ZERO INTEREST RATE: FROM THE PERSPECTIVE OF ISLAMIC TASAWUR AND EPISTEMOLOGY

Abstract

Zero Interest rate is introduced in economic sectors of developed countries to stabilize as well as to offset the effects of global financial crisis of 2008-2009. However, as far as interest is concerned no matter in whatever name and form it may be, it is clearly declared prohibited for Muslims throughout the globe according to Islamic Shariah. Therefore, the issue in view is to identify whether zero interest rate is in line with Islamic Shariah or not because at its extrinsic aspect at operational level it seems identical to interest free phenomenon but intrinsically at philosophical underpinning aspect it needs to be analysed that whether or not it is in line with Islamic shariah. While keeping in view that there is difference of opinion or ruling judgement regarding zero interest rate and its equivalence to interest based economic activity. Because it depends upon the nature of contracts and the nature of contracts differs. Therefore, the study is conducted to analyse zero interest rate and also to identify zero interest rate from Islamic tasawur in terms of philosophical underpinning and operational mechanism. Whereas, from methodological point of view qualitative research is conducted in order to build conceptual framework by using inductive paradigm to address the issue of understanding the applicability of zero interest rate from its Islamic tasawur. The expected outcome suggests that zero interest rate from conventional aspect is rejected by its philosophical underpinning as it is not in line with Islamic shariah such as decreasing interest rate below zero percent or near zero percentage is not according to Islamic shariah but it can be implemented in Muslim countries if its philosophical and operational side is according to Islamic shariah and Islamic tasawur by eliminating interest purely at zero percent in economic activity.