Essay on Islamic Banking,Summary of the article
WebThe revival of Islamic banking coincided with the world-wide celebration of the advent of the 15th Century of Islamic calendar (Hijra) in At the same time financial WebAug 22, · Islamic banking was established in Malaysia in Islamic banking products and services should come under the Islamic Banking Scheme (IBS). Kuwait WebAug 6, · The main source of Sharia law is the al Quran, which prohibits any money that is far above the principle amount in the lending business by terming it haram and hence WebFeb 21, · Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in WebNov 19, · Consequently, Islamic finance is a banking technique that comprises a conglomerate of fairness, sharing, profit, loss, and real operations, which articulate ... read more
Apart from that, Islamic banking is an interest free banking, which there is no fixed rate of return. The Shariah board authorizes the production that whether these are Shariah compliant or not. Islamic banking is the banking that is guided by Islamic law Shariah principles and guided by Islamic economics. Islamic law forbids the usury, the collection. Islamic Banking vs. Conventional Banking In most Islamic countries, they tend to practice two types of financing in banking industry which are conventional and Islamic banking. The country like in Malaysia has successfully developed an Islamic banking system that operates in parallel with the conventional banking system. There is similarity between conventional banking and Islamic banking which helps to promote economic growth provided financing services such as credit facilities for business activity.
the motive of acquiring unreasonable interest. In the holy Quran, the four chapters are governed for the business transactions relating against the interest such as Sura Baqra, Sura Nisa,Sura Al Rum and lastly Sura Al Imran and emphasize on the principle of the Free interest economy. Islamic and conventional Banking principles. Causes of the financial crisis. Effects of the financial crisis. Banking Sector before the. aspects as one of it is the economical factor. As far as we know, businesses are the main sectors of a nation where it decides the economical status of a nation. Apart from that, banking operations are also one of the factors which contribute to the economical growth of a country.
The main core business of the banking corporation is being a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital. seen that the Islamic banking industry can be used as a medium to communicate and spread propaganda. Through this medium, it will demonstrate the power and advantages of Islamic banking system compared to conventional systems. This can also be seen in the Islamic banking system is not only widely accepted by the Muslim community even non-Muslim communities are also using this system. the establishment of Islamic banking in Bangladesh.
Later In November , a entrustment of IDB triped Bangladesh and proclaimed enthusiastic interest to contribute or the establishing a Islamic bank through joint venture especially in the private domain. Two proficient bodies such as the Islamic Economics Research Bureau IERB and the Bangladesh Islamic Bankers ' Association BIBA ended noteworthy groundwork on the way to initiate a Islamic banking in Bangladesh. They gave several training and. Generally, a financial institution or a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets is given the name of bank. its source of generating revenue and. the study 6. Key estimated learning from the study Part two 7.
What is Islamic Banking 8. What are the transaction process of Islamic banking 9. The key sources of law and values of Islamic Banking The differences between Islamic Banking and conventional Banking Part three A comparative analysis Conclusion Basic differencess: Results indicate that conventional banks perform better in profitability, while Islamic banks perform better in liquidity and credit risk. In t-test of the return. Introduction Islamic finance within compliance of Sharia law form the core of Islamic banking and have become one of the fastest growing segments of the financial industry, operating in over 75 countries Cihak,Hesse Islamic finance initially was concentrated in the Middle East and South East Asia, but is now found globally.
The roots of Islamic finance stemmed from the efforts of Islamic scholars to identify alternatives to the interest based system that is prohibited and condemned by Allah. perceptions number of Islamic banking services. Study from Erol and El-Adour and Erol et al. Using both conventional and Muslim banking customers as respondents, the study found that the provision of services quickly and efficiently, the bank's reputation and confidentiality are the most important selection criteria for bank customers who visit the Islamic banks. In their study. A case study on Islamic banking at SINDH Pakistan This study about knowledge attitude and practices on Islamic banking To receive the idea about knowledge attitude and practices of Islamic conventional bank and their bank account holder.
Research was conducted among the questionnaires were distributed among account holders in SINDH. This research point out the relationship between the knowledge and practices of Islamic bank. And research also shows that netural behavior dosnot effect the knowledge. globally, Islamic finance remains tiny compared to conventional finance with its tens of trillions of dollars. In view of the financial crises which have been affecting the whole world, a solution in the name of Islamic finance could be introduced.
