Banking Structure and Riba-Interest Equation: The Case for Ta’awuni (cooperative) Finance

This conceptual paper is provoked by two interrelated queries. (a) Did Islamic finance industry adopt the wrong banking structure by choosing commercial banking as its core structure? (b) Does riba prohibition requires nuanced understanding in case of financing in a mutually beneficial, cooperative framework? Currently adopted banking structure fails to contribute to some imperatives: spreading ownership, shared prosperity, profit sharing beyond transaction level, and adequate risk-sharing. This paper contributes toward filling a gap by raising the issue of compatibility of commercial banking with Islamic imperatives, while dealing with the issue of riba-interest equation in the context of cooperative (Ta'awuni) banking and finance.