Socio-Ethical Dimensions of Islamic Economy and Issue of Modern Interestand RIBA: An Analysis in the Light of the Economy of the Muslim World

This article analysis the issue of riba and capitalist banking interest in the light of the ethics of Islamic economics. It provides that many of the Muslim countries are Under Developing and dependent upon interest-based foreign aid for their survival. In this context, it seems impossible to establish an economy on the basis of zero rate-interest. In the light of the historical and contextual development of riba and capitalist interest it reveals that both have a different background. The former was a way of exploitation of the poor segment of society while the later was legalized to help poor segment of the society, to control the fluctuation of monetary value, to ensure capital growth and above all has become an unavoidable element of contemporary economic transactions. Hence, this article suggests that the contemporary mode of capitalist interest should be declared permissible by way of well recognized interpretive principles of necessity which means that necessity makes a prohibited thing permissible (al-darurat tubihu al-mahzurat) and public interest.