ISSN 2736-1721
Global Journal of Business Management ISSN 6731-4538 Vol. 8 (4), pp. 001-005, April, 2014. © International Scholars Journals
Full Length Research Paper
Islamic banking and prohibition of Riba/interest
Ashfaq Ahmad1*, Kashif-ur-Rehman2 and Asad Afzal Humayoun3
1Department of Business Administration, University of Sargodha, Pakistan.
2Department of Management Sciences, Iqra University, Islamabad, Pakistan.
3Foundation University Institute of Engineering and Management Sciences (FUIEMS), Foundation University, Islamabad, Pakistan.
Accepted 20 October, 2013
Abstract
The 21st century came with blending of threats and opportunities due to the inception of Islamic banking practices across the globe. Islamic and conventional banking could be differentiated due to interest, risk sharing and objectivity. This study describes the Islamic instruction regarding Islamic banking and prohibition of Riba/interest, and also presents a glossary regarding prohibition of Riba/interest in the light of the Holy Quran and Sunnah (Ahadith). It depicts the superiority of Islamic banking as interest free banking over conventional banking (interest based banking) due to its long lasting benefits. Islamic banking is desirable because it promotes cooperation and mutual benefit oriented behavior among different stakeholders with the assurance of a welfare oriented society. This study attempts to differentiate Islamic banking from conventional banking on the basis of interest.
Key words: Islamic banking, Riba, Holy Quran, Sunnah, prohibition of interest.