Central to the Qu’ranic teaching is the

promotion of justice, which leads to peace and harmony.

Kamali says that the purpose of the Prophet’s mission was not only mercy to mankind, but to all of God’s creatures.

He says that in order to attain these objectives, which constitute the component parts of mercy, we must educate the individual, establish justice, and realize benefit (maslahah) for the people.

We must follow the Rules on Counter-Values in Islamic Finance to create justice.

Both counter-values must be certain and may either occur both at the time of transaction or one now and one later, however, not both in the future.

In the case of riba, the variance in certitude between the two counter-values, the interest on the one hand and the opportunity cost on the other hand, constitutes the essence of the injustice of imposing interest on loans.

The increase over the principal, the common form of which is bank interest, is certain and its amount is known whereas the yield resulting from investing the loan by the creditor is not sure to materialize and if it does, its amount is not ascertainable in advance.

In a contract, which contains gharar, such as a contract based on speculative activities, the contract may include a counter-value, which is not only of uncertain value, but may not be realized at all.

In both riba and gharar, one of the counter-values is uncertain and may never materialize and both are therefore invalid under Shari'ah.

Riba is an extreme form of gharar.

Islamic finance today primarily uses debt-finance, which replicates the results of Interest-Financing rather than using equity-finance, which promotes justice.

Asyraf Wajdi Dusuki states that (2010): ‘In contrast to debt-

financing, equity-financing utilizes a profit-loss sharing mechanism based on the contribution of capital in the project or investment.’

Dusuki says that (2010): In equity- based financing, both the borrower and lender share profits and losses as compared to the case of debt- financing, where one party is made to take all the risk.’

Dusuki explains that (2010): It also promotes expansion of the economy including the development of small- to -medium sized businesses in addition to large enterprises and promotes stability in the economy and society at large.’

Equity- financing fulfills the essence of Shari’ah requirements in Islamic banking and finance as it fulfills the counter- value (iwadh).

For a contract to be valid, there should be Iwadh or counter-value present. Three elements of iwadh that should exist are risk (ghorm), work and effort (ikhtiar) and liability (daman).

In the majority of debt- financing contracts, one or more of these elements of Iwadh are missing. If there is no risk, effort and liability, then such a contract cannot be considered to contain any element of justice.'

Bank as a Finance House Rather than Loan House

The Islamic Banking and Finance Industry, which exists today is a sham. There is nothing moral about it. It does not encompass any of the ideals of the Islamic moral economy and has become just another branch of the conventional banking system, imitating its products and services and dishing out interest in disguised forms.

It is debt-based and produces similar outcomes as interest-based financing.

Shari’ah is not the base and the Tawhid (One-God) Framework is not being utilized.

The modes of finance are not musharakah and mudharabah and thus a participatory superstructure in society does not result.

The debt finance base of Islamic finance and banking creates the same debt-trap superstructure encapsulating the neo-classical individual in his own misery, which exists in the conventional economy.

The bank remains a loan house rather than finance house to the detriment of the well-being of humanity.