Professional Documents
Culture Documents
Profile
Group Members:
•Noureen Mushtaq
•Sadia Ahmed
Submitted to: •Hafsa Tariq
Sir Javed Kareem •Saliha Anum
The importance of banks cannot be denied in the
development of the economy of any country…..
The involvement of Interest in the current conventional
system of banking has closed several doors of
opportunities for not only Muslims, but also for the world
development of economic sustainability ….
In such times, the need of an
Islamic Ideal Body is obvious….
Let us try to know the reasons
and basics upon which islamic
banking is considered as Halal…
and different from
Interest/conventional banking….
Islamic Banking
Islam
“The
truthful honest merchant is with the
Prophets, the truthful and martyrs (in the day
of judgment)”
Narrated by Al-Tirmidhi)
Forms of Businesses Allowed by
Islam
1. Joint ventures based on sharing of risks &
profits
2. Provision of services through trading, both cash
and credit,
3. Leasing activities.
Uniqueness of Islamic Banking
Commingling between Finance and Religion and ethics
Sharia Supervisory Boards (SSB)
Studies Articles of associations and by laws
Approval of all contracts
Islamic Banking
Audit the actual implementations
Issuance of Fatwas (Responses)
Conferences – Research - Training
Finance Religion Ethics
Structure of Hierarchy
Shari’ah Supervisory Board
Shariah Advisory
Council/Consultant
Basis of Shariah Approval
Terminologies
• Bai' al 'inah • Ijarah
• Bai' bithaman ajil • Musharakah
• Bai' muajjal • Qard hassan/
• Musharakah Qardul hassan
• Mudarabah • Sukuk
• Murabahah
• Takaful
• Musawamah
• Bai salam • Wadiah
• Hibah • Wakalah
Major Contracts Used in
Islamic Banking
Bank Client
Money + Money
(interest)
Islamic Bank
Islamic
Bank Client
Goods
And
Services
Money
Islamic Banking Conventional
Banking
1) Functions and operations are based on 1) Functions and operations are based on
Sharia’h principles fully man made principles
2) Promote risk-sharing between provider 2) Investor is assured of pre-determined
of capital (investor) and user of funds rate of interest
(entrepreneurs) 3) Aim at maximizing profit without any
3) Aim at maximizing profit but subject to restrictions
Sharia'h restrictions 4) Creditor-Debtor relationship
4) Partners, investor and traders, buyer or 5) Based on money trading. Money is a
seller relationship medium of exchange and not a
5) Encourage asset-based financing and commodity, its sale and purchase is
based on commodity trading prohibited in Islam.
6) No right of profit if there is no risk 6) It is almost risk free banking and
involved. The profit and loss sharing depositor has no risk of losing its
depositor may lose money in case of money because interest is guaranteed.
loss.
Deposit Products
Current Account
"Islamic banks should prove that they are totally different from conventional ones to attract
faithful Muslims,"
“At present there is no law defining what is Islamic banking and finance. We need a
complete set of rules and regulations. In the absence of such a law, discrepancies will
continue,“
• The deficiency of educated and qualified scholars in the field of banking, one of the expert
said:
“"These bankers think the mothers are going to give born graduated sharia scholars,
obviously we need to develop them ”
Conclusion
• On the basis of the above it can be said that supply
and demand of capital would continue in an
interest free scenario with additional benefit of
greater supply of risk-based capital along with
more efficient
• Allocation of resources and active role of banks
and financial institutions as required in asset based
Islamic theory of finance.