As the global economic slowdown becomes more severe and protracted, many countries will be seeking alternatives, and Islamic finance. According to Mansoor Khan, Islamic banking and finance IBF is an economic ideology that depends on Shariah rules which are extracted from the Islamic holy book - Quran- and Al Sunnah - what the prophet Mohammed stated or did. This ideology is mainly about expunging interest and other exploitive elements from the financial sphere. Islamic finance is an equity-based system depends mainly on Profit and Loss Sharing PLS modes.
Opines that half of interviewees accept that the role of islamic banks in the financial emergency is truly positive. Opines that Explains that islamic saving money financing is connected with financial development and collection of capital. islamic banks are less unsafe than traditional banks, both for moguls and business visionaries. Explains that islamic banking items have been decently acknowledged by malaysians. this is reflected in the expanding sums for stores and advances dependent upon islamic standards put by muslim and non-muslim clients. Financial performance of Islamic banking and conventional banking in United Kingdom- A Comparative Study explanatory essay.
Chapter 1: Introduction 1. Summary In this essay, the author Describes the research title, aims, objectives, hypothesis, research context, and research limitation in this chapter. Explains the aim of this research is to analyze and evaluate the financial performance of european islamic investment bank with allied irish bank and northern bank. Explains that research objectives are set of goals which researchers intend to make from the research conducted. comparing financial performance of islamic bank with other conventional banks can measure the overall financial health over the given period. Explains that islamic banking refers to the way of doing commerce and transactions which are sharia compliance. Defines riba al fadl as the addition compensation without any consideration resulting from a sale of commodity.
Explains that the above hypothesis will be tested by the following research questions. Compares the financial performance of european islamic investment bank eiib with two conventional banks, allied irish bank and northern bank. Explains that european islamic investment bank is regulated and approved by financial service authority. it invests money in middle east, asia, and europe. Explains that the dissertation is limited to islamic banking, excluding the closely connected subject islamic insurance. there are three islamic banks and more than ten non-islamic banks operating in uk, but researcher has chosen one islamic bank and two conventional banks. Explains venardos. Explains that fsa encourages growth of islamic finance in the uk. Cites fsa, ukinvest.
uk, and islamic bank of britain. Explains that the researcher wants to pursue a career in islamic banking and this research would help him to know about islamic banks. Explains that northern bank is one of the most established providers of financial services within the island of ireland, with origins dating back as far as Explains that allied irish bank was formed in by the merger of three banks — the munster and leinster bank, the royal bank of ireland, and the provincial bank. aib is the largest irish banking group by market capitalisation. The Advantages of Islamic Finance and Banking argumentative essay. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
Summary In this essay, the author Explains that analysts are giving different opinions and making new economic hypotheses about the origin of, as well as the process of different countries escaped from the crisis. they will highlight the basic principles of islamic finance, the reasons of the restriction of interest, and the most important tools used by islamic banks. Explains how islamic banks operate and what their main differences are in comparison with conventional banks. Argues that interest is a negative factor when it comes to the economic impact of the interest riba on the whole economy and individuals. Explains that islamic banks provide investment management service which enable customers to earn profit over their investments.
mudarabah is a special kind of partnership where one partner gives money to another for investing it in commercial enterprise. Compares musharakah to mudarabah, where all partners invest and share the profits. this is an alternative to interest-based funding of conventional banks. Explains that murabahah is a term of islamic fiqh and refers to sale transactions that have nothing to do with financing in its original sense. Explains that the gain from all these activities comprises a part of the islamic banks finance. Concludes that islamic banks are operated according to islamic financial principles which is set by sharia law.
Cites islamic economic studies, vol. What is Islamic Finance? explanatory essay. Islamic finance is a financial system that operates according to Islamic law which is called sharia and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. However, these entities are governed both by Islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process. Summary In this essay, the author Explains that islamic finance is a financial system that operates according to islamic law and is therefore sharia-compliant.
Explains that the modern islamic finance industry is young, its timeline begin only a few decades ago, but islamic finance is involving rapidly and continues to expend to serve muslims and conventional. Explains that mit ghamr savings bank in egypt became the first modern islamic bank record in Explains that in , the pilgrims saing corporation of malaysia began to incorporate basic islamic banking concepts. Explains that the islamic development bank opened in saudi arabia in and gave the islamic finance industry an international presence. it recruited member countries and offered them financial products to promote economic and community development. Explains that in , the first islamic insurance takaful company was established. all muslims at that time couldn't purchase conventional insurance products due to interest-based transactions, uncertainty, and gambling.
