The entire text of "The historic judgement on Interest" in Pakistan can be read here. This is a 250 page Judgment written by Justice Mufti Taqi Usmani who was a judge on the Shari'at Appellate bench in Pakistan. It covers, in detail the concept and the prohibition of interest and gives answers to those who argue in favour of it. The entire book is available in the link provided.

To gauge the content, here are a few snippets from the book:

(38) The Bible the word usury is used in the sense of any amount claimed by the creditor over and above the principal advanced by him to the debtor. The word riba used in the Holy Qur'an carries the same meaning because the verse of Surah An-Nisaa explicitly mentions that riba was prohibited for the Jews also.

Imam Abu Bakar al-Jassas states…

(40) The riba which was known to and practiced by the Arabs was that they used to advance loan in the form of Dirham (silver coin) or Dinar (gold coin) for a certain term with an agreed increase on the amount of the principal advanced.

A points to keep in mind to answer detractors

(i) [67] ... Validity of a Transaction is not Based on the Financial Status of a Party ... (ii) [73] the verses which prohibit riba do not at all differentiate between a consumption or a commercial loan, nor does this difference find any mention whatsoever in the vast literature of the Sunnah dealing with riba.

However small, interest is prohibited.

The directions of the Holy Qur'an and the Sunnah are quite explicit on the point that any amount, however little, stipulated in addition to the principal in a transaction of loan is riba, hence prohibited.

Interest is prohibited because Allah prohibits irrespective of there is any harm or oppression

(131) Thus the Holy Qur'an did not leave it to the assessment of the parties to decide what is injustice and what is not. Instead, the Holy Book itself has precisely decided what is injustice for each one of the two parties in a transaction of loan. Therefore, the notion that the permissibility of different transactions of interest should be judged on the basis of human assessment is tantamount to defeating the very purpose of the revelation and is not, therefore, acceptable.

Read the chapter on the difference between illat and Hikmat (119-134)

The chapter on the nature of money and the nature of loan is worthwhile a look from an academic perspective. Particularly focus on the difference between money and commodity

The ill effect of interest are discussed from para 162-179

Interest-based loans have a persistent tendency in favor of the rich and against the interests of the common people. It carries adverse effects on production and allocation of resources as well as on distribution of wealth.

Interest is not a necessity

(195) Before deciding an issue on the basis of necessity one must make sure that the necessity is real and not exaggerated by imaginary apprehensions and that the necessity cannot be met with by any other means than committing an impermissible act.

From para 204, Mufti Taqi Usmani starts discussing possible solutions and answers objection raised

(204) The basic and foremost characteristic of Islamic financing is that, instead of a fixed rate of interest, it is based on profit and loss sharing.

(209) In equity-based banking the depositors are expected to gain much more than they are receiving today in the form of interest which often becomes negative in real terms by the inflation caused mainly by the expansion of the debt-based money. It will divert the flow of wealth towards the common people and in turn will encourage savings and bring a gradual and balanced prosperity.

In para 210-213 and 214-217 the author answers the perceived drawbacks of risk of loss and dishonesty respectively.

For valid models of Islamic finance read "Islamic Finance' by Shaykh al-Islam Mufti Muhammad Taqi Usmani. Book is available here

Conclusion: Read the summary in para 242-245

Muhammad Saifur Rahman Nawhami
23 Rabi II 1435
23 February 2014