Under
Islamic law money is not considered as a commodity, and the conditions of
exchanging money for money is considered to be a Usury in Islam and it is
perceived as medium of exchange in Islam, so there should be commodity in the
form of Physical expansion for it to be allowed by Islam.
The
allowable two conditions for exchanging money for Money: it has to be
hand-to-hand, and in equal quantity. This is what is known as a currency
Exchange contract (‘aqd al-sarf). And any violation of that tradition it will
result in either the two forms of Riba, Riba Al Fadhl or Naseea
Principle
of Qard Al Hassan means that when you lend to some, the person that
you lent the money to he has to return it without an interest or profit, so if
you lend someone 1000 dirhams in the principle of Qard Al Hassan he should
return it with the same amount . So Qard al Hassan Yjaaz in Islam according.
The
concept of the sharing of profit and loss in conventional banking is not
present, but it is present in Islamic Financing in the form of Musharaka,
because in Musharaka it is an
agreement between two or more partners, whereby each partner provides funds to
be used in a venture. Profits made are shared between the partners according to
the invested capital. In case of loss, no partner loses capital in the same
ratio (Wikipedia Musharaka). If the Bank provides capital, the same conditions
apply, so the concept of the profit and loss sharing comes in this concept, if they make a profit
they both share the profit and when the two parties make the loss they both
share the loss in the company.
There are also another Islamic
product that shares profit and loss which is Bai
Salam Bai salam which means a contract in which advance payment is made
for goods to be delivered later on. The seller undertakes to supply some
specific goods to the buyer at a future date in exchange of an advance price
fully paid at the time of contract (Wikipedia Bai Salam).
Dearest Esteems,
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