concept of islamic banking that is an alternate to conventional banking.pdf

this is the research article about concept of islamic banking that is an alternate to conventional banking. Drawbacks of conventional banking and aspects of islamic banking.

1. Assignment
Submitted to Sir Fida
Submitted by Urooj Fatima
Semester 3
rd
(Morning)
Section B
Session 2018-2022
Subject English
Department Zoology

2. Concept of Islamic Banking: A True
Alternative to Interest Based Conventional
Banking

3. Introduction
•Bankinginconventionalsenseistheprocessofaccepting,,forthepurposeof
lendingorinvestment,ofdepositsofmoneyfromthepublic,repayableondemand.
•TheprincipalfunctionofaBankistobringintoacommonpoolofidlemoneyof
thegeneralpublic,forthepurposetogainareturnintheformofinterest,feeand
dividendsinmakingadvancesandprovidingservicestoothers.
•Interest(Riba)isstrictlyprohibitedinIslamandhencetherecanbenobanking
systeminIslamasInterest.
•AnIslamicbankisafinancialinstitutionwhichidentifiesitselfwiththespiritof
Shariah,aslaiddownbytheHolyQur'anandSunnah,asregardsitsobjectives,
principles,practicesandoperations.

4. •Islamicbankinghasmadeitpossibletokeepthepeopleawayfromtheinterestas
wellastoaddressallthebankingneedssimultaneouslyandhasbecomeanideal
alternativetotheinterest-basedconventionalbankingworldwide.
•InterestfreeelementisthedistinguishingfeatureofIslamicbanking,apartfrom
twoelementsbeingvitalinIslamicBankingi.e.equaldistributionofincomeand
wealth,andincreaseinequityparticipationofeconomy.
•Islamicbankingbecauseofitsvalue-orientatedethosenablesittodrawfinances
frombothMuslimsandnon-Muslimsalike.

5. Research Objective
•How Islamic banking system is different from conventional banking system?
•What are the main aspects of Islamic banking?
•What are the drawbacks of conventional banking system?

6. Literature Review
•EvolutionofIslamicbanking:
1.StartedfromEgyptduetoeffortsofAhmedElNajjarin1963,'Mit-GhamrIslamic
SavingsBank(MISB)established,thisbankisregardedasthefirstIslamicbankinthe
world(TheFinancialExpress,2015).
2.In1971,Nasirsocialbankwasestablishedandnamedasinterestfreecommercialbank.
•ProhibitionofRibaisthefundamentalgoverningprincipleofIslamicFinancingandthisis
statedintheQur’an.
“ThosewhodevourRiba(Interest)willnotstandexceptasstandsonewhomdevilhathdriven
tomadnessby(his)touch”.(SurahAlBaqarah2:275)

7. •Ribaisforbiddenbecauseit(a)corruptssociety,(b)impliesimproperappropriation
ofotherpeople'sproperty,(c)actssuchawaywhichultimateeffectisnegative
growth,(d)demeansanddiminisheshumanpersonality,and(e)isunjust(Siddiqi,
2004).
•NarratedbyJabir”:TheProphetcursedthereceiverandthepayerofinterest,the
onewhorecordsitandthetwowitnessestothetransactionandsaid:"Theyareall
alike[inguilt].(Muslim3;1219)
•Islamicbanksdonotalloworassistinanyexcessiveriskyworklike'Gharar'or
'Mysir'astheyarenotShariahcompliantandforbiddeninIslamfortheirexcessive
riskorabsoluteuncertainty(Arman,2013).

8. Research Methodology
•Qualitativeresearch
•Documentanalysis
•Descriptiveresearch
•Basedonpriorliteratureandsecondaryinformation

9. Refrences
•Justice Muhammad Taqi Usmani, 1998, ‘The Adverse effect of interest on Society’.
•Mahnmoud Amin El-Gamal, 2000, ‘A Basic guide to Contemporary Islamic
Banking and Finance’.
•M. Muslehuddin Dr. 2008, ‘Banking and Islamic Law’.
•Official Website of Institute of Islamic Banking and Insurance
•M. and Khatun, M. (2013). The compliance with Shariah Governance system of
AAOIFI: A study on Islamic Banks Bangladesh
•Akbar C. S. (31 March 2015). Islamic banking: History and development, The
Financial Express.