim that “riba is that pre-decided excess amount which creditor
receives from the debtor on his/her principal amount at maturity of loan. It is a well accepted
definition of the term riba, but this definition restricts the concept of riba to debt transactions
only, whereas the rent of all other assets except cash is considered as valid. It means that, reward
of cash (one form of asset) is unlawful and rent of all other assets is legitimate. Muslim thinkers
provide some justifications for this special treatment to cash. According to then if an item is
depreciated with the passage of time then its rent becomes lawful. Moreover if during the
transaction ownership of the asset will not change, nature of rented item will remains same then
their rent is justified. In addition they said that, presence of element of risk and concept of badal
(exchange), provide a legal base to rent. But the critical analysis of all of those reasons shows
that none of them have any logical and religious base and the same situation is with this
definition of interest, which can qualify any standard of reasoning.
Key words: Riba (interest), Depreciation, Rent
1. Introduction
Riba (interest) is an important Qur’anic term from economic point of view. A huge literature is
available on the interpretation of this term. Instead of that, it is open fact that, still a lot of
confusion exists about the nature & meaning of this term. Different scholars have different point
of views in this regard. But it may be said that there is a concept on which almost a consensus
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