Explains that the amana income fund, the world's first islamic mutual fund, was created in indiana in Explains that in , the accounting and auditing organization for islamic finance institutions aaoifi was created to establish industry accounting and auditing standards. Explains that in , the islamic bond market emerged when first tradeable sukuk were issues by shell mds in malaysia. Explains that citibank began offering islamic banking services in when it established the citi islamic investment bank in bahrain. Explains that the dow jones islamic market index djimi became the first successful benchmark for the performance of islamic investment funds in Explains that the malaysia-based islamic financial services board ifsb was established as an international standard setting body for islamic financial institutions.
Explains that there are many issues involved in the islamic finance, such as lack of liquidity instruments and risk analysis and measurement. Explains the importance of risk analysis and measurement in islamic finance. islamic banks focus more on equity financing and expect to monitor investment risk carefully. Explains that in islamic finance or banks, employees face poor management and poor services. they do not know how to explain the islamic products well to their customers. Explains that wadiah is a trust and the depository is the guarantor and guarantees repayment of the whole amount of deposits. Explains that for the person that enters this type of product, the bank will give the passbook and atm card for them to use it.
Explains the profit sharing concept for an agreement made between two parties. one party will provide capital and another will become an entrepreneur. both parties will share the profits according to the ratios agreed. Explains a partnership or joint venture, whereby the distribution of profits will be apportioned according to an agreed ratio. Explains the concept of sale of goods at a price which includes profit margin which have been agreed by both parties. Explains that bai' bithaman ajil bba is a mode of financing suggested by the muslim economists. it is where the buying and selling goods or services based on the deferred payment or installment that has been agreed to pay.
Explains that debt financing is used for production, commerce and services of sale or purchase of trade documents and papers. only documents evidencing debts arising from bona fide commercial transactions can be traded. Explains the concept of leasing, where a lessor leases an asset to the lessee, and the principle of "al-takjiri" where the owner of the asset agrees to sell the assets. Explains the term benevolent loan or charity loan, which is a loan without interest and given by the bank for welfare purpose. Explains that bank guarantees a third party that the bank's customer will fulfil his obligation. the bank compensates any loss due to the failure of the customer. Explains borrowing with collateral. if the borrower fails to pay, the valuable asset can be disposed to compensate for the loan.
Explains that islamic finance is not prohibitive for accumulating wealth. it encourages customers to put some portiob of money for "zakat" or charity purpose. Explains that products in islamic finance are more simple compared to conventional products that is more complex and difficult to understand because it more to gamble on their transactions process. Explains that islamic finance is slower than conventional finance and encourages investors to make responsible decisions and avoid investments that will harm people and the environment. this reduces risks, increases stability and is socially responsible. Explains that islamic finance is based on the shariah compliant and prohibits the use of products with interest, speculation, and gambling.
Explains that the islamic bank of britain became the first islamic commercial bank established outside the muslim world in Explains that the islamic principles started in malaya in the 16th century. Explains that shariah compliant or islamic principles are based on the secular banking law and practices of the respective countries. Explains that islamic finance provides equity financing to the business, projects and venture. if there is a loss occur, it will be bear equally based on the ratio agreement. Explains that transactions involved in gharar are prohibited by islamic financing because it involved uncertainty on buying and selling the goods and services.
Explains that all transactions are based on the shariah principles, therefore the profits that business will get share equally and no interest on profits or loss. returns for customers do not depend on banks performance. Explains that islamic finance is focused more on creation of wealth, recognized private property, emphasized fullfilment of contracts and equally transactions. it is free from riba, speculation and gambling. Recommends that islamic finance be more efficient and effective in terms of liquidity, risk analysis, and management. What Is Financial Crisis? argumentative essay. According to Abdulkareem Abu al Nasr, The CEO of NCB, or Al-Ali Bank, global financial crisis happens because of " excessive use of structured debt and securities which drove unsustainable levels of financial leverage'' Could Islamic Banks Help, On the other hand, Islamic banks that prohibits riba prevents this kind of situation from happening.
