Ways to lend without interest

Many Moslems are proud of their approach to finance but are bemused by western criticism. Richard Freeland explains.

Islamic banks aim for the mainstream

Key concepts in Islamic banking

The essential difference between western banking and Islamic banking concerns interest payments. There is a basic principle in Islamic law that exploitative or unfair contracts are unenforceable. This includes any contract which involves uncertainty, risk or speculation (gharar), or contracts that provide for the payment of interest (riba). Such agreements are not banned outright, but may be, depending upon the precise nature of the agreement.

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