In Islamic Ijarah and Diminishing Musharakah based contracts, Islamic bank charges rent for the use of asset in its ownership and risk, charges these rents after the asset has been provided to the client in usable condition and only till the asset remains in usable condition during the lease period. These differences also ensure strong links with the real economy and productive sector and limit credit creation other than for genuine value creating economic activities in the real economy.
If the virus had been growing at a linear rate, it would not have been that much dangerous. It is the exponential increase in the Corona Virus spread which makes it become uncontrollable and create havoc in the society. Compound interest in the financial system is such a Corona Virus. Interest accrued but unpaid increases interest in the future periods ahead at an exponential rate.
On the social equality front, the one paying interest becomes a slave of those who lent him money since the burden gets bigger over time. This leads to dependency and leaves self-empowerment as mere fantasy and ultimately leads towards loss of self-identity, self-honor and destruction of humanity.
This article briefly analyzes the logical arguments that are usually presented in the defense of interest as a price of money capital in loans.
“The term riba encompasses interest in all its manifestations irrespective of whether it relates to loans for consumption purposes or for productive purposes, whether the loans are of a personal nature or of a commercial type, whether the borrower is a government, a private individual or a concern, and whether the rate of interest is low or high” (Council’s Report, 1980).