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

Question

Quizplus · Accepted Answer

Islamic banks make their money using two methods - Mudarabah and Murabaha. Mudarabah is a profit-sharing investment partnership, where the bank acts as a financier, and the borrower acts as an entrepreneur. In Murabaha, the bank purchases assets, such as commodities, and sells them to the borrower at a marked-up price. Both of these methods are compliant with Islamic law as they do not involve the payment or receipt of interest.

The Koran Explicitly Forbids Interest to Be Paid to Lenders