MARKING THE INVESTMENT TO THE MARKET
The RF banking and finance discipline, in an effort to neutralize the effects
of the prevailing fiat currency in the local markets, requires that we first ap-
ply the commodity indexation rule to check on the existence of a bubble in
the business that we are considering to finance. This process is followed by a
mark-to-market approach, evaluating the economic prudence by calculating
the real return on investing in this item, using its actual real market rental
value. This way, it is affirmed that money is not rented using the prohibited
riba—and that the rent is that of the market rent of the facility in the market
place. For example, in the case of:
&A car:The value for which this car is leased in the market (dollars per
day), as obtained from actual operating leasing companies.
&A house:The actual market rental or lease rate (dollars per square foot)
of a similar house in the same neighborhood. It is important to make
sure that this house has essentiallythe same specifications as those
researched. These rates can be obtained live from real estate agents.EXHIBIT 5.22 Price of gold in terms of wheat.
128 THE ART OF ISLAMIC BANKING AND FINANCE