The Usurious Nature of Excessive Interest Rate in The Algerian Banking Legal System

Abstract

 

The Algerian banking law's omission of the term "Riba" is a notable feature, especially in a country where Islamic finance has garnered significant attention across various sectors. Despite the absence of direct reference to Riba, an analysis of Algeria's banking regulations reveals the presence of a concept that closely parallels it. Instead of Riba, the law employs the term "prepared interest" to govern credit operations. This terminology is strategically used to ensure customer protection and to establish clear accountability for banks in the event of regulatory violations.

The term "prepared interest" appears to serve a dual purpose: it adheres to the practical requirements of modern banking while subtly incorporating principles that resonate with the Islamic prohibition of Riba. This study delves into the intricate relationship between the Algerian banking system and the concept of interest, arguing that while the term "Riba" is absent, the underlying principles that regulate interest in the Algerian context reflect a nuanced adaptation of Islamic financial tenets.

The research highlights how this adaptation allows the Algerian banking system to align with certain Islamic values while maintaining the flexibility required for contemporary financial operations. By exploring this alignment, the study aims to shed light on the existence of a concept of interest that, although distinct from the broad and traditional notion of Riba in Islamic Sharia, remains consistent with its foundational principles. This analysis underscores the complexities involved in balancing Islamic financial ethics with the demands of modern banking in Algeria, offering insights into how the country navigates the intersection of religious values and economic imperatives.

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