Islamic Banking Concepts
Banking is a concept that has been used in our society in different form and shapes. The history of banking is as old as 2000 BC when there were trading system and the gold coins. There are different banking systems in the world but the most famous ones are conventional banking and the Islamic banking. The main function of conventional bank can be summed up in one sentence: The banks borrow to lend. They borrow in the form of deposits and lend this money to earn interest. In contrary, Islamic banking system is based on the principle of partnership. In Islamic banking, the shareholders, the depositors and the borrowers-all would participate on profit-loss sharing basis. Here you will get the complete information about what is Islamic banking and is it really Islamic?
Introduction to Islamic Banking
Islamic banking is a finance management system that is based on the Islamic rules of Sharia. The main concept of the Islamic banking is the prohibition on collection of interest and its utilization for the business purposes. Banking in Islam is a saving money framework that depends on the standards of Islamic law, additionally known as Shariah law, and guided by Islamic financial matters. Two fundamental standards behind Islamic banking concepts are the sharing of benefit and misfortune. Gathering interest or Riga isn’t allowed under Islamic law.
Islamic banking concepts have an indistinguishable reason from traditional managing an account aside from that it works as per the guidelines of Shari’ah, known as Fiqh al-Muamalat. Banking in Islam as an account exercises must be polished reliable with the Shari’ah and its pragmatic application through the improvement of Islamic financial aspects. A significant number of these standards whereupon banking in Islam is based are regularly acknowledged everywhere throughout the world, for quite a long time as opposed to decades. These standards are not new but rather their unique state has been changed throughout the hundreds of years.