| A fundamental difference between conventional and Islamic finance is that, as the Islamic system does not permit risk-free capital, those operating under the Shariah framework cannot profit from the lending of money. Accordingly, the charging of interest known as riba is prohibited by the Shariah and instead, a system of risk sharing is promoted.
Riba can be defined as any increase over and above the principal amount payable under a contract, which is not covered by a corresponding increase in labour, commodity, risk or expertise...............................................Full Article: Source |