Islamic Money And Time Value Of Money In Islam

Islam strictly says no to 'Riba' and the consideration of time is not allowed. But, time value of money is an elementary financial theory and a basic component in the monetary system. So, it affects the financial dealings of consumer, business and government. There is several basic type of banking:

1. Conventional banking: When there is some additional amount charged on the money lending is known as conventional banking.

2. Islamic banking: In the Islamic banking people are work like the doing in a trading house.

Moreover, there are some basic principles in the conventional theory in the view of “Money” & “Commodity” which differentiate and compares with rules which are followed in Islam. This leads the time valuation of money in Islamic perspective is completely different from the conventional standard.

Time Value of money is an elementary financial theory and a basic part of the monetary system. According to Islamic perspective the

The medium of exchange and unit of account of money determine by the Islam. Money does not perform any functions by its self unless when we exchange it with any service or assets at that time it will become very helpful or useful. Moreover, in the time of Hazrat Muhammad (S.A.W), the most purpose of exploitation cash is as a substitution of barter trade system (the exchange between goods) to keep up the economic stability. Money has no value in itself as a result of cash unable to provide by itself and it'll be productive only if it's articulated with other resources. According to the Shari‟ah, money is taken into account as a capital once it combines with different resources to hold out the productive activity like Mudarabah & Musharakah that lenders don't share solely profit however conjointly loss as well. Additionally, Islam prohibited to extend extra money by loaning out as a result of it ends up in part of interest that banned in