Shood controversy
In the last few days two of the DS readers opined that shood (interest) in the banking system is not anti-Islamic. I would like to shed some lights on the issue. Let's first clear the definitions. While we can say that interest is technically a profit, for this example, we take them as 2 separate items: Interest as interest or riba' and profit as the gain from trading.
In understanding the difference between interest and profit, let's take a look at the similarity. The similarity is essentially the amount of money gained. If someone has Tk.500 in interest, versus Tk.500 in profit, both represent gains of Tk.500. So monetary wise, it is the same. So if the end result is the same, what then is the difference?
The difference then, is the process of getting the Tk.500. One method (profit by trading) is permissible, while the other (riba') isn't.
So how do we get Tk.500 in interest? One way is by lending someone a certain amount of money. And the agreement is that when the money is returned, we want Tk.500 more. Islam forbids this for many reasons. Some we can spot here are 1) unfair gain and 2) laziness on the part of the gainer. This is different from getting Tk.500 in profit. An effort of buying and selling an asset and making profit from it is not forbidden in Islam.
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