The Koran explicitly forbids interest to be paid to lenders. Consequently, Islamic banks make their money using the following two different methods.

Question

Quizplus · Accepted Answer

Islamic banks primarily use mudarabah and murabaha methods to generate income while complying with Sharia law, which prohibits interest. Mudarabah is a partnership where one party provides capital and the other provides expertise, sharing profits according to a pre-agreed ratio. Murabaha involves the bank purchasing an item and selling it to the customer at a profit, with payment made in installments.

The Koran Explicitly Forbids Interest to Be Paid to Lenders