Definition of riba in islamic finance pdf

This definition of riba is derived from the quran and is unanimously accepted by all islamic scholars. The muslim populations have over the years banked with the conventional banks. A broader definition of riba 1 muhammad mazhar iqbal the paper analyzes different interpretations of riba and discovers that the main source of confusion about the concept has been misunderstanding of riba in hadith in general and riba in barter exchange with a time lag, hereafter called riba in barter loans, in particular. The article examines the principles of riba and how it fits within the realm of islamic economics, as it is. Full lecture on riba in islamic banking is covered in the islamic banking course, islamic finance course and islamic banking diploma, all these programs are a part of mba in islamic banking and finance degree offered by aims. They define riba as an increase or excess which, in an exchange or sale of a. Furthermore, for the success of interestfree system, deepening of financial markets and. Pdf islamic banking and prohibition of ribainterest researchgate.

This study describes the islamic instruction regarding islamic banking and prohibition of ribainterest, and also presents a glossary regarding prohibition of riba interest in the light of the. Riba is prohibited by the quran, sunnah prophetic example, and consensus of the scholarly community. Muslim writers give various definitions to the term riba. Riba is a concept in islam that refers broadly to the concept of, growth, increasing or exceeding. A broader definition of riba pakistan institute of. Journal of islamic economics, banking and finance 1. The introduction of islamic banks in kenya in the early 2006 was met with a lot of jubilations from the muslim faithful in the country and the financial service providers. Journal of islamic economics, banking and finance 2 2. Thus technically the term riba means interest and usury, and generally it is unjust excess in money without any compensation given 5. Riba is one of the most often misunderstood terms in islamic finance. Islam prohibits all forms of riba which has been understood throughout muslim history as being equivalent to interest. Islamic finance part i riba by sheikh hacene chebbani.

More education on this fundamental concept is not only necessary for the preservation of a halal livelihood. For example, even though there is a wide spectrum of interpretation on the. Pdf ibra and its application in islamic finance lai. Riba is an unjustified increment in borrowing or lending money, paid in kind or in money above the amount of loan, as a condition imposed by the lender or voluntarily by the borrower. The prophet admonished riba in its all forms in his farewell pilgrimage speech. Pdf islamic banking and prohibition of ribainterest. Sheikh hacene chebbani was born in algeria and has been living in canada since 1997. Islamic banking, also known as noninterest banking, is a banking system that is based on the principles of islamic or sharia law and guided by islamic economics. Interest by definition is an additional amount paid.

Riba is a concept in islamic banking that refers to and forbids the. It has also been roughly translated as illegal, exploitative gains made in business or trade. Usury riba and the place of bank interest in islamic banking and. In the latter view, the meaning of riba is restricted usury interest charged at. Understanding the concept of riba in islamic banking, is a fundamental part of islamic financial system.