Islamic banks focused their activities mainly on domestic markets, where most of the activities involved tangible objects instead of debt based financing. That way, Islamic banks would not be seriously affected even when financial crises hits the economy. Conventional banks gain their profit mainly from giving out loans to borrowers and receive interest in the process by using money deposited by customers. This causes conventional banks to be exposed to banking crisis where the bank is incapable of returning the money to depositors due to the moneys given out for loans or investment purposes. Therefore, it can be conclude that the nature of Islamic law, Shariah has a major contribution to the stability of Islamic banks around the world during financial. Summary In this essay, the author Explains that financial crisis is a situation where one or more institutions lose their nominal values.
it can be explained as the situation when the supply of money cannot compensate for the demand for money. Explains that there are many forms of financial crisis in the economy nowadays. banks gain their profit by providing deposit accounts to users, and use those deposits to provide loans and investments. Explains that speculative bubble is a situation where the price of security suddenly spikes above their actual value, causing major loss to the company that issues the security. Analyzes how the financial crisis has given islamic banks a chance to show their capabilities to withstand the crisis. Concludes that islamic law based structure of the islamic banks has made them more resilient and capable to maintain stability during financial crisis.
Compares islamic banks' unique banking structure to conventional banks, which is based on islamic law, shariah, that prohibits earning interest through loans and discourages financial speculations. Islam is More than Just a Religion explanatory essay. With justice and ethics the main purpose in the Islamic finance system, Muslims can be ensured that what they are doing is not displeasing Allah SWT. Islam certifies distribution of wealth in a method that follows Islamic ethics. The best part of the Islamic system that it is one that binds man to Allah SWT , with no additional conditions or purposes.
Summary In this essay, the author Explains that islam encompasses all aspects of our existence, from lawful food and drink to ethics and marriage. islam's financial system is founded on justice and faith, rather than a prospect to make additional capital. Explains that capitalism is a system in which trade and industry are controlled by private owners for profit, rather than by the state. Defines socialism as a system that advocates that the means of production, distribution, and exchange should be owned or regulated by the community. the production of goods and services is dependent on the economic demand of society. Explains that islam is neither capitalistic nor socialistic; it is a way of life declared for mankind by allah swt.
islam strives for social justice and lessens material differences. Explains that islam follows neither the capitalistic nor socialistic system. the islamic system is founded on the belief that allah swt is the absolute owner of all the wealth in the world. Explains that islamic finance is based on the orders of allah swt and the example of muhammad pbuh. Explains that a man can acquire wealth through labor, and the wealth he acquires from that labor is his payment. islam works to protect all people and lessen the gap of material differences.
Explains that zakat is the practice of charity given by muslims to those in need to promote justice in relation to the distribution of wealth. Explains that in sensitive issues, such as dealing with banks, muslims acquire scholarly opinions on how to deal with these western banks. Explains that using western banks is just one part, but the obligatory regulations are placed when you open an account with the bank. Explains that islam's system is founded on the submission and worship to allah and not profit or societal demands. islam certifies distribution of wealth in a method that follows islamic ethics. Solution for the IT Security Banking and Ethics comparative essay.
There are several solutions for the Islamic banking, IT security and ethics in where their practices should not contradict with the teaching of al-Quran but at the same time implement the technology to improve banking service to the society. Below are the solutions that might be suitable for the banking services to implement Islamic ethics in the business and their security perspectives. Summary In this essay, the author Explains that there are several solutions for islamic banking, it security and ethics in which their practices should not contradict with the teaching of al-quran but at the same time implement the technology to improve banking service to the society. Advises readers to think about the social consequences of the program they are writing or the system they're designing.
Explains that an islamic bank cannot charge any fixed return in advance, but participates in the yield resulting from the use of funds. Explains that interest-free banking is based on islamic legal concepts of shirkah partnership and mudaraba profit-sharing. Advises to be aware of people who have physical access to your computer. the casual use of your laptop by someone you trust can blow your system out of the water.
In this era of development and growth in Islamic finance and banking, this is a question being raised at every forum by various quarters. All those who raise this question, are undoubtedly well-wishers of Islam, Islamic economic system and Muslim Ummah. Accordingly, while we celebrate the achievements of Islamic banking on one hand, we should not be ignoring the issues and objections being raised by such quarters in order to ensure that we lay the foundations of this industry on strong, straight and acceptable-to-all footings. Objectives Of Islamic Banking Before discussing various objections raised on the present day Islamic banking, we should first try to understand the objectives of Islamic banking, which are as follows: 1.
