then claim that we are providing Islamic finance services just because the
namewasdifferent.Wewereseverely criticized by many of the puritan
and educated members of the community, who asked repeatedly: ‘‘What
is the difference?’’ In fact, we concluded that they were right—there was
not much difference. Within our firstyear of operation, we began to de-
velop a model that is truly beneficial to the user and that follows Shar-
i’aa. We call it the Shari’aa-based model or the LARIBA model, as it is
known worldwide.
Through our development of this model, we asked a fundamental ques-
tion: ‘‘Why does the RF system prohibit riba or the act of renting money for
a price (the interest rate)?’’ We reasoned that if we stopped rentingmoney
and started looking at the rental rates of theitemsfinanced in the actual
marketplace, then we were in fact investing in rent-producing cars, propert-
ies such as homes and commercial buildings, and businesses. If the transac-
tion is profitable because of the rent it generates, then it makes prudent
economic sense to invest in it with those who come to us for finance. We
also concluded that based on the fact that money is a fungible thing that
cannot be rented, then giving it to a customer in the form of debt financing
(daynin Arabic, compared toqard,orloan, as explained in Chapter 2) is
actually as if we are investing with this customer.
THEPUZZLEANDTHECHALLENGEOFDEVELOPING
RF BANKING AND FINANCING
It is useful to document the many challenges we faced while trying to solve
this puzzle with the humble tools and the limited resources available at the
time. The intention is to document what our team did for the record and
for the benefit of future generations. When we started, our goal was to
come up with a solution to the problem of living a full American life with-
out violating the laws of Shari’aa and to uphold the laws of the land without
participating in the culture and practices of riba/ribit. It may have been easy
to articulate that goal; in practice, though, it was a big and daunting chal-
lenge and a hard dream to realize!
The following sections comprise a review of the many currents faced in
developing an RF financing and banking regime.
Legal and Financial Categories
First, let us review what we learned in Part One in each category of the sub-
ject that had an impact on the development of the RF financing and banking
brand.
RF Banking Model for the 21st Century 227