How does P2P lending fit into Islamic crowdfunding given that interest (riba) is prohibited in Islam?
Unlike conventional P2P lending that runs on a credit model with interests, shariah-compliant P2P lending is based on Islamic contracts. It requires a product, commodity, or service as a trade-off of the financing. There are various Islamic contracts that can be used in the P2P lending transaction, such as Murabahah, Musharakah, Mudharabah, Ijarah, etc.
At Ethis Indonesia, a fully licensed shariah-compliant P2P platform, our transaction is based on a limited-scope joint-ventures partnership known as Musharakah. Each project will go through a thorough shariah screening by our shariah advisory team before it’s launched for funding.