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What IS a solution to Riba?

As we know, Riba is forbidden in Islam. It is agreed upon, overwhelmingly, that interest constitutes Riba.

I have written extensively on the following facts:

  • Banks do NOT use depositors’ money to lend out to their customers – they simply create this credit / “money” out of thin air

  • In the UK, at least, around 97% of ALL the money supply is credit creation by private banks – only 3% is actually physical notes and coins

  • The consequence of this unfettered money creation is inflation

  • Over 50% of all bank credit creation (via lending) is directed to the property sector – this is why property prices are now unmanageable for the average citizen

  • Over 30% is directed to the financial markets – this is why Wall Street has lost all connection with the real economy that you and I live in. This is why markets rise all the time, beyond what is supported by reality, and why we see regular, and huge, market corrections

  • Islamic banks are no different to conventional banks – they lend money to us and create this credit from thin air

  • This credit MUST charge interest – there is NO OTHER REASON for creating this credit UNLESS the banks charge interest on it

  • Islamic banks thus charge Riba in all of their lending contracts

  • They try to hide this by having deceptive contracts, such as selling items to us and charging a “profit” that is benchmarked to an interest rate

  • Or they lease/rent an asset to us and charge us a rental amount that is benchmarked to an interest rate

  • This is why my analysis of the balance sheet of Islamic banks shows that around 98%-99% of everything they do is benchmarked to Riba

  • Any Islamic contract (which is, by definition, not designed for Riba) that uses Riba can only do so through deception

  • Islamic banking is thus built on deception

  • Islamic banks are NOT here to help Muslims, they are here to pump out debt to Muslims, and charge us Riba

  • This whole industry is supported, and enabled, by the creation of “regulators” that are designed to facilitate this deceptive Riba

  • The use of Scholars to support this activity is an act of abuse of scholars

  • Either scholars are ignorant of how their approvals are used (and trust me, I have spoken to MANY scholars, and I am always surprised how many of them seem to be “unaware” that their approvals are used to deliver Riba – this is due to ignorance of the details of financial contracts and markets)

  • OR scholars ARE aware that these contracts are used for Riba, and they ask the banks to use this as a last resort only

  • Instead, Islamic Banks build their whole business on this Riba, this is an abuse of the very restricted approval given by Scholars

  • Islamic banking is therefore wholly founded and built on Riba, and the use of Fatwa and scholars is purely to silence any criticism, using religion as blackmail

Many Muslims refuse to accept the above, and it is part of my role to educate Muslims.

In addition, many Muslims refuse to accept such facts, stating that there is no better solution.

“What is the solution?”

This is the most common response I receive when I state the above facts (with clear evidence). My pinned thread on Twitter is a response to this often-disingenuous question.

In any case, there is a path to a solution, and I will write further about this. I will show how services and products CAN be delivered without Riba in a series of posts and articles.

You will note a few things:

  1. Overwhelmingly, these solutions have been developed by Non-Muslims

  2. Overwhelmingly, these solutions have been developed by NON-BANKS (think about why this is the case)

  3. The solutions identify money as a path, a tool, to achieve something – they do NOT treat money as the commodity itself, something to be created and lent out at interest

But before I begin, let me make clear a few things, for those hoping to read these solutions and hoping they can help Islamic banking move away from Riba

  1. Islamic banking is several decades old, and in that time, it has not changed one single bit

  2. Sure, it has grown, but only through further lending and charging of interest

  3. The Islamic banking sector is supported by a huge infrastructure that supports Riba

  4. Regulators, politicians, Shariah advisors, lobbyists – all these have been aggressively in support of the Islamic banking model built on Riba

  5. It IS in the interest of Muslims to move away from Riba

  6. It is NOT in the interest of Islamic banks – and their lobbyists – to move away from Riba

  7. Any attempt to move away from Riba (in a systemic manner) will very likely be opposed by the groups mentioned above

  8. As such, even though it may be possible to use the infrastructure built by Islamic banks to support a move away from Riba, it is, in my view, unlikely this will be the case – unless the Islamic banks feel they can benefit from it

  9. More likely is the creation of a niche sector, driven by NON-BANKS, that uses creative business models that are not built around lending and Riba

  10. This is already proven in the global finance sector over recent years, where the best (non Riba) solutions are being built by non-banks

Finally, let me make this point very clearly:

Non-Muslims are better at finding solutions to avoid Riba than the whole $2.5 trillion Islamic banking sector that is built on Riba. Yes – non Muslims are being more “Islamic” than Muslims when it comes to finding solutions against Riba.

I will start to publish a series on how Riba-free solutions do exist, and can be incorporated into the Islamic finance sector.

To follow this series, please do subscribe here to be informed.

Safdar Alam

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I think you accept too quickly the assertion that interest=riba just because many scholars (paid by sharia boards) and others following taqlid say so. Riba was really about the exploitive redoubling of unpaid debt to moneylenders burdening poor debtors at the time of the prophet - see Prof. Farooq's paper in the Arab Law Quarterly here Modern interest and sukuk revenue pass through are not riba. Loan sharking and predatory lending is the modern equivalent of riba.


H. A
H. A
Aug 07, 2022

non-bank solutions?


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