Istiqlal

Definition of "Istiqlal"

A legal device practised by the people of Turkey during the Ottoman period (1281–1925) for concealing a usurious transaction. It was apparently a sale transaction but actually a loan contract. The borrower handed over to the lender some real estate, supposedly as a sale, but actually as a pawn. If the borrower redeemed his debt after the agreed period, asset reverted back to him. In the meantime, the lender leased the asset to the borrower (so that the borrower could go on using it) and the ‘rent’ which was exactly 10 per cent per annum of the loan, was nothing but interest. It was, thus, a transaction of interest-bearing loan with real estate as a security.