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Islamic Banking and Applied Finance Assignment 1 Question No. 01 Find five examples of Riba-al-Nasi’ah from your daily life and justify how Riba is found. Riba Al-Nasi'ah is derived from the Arabic root ''nasa'a'' which means to ''delay" or "defer". This type of Riba falls into two categories: Charging interest on the loan lent to an debtor. This category was commonly practiced in the pre-Islamic era. A person, for example, may lend another person a sum of money to be paid back on a specified date. When the date agreed upon is due, the creditor gives the debtor the choice either to repay the debt or defer repayment in return for charging additional interest on the principal. Riba Al-Nasi'ah’s examples from daily life: 1. Credit cards: minimum set payment with interest rate. Until you pay your debt. Either it’s on lower/higher rate it’s an interest (Riba Al-Nasi'ah). As they have taken benefit on providing loan. 2. conventional insurance prohibited is the fact that conventional insurance entails interestbased dealings. The funds that the insurance company receives in the form of insurance premiums are generally invested in interest bearing accounts or interest bearing securities. Interest has been forbidden in the Sharia in no uncertain terms and is an extremely grave sin. The investments and operations in conventional insurance are all based on debt and equity, debt being interest based. 3. Person/institutes lend money to any person with a set amount to be paid on top up of that loan (Riba Al-Nasi'ah). Same they are taking benefit on top of loan. 4. Bank/person/institutes lend money to any person/institute with set monthly payment for specific time on top of principle amount borrowed (Riba Al-Nasi'ah). As taking benefits on top of loan is riba 5. A person owes some money to another person/bank/institutes and the period of debt expires, the lender demanding his principal sum; if the debtor expressed his inability to pay, the lender would then grant him an extension on the condition that he paid in excess of the capital. The period is then extended with an increased debt. The additional amount charged is called Riba Al-Nasi'ah. As they are taking benefits on provided loan. 6. Saving accounts in conventional bank, as the conventional bank runs on revenue generated by interest, and the same they do with saving account holder and share earned interest rate with account holder. 7. Conventional bank charge interest rate while providing loans.

Question No. 02 Find five examples of Riba-al-Fadl from your daily life and justify how Riba is found. According to Hadith of the Prophet, six things are susceptible to Riba Al-Fad: gold, silver, wheat, barley, dates and salt.It is prohibited to charge interest on such transactions where any of the above things are exchanged for articles of the same type. The same holds true with regard to exchanging two articles which bear the same common cause of prohibition. It is, for example, prohibited to exchange a kilo of gold of inferior quality for half a kilo of superior quality. The same is applicable in the case of exchanging a good type of silver, wheat, barley, dates, or salt for a poor type. It is only permissible to exchange articles of the above mentioned things provided that they are equal in weight and the exchange has to be made in a hand-to-hand transaction. However, it is permissible to exchange a kilo of gold for two kilos of silver provided that it is a hand-to-hand transaction. The Prophet (peace be upon him) said, Gold is to be exchanged for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then sell as you wish if payment is made hand to hand. Examples of Riba-al-Fadl: 1. Exchange of low quality gold done with superior quality while paying some amount with it or it differs in weight is Rib-al-fadl. 2. An exchange in which one part with 110 grammes of gold now in return for 115 grammes of gold to be received now can be described as riba al-fadl irrespective of their quality 3. It has been observed exchange made of wheat with differ in quantity as they differ in quality so the exchange made in unequal quantity in respect of quality is called riba-alFadl 4. Exchange of gold is done and one is providing now and other is providing a week later is Riba-al-fadl. 5. A trader may claim that a kilogram of a specific brand of wheat is equivalent to 3 kilograms of the other kind because of the excellence of its quality and exchange it with this logic, is riba-al-fadl. As exchange is not being done in same quantity....