Want to ascertain if a transaction involves the type of interest which Islam prohibits? Here are three ways to do so easily:
1- Decision Tree
Not clear enough? Maybe you’re an algorithm person:
2- Algorithm
IF the financier provides money
AND the financier is compensated with the right to receive more money
THEN the contract involves Riba.
On the other hand …
IF the financier provides money
AND the financier is not given the right to receive more money
THEN there is no Riba regardless of how much money the financier ends up receiving.
Want a third method?
3- Compare against the plain English definition
Riba is the use of money to purchase more money regardless of what time frame the transaction is completed in.
If you understand this article, congratulations, you are more qualified than most to identify if something is a form of interest-bearing debt (Riba) which Islam prohibits.
