Islamic Banking at glance

Riba is something that really start the purpose of Islamic banking. Because Riba & Usury are banned by Sharia. Interests in business and investments that benefits Pork or haram activities. The concept lending on interest existed since Prophet(P.B.U.H) time. Word Riba  was first mentioned in the Verse of  Surah Rum :

And what you give in usury, that it may increase upon the people’s wealth, increases not with God; (Quran 30:39)

Although Islamic banking existed since the era of Caliphate Umer (R.A) .The Islamic was fully modernized in 2000,s The number of  Islamic Banking publications increased from 2000 to 6000 + .The significant amount of research done in Islamic finance and economics sector after the formation of Islamic Development bank by  OIC (Organisation of Islamic corporation in 1975.Some people say that the  role of petro-dollars and Modern Islamization  has influenced the surge factor in Islamic bank .

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Dubai Islamic Bank and Citibank were modern early banks that offered Islamic serves with Dubai bank offering commercial banking products and Citibank offered Islamic Investments .As of  today Sharia compliant funds are managing assets worth 2.5 trillion Dollars around the globe .The most famous of these funds are Sukkot(Financial certificates).Even non Muslim majority countries are also offering Sukok bonds .One of other reasons that Islamic bank is becoming famous because Islamic Funds were not directly impacted by financial crisis’s in 2008 .The only effect was due to changes in property prizes .In Pakistan  Mufti Taqi Usmani is seen as top Islamic scholar in economics and Islamic banking .He monitors Islamic Banking in Pakistan and M.T.Usamani is the chairman of Sharia board in State bank of Pakistan .He also Sits on the boards of Almost every Islamic banking organisations & committees around the world .

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Mudarabah : Means Profit Sharing System in which a person gives other person to invest in commercial activity in Mudarbah the Profit and loss is shared .Investor is known as Rab-ul-Mall and person who is given the cash is Mudarib .Profit and loss ratios are normally decided at start of contract and Normally is 60:40 .In term of loss the mudarib’s effort put in business and Investor(Rab-ul-mall) lose all the Cash,Asset invested will be lost,

Murâbaḥah : Means Sales of assets ,cars, commodities or other sale purcahse goods in Murabahah the sale and price of good is pre stated at agreement .

Bai Salam: This means Advanced payment contracts in which delivery will be done in future .

Ijarah : Ijarah Means lease,rent it refers to service at a fixed amount of cost ,wage .

Sukok bonds  : These are the financial certificates offered by Islamic banks .There is a major difference between conventional and Islamic bonds .

Tafaful : This is an alternative to Insurance offered by Islamic banks  in case of lose due to misfortune .

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