Islamic finance recognizes time value of money in deferred sale contracts and does NOT recognize time value of money in lending and rescheduling of debts.

1. Islamic
finance &
time
value of
money

2. Financing: A mechanism to acquire
assets by creating future
obligations
Deferred Lending
Sales
Goods & Money and Riba-based Riba-
other financial lending free
Services assets

3. Financing
Deferred Lending &
Sales of rescheduling
goods & of debts of
services all origins

4. Basis of recognizing time of money
in deferred sales financing
Source: Quoted in El Gamal (2000) www.ruf.rice.edu/~elgamal/files/primer.pdf p 12

5. Islamic finance
recognizes time of
money in deferred sale
contracts and NOT in
lending and debt
rescheduling