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- By Subramanian Swamy
- Islamic scholars argue that payment of interest is a bane on the society. What are the alternatives especially example, for old-aged people who live on the interest from deposits of their lifelong savings, if interest is prohibited? How will banks survive without charging interest on loans extended?
An Islamic banks cannot charge interest, but then what does it do to survive? By giving by one hand, and taking away twice as much or more by the other hand! Let us take an example: If you want to purchase a house worth Rs 10 lakh an Islamic bank will not give you a loan of Rs 10 lakh at a rate of interest and fixed maturity as non-Islamic banks would. Instead the Islamic banks will purchase the house and sell it to you at a higher price! This means they will make a profit and such profit is called halal, as per Sharia! They will ask you to pay this back in say 15 years or so. Of course, interest-free. This is back-door collection of interest.
Thus, an Islamic bank is like a boiled ice cream; it cannot exist in real life without tricking our confidence. - (The writer is former Union Law & Justice Minister.)
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