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Write a 6 page essay on Islamic banking concepts.Download file to see previous pages... The paper tells that Islamic banking focuses on the profit and risk concept than the interest alone as it is in
Write a 6 page essay on Islamic banking concepts.
Download file to see previous pages...The paper tells that Islamic banking focuses on the profit and risk concept than the interest alone as it is in the traditional banking for the calculation of returns. In the Islamic the risk of the individual sharing the financial resources is similar to banking borrower’s risk. The returns are also calculated in the similar manner. It is based on Shariah laws where in honesty and trust is the basic foundation of such approach. It is assumed that everyone from investor to borrower would be honest regarding their work and financial aspects. However it is borrower’s challenge to run the business and making it profitable. Hoq et al explain that the level of trust in the context of Malaysian Banks were determined by the basic belief of Muslim and non-Muslim customers on the bank for fulfilling its promises and obligations. “In this sense, when Islamic banks are operated on the basis of Islamic Shariah, trust becomes even more important dimension in gaining the customers than trust in the conventional banks.” Nevertheless, ‘Reba’ or Interest is forbidden under Islamic laws”. This changes the overall banking process very different from the conventional banking. Looking from the conventional banking approaches, Islamic banking and its product may sound complex. The overall development of products, designing, training manpower for the product management, business compliances, human resource and overall administration is much different from the conventional banking.
