ENTREPRENEURSHIP

Detailed explanation-1: -In Islamic finance, riba refers to interest charged on loans or deposits. Religious practice forbids riba, even at low interest rates, as both illegal and unethical or usurious. Islamic banking has provided several workarounds to accommodate financial transactions without charging explicit interest.

Detailed explanation-2: -In the process of highlighting economic substance of prohibitions of riba and gharar in this chapter, we need to address two charges against prohibitions: paternalism and efficiency reduction.

Detailed explanation-3: -Prohibition of Riba (interest), Gharar (uncertainty) and Maysir (gambling) are the fundamental principles of Islamic banking and key differentiators to differentiate it from conventional banking practices.

Detailed explanation-4: -Key Takeaways. The word gharar means uncertainty, hazards, or risk. In Islamic finance, gharar is prohibited because it runs counter to the notion of certainty and openness in business dealings. Gharar can arise when the claim of ownership is unclear or suspicious.