Achieving the goals and objectives of an Islamic economic system. We all can agree that, given the circumstances, the Islamic banking industry is making all efforts to ensure the first objective, while the second objective, although no-less important, is not the prime objective of current-day Islamic banking. History Of Islamic Banking Modern banking system was introduced in Muslim countries at a time when they were politically and economically slave to the western world. The main banks of the western world established their branches and subsidiaries in the Muslim countries and territories to fulfill requirements of foreign business.
Order custom essay Islamic Banking with free plagiarism report. The Muslim community generally avoided the foreign banks for religious reasons but with the passage of time, it became more and more difficult to engage in trade and other activities without making use of commercial banks. Even then, a large number of Muslims, confined their involvement to transaction activities such as current account or hundred percent cash margin letter of credits. Borrowings from commercial banks or placement the access funds and saving accounts were strictly avoided by practicing Muslims in order to keep away from dealing in interest which is prohibited by Islam. With the passage of time, however, due to increase in cross-border transactions and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible.
Local banks were established in Muslim countries including the names like Muslim Commercial Bank on the same lines as the interest-based foreign banks and they began to expand within the country bringing the banking system to more and more people. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals which gave emergence to the contemporary Islamic banking. By the midst of the last century, many Muslim countries started their efforts to adopt the Islamic economic and banking systems. Many scholars, economist and experienced bankers came with different solutions to initiate the Islamic banking.
Those experiences paved the route for modern Islamic banking. Nowadays Islamic financial institutions IFIs are spread all over the world including European countries and the United States. In particular these have their significant presence in Pakistan, Saudi Arabia, Bahrain, United Arab Emirates, other GCC countries, Malaysia, Sudan and Iran. Who Raise The Questions? Islamic banking is a weak industry…. In respect of resources, in respect of knowledge-bases, in respect of trained-knowledgeable-sincere human resources, in respect of availability of commercial options, in respect of state support, as well as, society support, in respect of sincerity of stake-holders and WHAT NOT. With such adverse footings, unfortunately, it really has certain weaknesses which are not only targeted by the enemies, but, are more severally and forcefully attacked by the FRIENDS.
Can Banking Ever Be Really Islamic? The first question is raised mostly by those who either do not have any knowledge about banking, or those who have the courage to evaluate the banking systems from its evolution to its objectives. They feel that the banking per-se is against the very basic concepts of Islam. This viewpoint is supported by the fact that, particularly in Pakistan, we have already faced a complete disaster in the name of interest-free banking and so-called IFIs particularly including Modarabas. The argument, as to whether Islamic banking is really Islamic, has two different facets.
So they feel that it is merely a change in name and documents and in fact, it is nothing different from conventional banking. The second facet of this question is more important nd deals with the socio-economic factors associated with the overall Islamic financial system. Due to significance of these objections, we will discuss these two issues before looking for other arguments. The second argument, which is in-fact a derivative of the first argument, is that even in Islamic banking, the most common products being used e. Murabaha, Musawwama, Salam, Istisna, diminishing Musharaka and Ijara Muntahia Bittamleek are on fixed return basis.
One should realize the fact that unless we can distinguish an Islamic bank from a conventional bank, it would be difficult for any of us to rely on the same. Particularly, it is observed that they try to make sure that their product is similar to the conventional products in all respects, even if for that purpose they have to incorporate a few provisions in these products which are not considered to be good or a few of them are considered Makrooh. In addition, their endeavors are focused towards minimization of their risk through every possible option and accordingly, the essence of Islamic finance which is based on risk taking is killed.
We can note that most IFIs market their products on the models very much similar to those used by the conventional banks. The basic reason behind this similarity is to ensure three objectives. The second one, is that even by IFIs, it has to be ensured that their shareholders and depositors get some return and preferably a return equivalent to those of conventional banks. And the third reason is to avoid arbitrage amongst Islamic and conventional financial systems which may be exploited by a few big-guns to get the benefit of the pricing difference between the two parallel financial systems. For such reason, time value of money concept is used for performance measurement and pricing of financial products. Most importantly, it should be kept in mind that in some areas Haram and Halal have a very small difference.
For an example, only saying the name of Allah Almighty on an animal at the time of slaughter makes it Halal and permissible while by not saying that name we make it Haram or by just a few words of acceptance in Nikah, in presence of a few persons, a man and woman become Halal for each other. Similarly, if a transaction can be engineered in a way that the same becomes Shariah compliant, then we should not conclude that the same is Haram only due to its resemblance with the interest based financing. It is also pertinent to note that since the Islamic financial services sector is in its infancy phase, as compared to the conventional banking, we unfortunately have to follow the conventional system in the pattern of financial products and are still not in a position to invent absolutely new financial services.
