Question

In: Finance

ibra' with riba' comparison in financing

kindly compare between ibra' with riba' in financing.

Provide a scenario to differentiate these two concepts.

Solutions

Expert Solution

Riba is an Islamic economic concept that expounds on increasing and growth and Islamic doctrines prohibit interest charged on loans or deposits. Islamic doctrines forbid awarding incorporation of riba since it’s considered unethical and illegal (Alam et al., 2017).   Ibra’ in Islam means awarding of rebate by Islamic banks to customers who settle debts that are sale-based. Riba is meant for various purposes which include promoting equity in exchange, aims at forbidding unjust and illegal exchanges, and eradicating self-centered traits and selfishness (Aziz et al., 18). The policies encourage charitably and loaning systems without interests.

The need to finance Investments via depositing in banks and borrowing loans is essential in every aspect of development. Islamic Bank of Yemen offers Ibra’ to customers who complete loans that involve the sale of products while the same bank denies interests on loans borrowed by the customers since its policies rhyme with the application of sharia laws. Thus the relevance of riba and ibra’ is determined by policies and religion practiced by involved persons.

 

 

 

 

 

 

 

 

 


Riba is an Islamic economic concept that expounds on increasing and growth and Islamic doctrines prohibit interest charged on loans or deposits.

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