According to Islam, a
contract between a lender and borrower should be an equitable one. It should
ensure justice to both parties and safeguard their rights on equal footings.
If one party’s rights are protected more than the other even minutely,
injustice creeps in. In a Ribā (interest) contract, justice to both parties
is not ensured. While the lender is ensured a safe return, the borrower is
not – and the lender is least bothered with it. This is unethical. Various
measures have been suggested by economists that reduce risk for the lender.
All said and done, these measures may be efficient, but the fact remains
that they do not ensure equal justice to both parties. Injustice, you’ll
agree, is something very objectionable and cannot be tolerated at any level.
The fact that a certain unjust
act might cause an economic boom is not reason enough that it should be
legalized. There are many practices which may be ethically incorrect but
which may boost the economy of a country. Drug trafficking and smuggling,
for example, can sometimes be very beneficial for a country. Similarly, in
the far eastern countries, child pornography is a very lucrative way of
earning. In some African countries, slave trading is very profitable. So you
see that if a thing is economically profitable, it does not necessarily mean
that it is morally correct. Interest is prohibited because of the fact that
it is an unethical contract. You would perhaps agree that economic boom is
only commendable if it is based on ethical contracts.