During the last few centuries, the conventional banking system has well read the human needs and psychology and has invented a considerable number of financial products and accordingly, it is not simple to just invent a new financial tool just for the purpose of inventing one. For example, if they have running finance and overdraft as a financing tool, we have invented an alternate to the same in form of Istijrar with Murabaha or Musharaka based running finance model. Similarly, if they use finance leases as a financing tool, we have converted the same in a Shariah compliant form in form of Ijara Muntahia Bittamleek or in form of Diminishing Musharaka.
These are only two examples, but the tally is practically very high and for each interest based financial product except for those explicitly Haram, more than one alternates have been engineered. The objective of this discussion was just to emphasize that merely an amortization schedule similar to the one offered by a conventional bank, is not a basis for declaring a Halal product to be Haram. If just a pricing model or just the similarity of a cash-flow model makes the transaction Haram, what you will say regarding a conventional loan offered at a price much higher or much lower than the market prevailing rates for which the pricing model and the cash-flow model are not similar to those generally applied in the industry.
Does anybody think that such dissimilarity will make it Halal? Accordingly, from Shariah principles it is rightly concluded that it is the substance of a transaction what makes it Halal or Haram and not a pricing model used to price the transaction or the cash-flow model used for the payments and repayments in monetary terms. Socio-Economic Effects Of Islamic Banking And Finance Second most significant argument from such group, predominantly by certain Islamic economists and certain Islamic revolutionary movements, is about the socio-economic factors of Islamic banking. This is a crucial question and, we believe that, every conscious Muslim will concur with the concerns of those who raise the same, although the conclusions derived by different people might vary. Nobody can argue that virtually-fixed return based banking, although being Shariah compliant, is not what has been desired by Islam as a complete way of living.
Accordingly, one can easily imagine that in an economy whereby most of the businessmen are not honest in fairly presenting the financial statements of their businesses, how difficult it is to introduce a profit and loss sharing based financial solution. Similarly, in most of the cases payment of Zakat and Sadaqat depends on the individual and particularly, in view of the gigantic volume of the black economy in the country, what can be expected even if a good system for Zakat and Ushr is introduced? It needs to be emphasized that only the change in banking system is not a solution to the overall revolution of economic system unless other facets of Islamic economic system, as well as, Islamic social system are not implemented simultaneously.
Accordingly, the complete transition of economy to an Islamic economic system can be performed, when and only when, the overall consensus of the society is developed towards practical application of Shariah in all the facets of human life, particularly including the governmental, political and legislative structures. Despite such an unsatisfactory and rather discouraging attitude of the society towards application of Islamic Shariah, it should be noted that such a situation do not relieve a Muslim from the applicability of Shariah principles, but rather increases his responsibilities in the way that it becomes his duty not only to try to abide by all applicable Shariah requirements in his personal capacity but also to put his endeavors towards improvement in such system.
Consequently, in case the Islamic banking, in your opinion, is not contributing enough towards betterment of society, you cannot blame the same alone. The responsibilities of the Muslim Ummah as a whole or of the State can not be expected to be borne by a single sector only, which, at this point of time is in its infancy stages. Is It Heela Banking? This is a general discussion at various forums that contemporary Islamic banking is based on Heelas. From Shariah perspective, a Heela is an option utilized to disobey the divine guidance through engineering the circumstances and playing with the facts and intentions.
Having an insight into the industry, one can not disagree with this argument to certain extent, as it has been observed in a number of cases that in-fact, certain transactions are practically applied on this basis. Having said that; this argument should, however, not be used to blame the entire industry. We should acknowledge that the foundations of the industry have been built using the pillars which are directly derived from the Holy Quran, Sunnah and Fiqh. Accordingly, it needs to be emphasized that in order to support the growth of Islamic banking and finance on right footings, we need to strengthen the Shariah compliance mechanism for the industry.
In addition, in the longer run, we need to eliminate the Islamic financial products which have the potential of misuse. Use Of Interest-Rate As Benchmark; Is It Halal? Economists feel further issues and that and are of he view that this thing makes these financial institutions a part of the prevailing capitalistic economic systems, hence this sort of transactions are absolutely not desirable by Islam. Here it would be worthwhile to have a look on the arguments by the Islamic banking for better understanding of the pricing issue. They generally give examples like; suppose you enter into a supermarket in UK and see that the pork, the beef and the Halal beef are all being sold for GBP 2 per kg.
