Islamic Banking
The author makes much fun of the similarity of conventional car and house loans to the Islamic model. In the conventional car loan, the bank gives you money to buy a car, and charges you an agreed rate of interest on the money. In the murahaba loan, the bank buys the car that you want, and then sells it to you at a higher agreed-upon price, which you then pay back to the bank on a monthly basis. In the end, the interest rate on the money is identical to the mark-up on the price of the car. The author calls this a loophole, but whatever - it means to me that interest and riba are not equivalent terms. The Quran does not prohibit interest, it prohibits a thing called riba, the meaning of which is something both wider and more complex.
Bin Gregory writes about the article published in The American
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