Islamic banking
Pakistan's religious right is
trying to get the country to switch to an
Islamic banking system, which would -- among other things -- ban the payment of interest:
Islam allows only one kind of loan and that is qard-el-hassan (literally good loan) whereby the lender does not charge any interest or additional amount over the money lent.
Luckily, some Islamic financial engineers have come up with
Clintonesque definition-of-is workarounds:
Sharia-compliant mortgages involve a bank buying the house and the individual making monthly payments to the bank over a period of up to 25 years.
The total amount paid by the individual ends up being well over the asking price for the house, and if an individual's circumstances change and he has difficulty servicing repayments, the schedule is revised. At worst, the house may be repossessed by the bank.
If this all this sounds similar to conventional mortgages, that's because it is.
Incidentally, when I used to work in capital markets, one of my co-workers was a Muslim who was religious enough to fast for Ramadan, but who spent part of his days trading equity options (which are
not permissible). I think I'll have to ask him about it.