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Islamic Finance




Qardh


An Arabic term (قرض) that translates as an interest-free loan. More specifically, it refers to the transfer of the ownership of a fungible asset/ item of wealth to a person/ institution on whom it is binding to give it back in similar amount, type or measure, without addition, surplus or benefit (riba) over it. The borrower becomes the owner of the subject-matter of qardh through possession, and will be liable for the repayment of a similar subject-matter to the lender.

The stipulation by either, or both, parties that the lender will be entitled to an excess (better quality or more quantity) over the qard value is prohibited by shari’a, as it amounts to riba.



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