What is Islamic Lending or Shariah Compliant Lending? AIMS Education

Islamic lending, also known as Shariah-compliant lending, is a type of financing that complies with the principles of Shariah, or Islamic law. In order to be considered Shariah-compliant, a loan must not involve any form of interest or speculation. Instead, the loan must be based on a partnership between the lender and the borrower, in which both parties share in the profits or losses of the venture.
There are a number of reasons why someone might choose to take out an Islamic loan. For Muslims, Shariah-compliant financing is the only option that is permissible under their religion. But Islamic lending can also be attractive to non-Muslims who are looking for an alternative to traditional banking products. Because Islamic loans are based on partnership rather than interest, they can often be more flexible and less expensive than conventional loans.
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