Riba/ Interest Based Banking In Islam - Shaykh Asrar Rashid

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Please consider following problem statement in context of Riba and inflation - Money in Fiat form is itself haram in nature. According to Islam money should have it's own intrinsic value and should be made of valuable material which is not in today's Fiat currency. Money can be viewed just as a printed paper commodity. Assets depreciate, so does Fiat currency due to inflation which again is due to printing money without backing of any precious material. Interest or Riba is itself a debatable topic considering most countries are governed by a non. Muslim government and there is no Islamic banking system in most of the countries. Some of the main Component of bank interest are as follows - 1) Inflation rate 2) Cost of borrowing. This is the money that has to returned to the depositers by bank 3)Operation cost like Administration charges, employee salaries, infrastructure cost etc 4) Credit risk, if the loan is not repaid 5) Profit to shareholders All the above components have been given a single name of 'Interest' by conventional banks instead of giving a detailed breakup and this breakup does not include the word 'interest'. What is noteworthy is that the term Interest does not itself have the component of 'interest' which is actually a profit to run an organisation. Again if you consider time value of money then with time we have inflation which decreases the value of money. For example, $100 will be worth $50 after 10 years with an average annual inflation of 7.4% . So, if a person has a saving of lets say $10000 how can he preserve it's worth after 10 years which will actually become $5000? What about his efforts that he has put into all the hard work and after 10 years he finds $5000 worth of his work is wasted. Taking another example, can any imam take a salary of $100 per month since that was likely paid back 100 years ago. Imam and muftis will say inflation habibi! Considering we use Fiat currency that does not have any intrinsic value, should not paper currency be thought like another commodity which can be sold and purchased at agreed value. The following hadiths must also be taken into consideration and viewed from the point of inflation meaning we should atleast return in a better way (worth) that was borrowed. So if $10000 was borrowed and if we want to return it after say 10 years then considering average inflation of 7.4% we should return back at least $20000 plus something above it as per below hadiths to retain the worth of $10000 that was loaned 10 years ago. Hadith No: 585 Narrated/Authority of Abu Huraira The Prophet (SAW) owed a camel of a certain age to a man who came to demand it back. The Prophet (SAW) ordered his companions to give him. They looked for a camel of the same age but found nothing but a camel one year older. The Prophet (SAW) told them to give it to him. The man said, "You have paid me in full, and may Allah pay you in full." The Prophet (SAW) said, "The best amongst you is he who pays his debts in the most handsome manner." Hadith No: 586 Narrated/Authority of Jabir bin Abdullah I went to the Prophet (SAW) while he was in the Mosque. (Misar thinks, that Jabir went in the forenoon.) After the Prophet (SAW) told me to pray two Rakat prayer, he repayed me the debt he owed me and gave me an extra amount. Considering all the above points a consensus should be made by Islamic scholars and worldwide fatwa should be issued by muftis on how to preserve the wealth of approximately 2 billion Muslims throughout the world. Considering one Muslim is losing an average of just $10 per year then for 2 billion Muslims it will be a annual loss of $20 billion, actual figures will be much high which is wiping their wealth day by day. We need to keep in mind that the properties and behaviour of money has considerably changed than what it was at prophet's time and new rules should be framed and fatwas issued based on conclusion of Islamic scholars.