Do you think that this similarity of price or the fact that these products are being sold under the same roof renders the Halal beef as Haram? Or for example; in the same superstore you note that they are using the same balance for weighing these three types of meat. Do you think that using the same balance will render the Halal beef, as Haram? If not, then we should better understand the principle that it is the substance and legal form of the transaction that makes it Halal or Haram and not its pricing, rate or the cash-flow model or the institution, or even the environment that offers such transaction. This issue, however, needs to be addressed by the government, as well as, the market players. A strong Islamic inter-bank market will InshaAllah provide us opportunities to develop our own benchmarks for Islamic banking operations.
Dealing of Islamic Banks with Conventional Banks Another strong argument against Islamic banking is against dealing with conventional banks. These dealings are of two types i. sharing of services and commercial transactions. As far as services are concerned, where the Islamic Banks are facilitating the foreign businesses of their customer or helping out their customers to transfer the money from safe channels. For these services, the remuneration or expense of Islamic banks is service charges which are allowed by Shariah jurists, although they recommend that such interaction should be avoided wherever IFIs are available.
The second argument which is much strong is regarding the commercial transactions with conventional financial institutions. These transactions generally relate to the treasury side of the Bank whereby either the IFIs place their excess liquidity with the conventional banks or obtain financings from them to meet their own liquidity requirements. Although, most of the Shariah scholars have allowed these transactions duly considering the Shariah requirements, however, nobody can argue that it is a must to avoid all such transactions. For this purpose, however, we need to strengthen the Islamic inter-bank market and to provide further liquidity management options to the IFIs particularly, in form of strong Shariah-compliant government securities and a stable capital market with plenty of Halal investment options available.
All dealings with conventional financial institutions should remain limited to the necessities which reach the extremes of compulsion. Cost Of Being A Muslim Those who have bad memories of dealing with Islamic banks are in front-line of critics with this remark. People feel that there are serious doubts on the honesty and integrity of IFIs. On the financing side, they charge higher than conventional banks. In other words, internal rate of return on Islamic financial products is higher than the conventional products. On the contrary, it is observed that on the deposit sides they pay less as compared to the conventional banks. In addition, it is generally observed that the expected rates, as well as, the actual rates of return offered by these financial institutions are fairly equivalent to generally slightly less than the rates being offered by conventional financial institutions.
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WebAug 22, · Islamic banking was established in Malaysia in Islamic banking products and services should come under the Islamic Banking Scheme (IBS). Kuwait WebNov 19, · Consequently, Islamic finance is a banking technique that comprises a conglomerate of fairness, sharing, profit, loss, and real operations, which articulate WebFeb 21, · Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in WebEssay On Islamic Banking 1) Riba’ (interest-based transaction) is prohibited. 2) Avoidance of Gharar (uncertainty) 3) Avoidance of Zulm (opression) 4) Promotion of WebThe basic concept of Islamic banking which is also known as 'interest-free banking' is based on basic ethical standards with just one main difference- Muslims are not allowed WebThe revival of Islamic banking coincided with the world-wide celebration of the advent of the 15th Century of Islamic calendar (Hijra) in At the same time financial ... read more
Even then, it is generally noted that IFIs are paying less than the market. Free Essays - PhDessay. Explains the primary source of primary data is the chief manager and the credit manager. The key sources of law and values of Islamic Banking Islamic banking has made steady progress over recent decade. rich merchants gave loans on grains to farmers and traders who traded their goods between cities. Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in augmenting a truly Islamic financial system, and more appropriately said, will serve as an experiment for the time when we will really be in a position to the implement the complete Islamic way of living in our beloved country.
Sample Islamic Banking Dissertation. Through this medium, it will demonstrate the power and essay on islamic banking of Islamic banking system compared to conventional systems. First, attributes of the Islamic profit-and-loss sharing banking paradigm are likely to be associated as a key reason for the rapid growth in Islamic banking in UAE. Did you know that we have over 70, essays on 3, topics in our database? Malayan Banking Berhad or also known as Maybank Group is the leading financial services provider in Malaysia catering the needs of consumers, investors, entrepreneurs, essay on islamic banking, non-profit organizations and corporations. This research project provides useful information about the strength and weaknesses of the BIMB, SCBMB and Maybank, so that the BIMB, SCBMB and Maybank may improve its operation.
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