Murabha and Ijara - Home Finance for Muslims Which is Allowed by Islamic Law
You learn in your economics course that the banks borrow cheaply from the depositor and lend at a higher rate to the borrower and the difference between the two allows them to run a profitable business. It is a way to make more money from money and sometimes it is not even on paper and is often not even connected to a physical asset. The demand-supply gap will be the larger, the greater the efficiency and credibility of the bank, which in turn will make the business even more profitable. Islamic banking runs on a very different principle. The first difference which exists between ordinary banking and Islamic banking is that the object associated with the contract must actually exist, be specific and free from all ambiguities and it also must be permitted by the Sharia'h. ...
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