Whats the difference between Islamic banking and conventional banking?
Posted on September 14th, 2009 by admin
Banking
Its a project i am working on and i wanted to see if people know the difference between them
Its a project i am working on and i wanted to see if people know the difference between them
Filed under: Other - Africa & Middle East
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I do not think they believe in interest
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Islamic banking refers to a system of banking consistent with Islamic (or “Shariah”) law, and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest. Generally, Islamic law also prohibits trading in financial risk (regarded as a form of gambling). Furthermore, Islamic law prohibits investing in businesses that are considered unlawful, or “haraam”. These include, for instance, businesses that sell alcohol or pork, or that produce media such as gossip columns or pornography, which are contrary to Moslem values.
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The main difference between Islamic and conventional banking is that Islamic teaching says that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of risk – in other words, interest (known as “riba”) cannot be charged.
To make money from money is prohibited – wealth can only be generated through legitimate trade and investment. Any gain relating to this trading are shared between the person providing the capital and the person providing the expertise.
At Islamic Bank of Britain, we generate all our profit through sharia’a compliant trading and investment activities. We then share the profits with our customers at a pre-agreed ratio. In order to share profits you must hold one of our savings or investment accounts.
i didnt know there was islamic banking
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Did not know there is really such a thing of banking in Islam.. I know that to take money on a loan with interest is bad.. as for banking in the true sense do you think there where banks when the Prophet Mohammed(pbuh) was alive………..So, for what they want to call Islamic banking I think it is wrong…like the Islamic bank lol