Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
Usury: Recognising Wolf in Sheep Clothing
Fakihah Azahari*
Usury has not been accorded due scrutiny it deserves in Islamic banking. Its definition has
been couched to equate usury with banking interest that confines its interpretation to mean
‘additional increase’ over the principal amount without assigning any further important
implication to its meaning.
This prima facie definition results in the convenient approach of denouncing banking interest
as usurious in nature necessitating Islamic financing instruments to be structured without
interest. The conventional banking instrument is immediately transformed into an Islamic
financing instrument by substituting the element of ‘interest’ with ‘profit’.
Until only recently, any attempt to examine the true relationship of banking interest and profit
would have been met with much sceptism. As Islamic bankers began to develop a
conscience to conform to the true form of Islamic finance, a more decisive and realistic
approach to define usury is imperative.
The legal position of usury (that is, its prohibition) is a settled issue. The challenge is to
recognize acts of usury. The author probes the meaning of usury, its acts, effects and how it
occurs within the context of sources of Shariah by analysing financial crisis in selected
economies. Through these analyses, acts of usury manifest in several forms.
Field of Research: Islamic banking and finance
*Fakihah Azahari, MCiarb, Messrs. Nik Hisham, Fakihah & Co, Kuala Lumpur, Malaysia.
Email : fakihahazahari@gmail.com