baby steps mat..baby steps
Well the scholars have been quite clear on this matter. They understand that due to floating currencies exposed to equilibrium forces there will be inflation. This will of course lead to the time value of money being included in any financial transaction.
The work of the scholars has led to the verdict that any inclusion of inflation into transactions involving currency are not allowed, ie they amount to riba. Now, I haven't read their works in full study yet but I do know that the sholars make their verdict based on the shariah, fiqh and understanding of the current environment, and I have to accept it as a valid verdict.
There are many classifications of riba, including the conventional understanding of interest and compounded interest. These forms are expained in many books and did exist at the time of the Prophet pbuh and after.
One must realise that riba is not the only thing that is of crucial importance, uncertainty in transaction (gharar) and various contractual boundaries are as important to adhere to.
Lets not make this a religious debate, I don't think any of us is qualified to really debate on the heart of the matter here.
I just wanted you to realise that Islamic Finance really does have something fresh to offer to conventional finance. In essence Islamic Finance acts in the interest of the community, of society and encourages free market participation with transparent and ethical corporate governance and ways of conducting business. In the short term, healthy debate will exist to ensure the correct development of this phenomenon. But in the long run, many non-Muslim practitioners agree that it has a great deal to offer to the financial powerhouses of today.
Lets make no mistake about it. While many muslim scholars consider modern banking interest as riba'a, there are an equal number (if not more) scholars who do not. Neither side of the argument is without merit. So while scholars in Pakistan Supreme Appelate Court decided on one end of the argument (all interest is riba'a ); scholars of Al-Azhar reached a diametrically opposite view on the same topic.
Even if we move forward from this particular issue, I am not convinced that the so-called islamic modes of financing are competitively priced. Most of them work on the assumption that muslims will come to them to avoid riba'a and this they can charge higher than normal profits/interest. I don't claim to know each and every Islamic financing product, but those that I have studied are no where close to being competitive. And almost all of them "estimate" future inflation and build that into their "profit" and charge it to their customers. There is really not much difference. Rather they are usually more expensive.
There’s Islamic finance available at ANZ Bank in the UK.
ANZ Bank
Islamic financing available at http://lariba.com