The document discusses the differences between trade and interest/riba, arguing that interest is prohibited in Islam. It summarizes four key differences: 1) Trade involves risk sharing while interest guarantees returns to the lender. 2) Trade promotes equality while interest concentrates wealth with the rich. 3) An interest-free system in Medina was able to fulfill all essential needs while rich countries with interest still have unmet needs. 4) Interest introduces instability through high volatility and short-term thinking, while equity-based risk sharing promotes long-term cooperation and stability. The document concludes by asking the reader if prohibition of interest still seems doubtful, or if interest-free systems provide

1. Prohibition Of Interest.....
Does it Make Sense?
By: Rizwan Ansar K.M
on the basis of the book " Prohibition of Interest, does it make sense?" By Dr. Umer Chapra and
with due regards to my mentor on the subject Mr. H. Abdur Raqeeb

2. Quran and Riba (Interest)
(Surah Al-Baqra Verse 275)
TRADE RIBA (INTEREST)
Reward Punishment (Fire)

4. Trade Vs Riba
The lender of money is an investor The lender of money has no role in
in trade and is prone to both profit trade but expects a fixed positive
and loss return
Trade is majorily based on Equity Trade is majorly based on Debt
Trade is natural and therefore Interest is artificial/forced with
maintains the mass balance i.e restraints which is positively biased
increase or decrease in trade gets towards the lender, therefore it
shared, thereby maintaining cannot maintain the mass balance.
balance No possibilities of Equality, By
There is possibility of attaining principle, Rich is destined to become
the humanitarian goal of Equality Richer and Poor to Poorer.
among people. Interest by nature inflicts damage
Trade by nature does Justice to and injustice to the borrower, and
Economy economy at large

6. Humanitarian Goals
1. General Need Fulfillment
2. Full Employment
3. Equitable Distribution of Income
and Wealth
4. Economic Stability

7. 1. NEED FULFILLMENT

9. Interest Based Non-Interest Based
(Islamic)
Financial allocation of resources Financial allocation of resources are
are majorly based on Collateral majorly based on End-Use i.e. for
to guarantee repayment what cause the funds would
be utilized.
Rich gets the most benefited
Both Rich and Poor can get benefited
Promotes Speculative and
Wasteful Spending as the bank Restricts speculative and Wasteful
gets benefited of a positive return spending as the bank shares the risks
just by promoting spending and rewards of financing.
E.g. United States - richest country in E.g. Medina, could fulfill essential needs
the world unable to meet the essential of all its people when the economy was
needs of all its people inspite of latest interest free (1400 years back, the only
technologies and abundant resources at recorded period of existence of such
its disposal. economy).

10. 2. Full Employment

12. Interest Based Non-Interest Based
Promotion of "Living beyond Means" Promotion of trade and equity based
culture by easy facilitation of credit system by facilitation of productive
investments.
Decrease in Savings leading to high
level of real interest rates & lower Equity based promotes savings and
investments leading to increased thereby lowers real interest rates,
unemployment. Increases Investments and
Employment.
Credit is made available for lifestyle
living, which is beyond means. Credit is primarily made available for
real goods and services.
Bank does not share the risk and
expects a positive return just by Bank shares the risk and reward of
promoting spending, therefore bank financing thereby by nature does
financing doesnot much improve real due diligence and promotes productive
economy growth and employment as it investments therefore increasing
is utilised for wasteful spending and Employment.
speculation

13. 3. Equitable
Distribution of
Wealth

16. Interest Based Non-Interest Based
(Islamic)
Deposits come from cross-section Benefits of the deposits goes to the
of the society benefits goes largely rich, the poor and the middle class
to the rich.
Strength of the project is the
Collaterals are the primary criteria primary criteria for fund sanction,
for sanction of loans, thereby thereby competent entrepreneurs who
helping the rich, but depriving the are poor or from a middle class family
poor. also get benefited.
Strong bank balances, Repayment Entrepreneurs with worthwhile
capability with guarantee is the projects, adequate managerial
primary focus. capability and a reputation for
honesty and integrity is the primary
focus.
System by nature reinforces the
rich to become richer, thereby System by nature helps the entire
creating in-equality cross-section of the society, thereby
creating equitable distribution of
wealth.

17. 4. Economic Stability

18. Interest Based Non-Interest Based
High degree of interest rate volatility No interest, equity based financing
injects great uncertainty into the with sharing on profits and losses
investment market making long-term helps making long term decisions
investment decisions difficult for relatively easier for entrepreneurs.
entrepreneurs.
Drives borrowers and lenders into Lenders are primarily investors in
short end of the financial market business and therefore, see a win-
resulting in highly leveraged short term win situation in helping the business
debt, which plays an important role in grow and taking a bigger share,
de-stabilizing the economy. thereby enhancing long term co-
operation.
Short-term debts are easily reversible
for lenders but borrowers find it
Islam allows a reasonable amount of
difficult to repay if funds are invested
short term debt, while the majority
in medium or long term returns,
is for long term, thereby helping
thereby creating crisis with even slight
withstand economic turbulences.
economic turbulence

19. It's your turn to make the decision -
Does the question of Prohibition of Interest, still daunt?.................. or is
it evident that Interest Free System is the Medicine to cure todays
Economic Meltdowns and Turbulences?
If prohibition of Interest makes sense to you, join us in our efforts