Continuation
Thus, only interest-free forms of finance are considered
permissible in Islamic banking system.
That is why, financial relationships between financiers and
borrowers are governed by shared business risk (and returns) from investment in
lawful activities (halal).
Islamic law does not object:
ü to payment for the
use of an asset;
ü and the earning of
profits or returns from assets
is indeed encouraged as long as both:
o lender;
o and borrower
share the investment risk together.
Profits:
ü must not be
guaranteed based on assumption;
ü and can only accrue
if the investment itself yields income.
Used from paper of Abdul Ghafar
Ismail and Noraziah Che Arshad
