and Profit

Raising of loans at home and abroad is a necessity where payment and receipt of interest involved which is not endorsed by Islam. How the system will be reformed to eliminate ‘riba’ in true democracy’? In case it is eliminated, will the financial structure of the country function smoothly? How the international commercial activity will be handled because foreign parties will insist upon interest-based arrangements? One of the reasons why Riba is forbidden in Islam is that it deals in money as a commodity and it is exploitative in essence. The alternative is sharing of profit and loss among the parties and their active participation in the act of trade, commerce, production, distribution involved This alternative is beneficial both for the lender as well as the borrower because the profit volume i often much higher than the amount of interest. If the expectation of the lender is inspired b higher returns for his funds he would not insist upon resorting to Riba? Moreover, the profit and loss modes keep lenders rights of lease ownership of the stock-in-trade alive till the expiry of agreement. So far as the fear of loss is concerned it works both ways. Most powerful banking systems are known to have collapsed, just as the recent American financial meltdown, due to their faulty capitalistic system itself or on account of unfair activities of the influential borrowers who never intend to pay back their loans. In the leasing system the lender’s interests remain protected because he is as good the owner of the enterprise as the investor.