In the past few months, I’ve been sharing on-and-off with a Muslim colleague on generating passive income and my own journey to financial freedom. It was through these discussions that I was reminded of the existence of Islamic banking. As someone who has read next to nothing on this topic, I thought I’ll do some reading of my own and present my findings here.
(Disclaimer: I’m a free thinker and do not presume to know everything about Islam or its guiding banking principles. While I endeavour to make sure the information is accurate as far as possible, take it with that caveat in mind.)
Islamic Banking Guiding Principles
There are generally 3 major interlinking principles that guide what Muslims can or cannot invest in:
1) Prohibition of Interest (Riba)
Earning of interest is specifically prohibited in Islam. There are 2 reasons for this.
Firstly, the concept of interest implies guaranteed