Riba (Usury)
Charging or receiving interest, deemed forbidden in Islamic law.
Detailed Description
Riba (Usury)
What does the term 'Riba' refer to in Islamic finance?
Riba refers to any guaranteed interest on loaned capital, which is strictly prohibited under Sharia law.
What are the two main types of Riba?
The two main types of Riba are Riba al-Nasiah, which is interest on loans, and Riba al-Fadl, which involves unequal exchange of commodities.
Why is Riba prohibited in Islamic law?
Riba is prohibited due to its exploitative nature, which is seen as unjust and contrary to the principles of fairness and risk-sharing.
How does Riba differ from conventional interest?
While interest is a common charge for borrowing money, Riba encompasses any unjust enrichment through lending, prioritizing ethical considerations.
What impact does the prohibition of Riba have on Islamic finance?
The prohibition of Riba shapes Islamic finance by promoting alternative financing models like profit-sharing and joint ventures, emphasizing ethical investment.