The present day situation is undeniably pre-eminently dominated by economic considerations. A deep analysis shows that not only the national policies of the Government but also International politics appear to be exclusively governed by considerations of economic interest. The multinational Corporations, Financings bodies and International Banking Institutions if though do not, virtually, control the policies of the entire world; however, do the same in third world countries. There is no denial to the fact that the cornerstone of free market economy is Interest which is deeply percolated in the ins and outs of the current economic system and that is core disordering of the World economy. Contrary to this, Islam confers a guided economy, having restricted earning tools and more refined and specific patterns and procedures of financing deals in order to maintain the smoothness and order in the life system. Shariah’s Teachings are transparent and perfect containing the basic principles and pros and cons of each and every action/phenomenon that take place in human life. Since almost all the activities revolve around economy for which Islam has provided complete guidelines regarding financial transactions and business deals in the form of Musharaka, Ijara and Mudarabah.The present study has focused on the Investigation of in vogue Diminishing Musharaka in Interest free banks and find out the loopholes which still exist in the in-practice Interest free banking and to propose the remedial measures to fill the gaps with appropriate shariah substitutes.
Keywords: Riba: the Interest, Safaqah: the deal or Transaction, Al-ghunm: Gain/ profit, Haram: Impermissible