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Differences between Islamic banking and conventional banking
Comparison between convensional and islamic banking
Differences between Islamic banking and conventional banking
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Our group have been assinged to discuss on the topic above but in Islamic Banking perspectives. Therefore, before going any further, let us clarify definition of the Principles of Islamic Banking and clarify what are the elements involve in the Principles of Islamic Banking. Beside, we will also do some comparison of product or services offered by both banks which are conventional and Islamic banking. Apart from that, we will also clarify the problems or challenge faced by the agency which practices the Islamic banking in their agency. First, according to Section 2 IBA 1983, Islamic Banking Business is business whose aims and elements do not involve any element which is not approved by the religion of Islam. Based on the definition stated, it is clear that the Islamic Banking practices must according to or complients with the Shari’ah obliged in the Al-Quran and As-Sunnah. In conjuction with the Shari’ah appliances, the Islamic banking business must not include or prohibited involvement of illegal activities. Unlike Islamic Banking, Conventional Banking practises its system based on man-made laws and not included any religious guidelines to support their systems. According to Shari’ah, which is the guidelines underlined by Islam, there is several principles of Islamic Banking that are in accordance to its practices. They are :- 1) Riba’ (interest-based transaction) is prohibited. 2) Avoidance of Gharar (uncertainty) 3) Avoidance of Zulm (opression) 4) Promotion of socio-economic justice via Islamic tax (Zakat) 5) Discourage unethical business such as business that produces harmful goods and services to mankind and contradict to Islam’s principle or value (Haram) Next, we would like to clarify each principles that make sense ... ... middle of paper ... ...ctices. Thus, in order to counter this challenges, better awareness should be create among the customers that Islamic banking is not only valid to Muslims only. It can be widely use by other religion. Next, Islamic banking also are misinterpret as not profitable as it forbidden riba’ in its practices. Also, we need to aware the customers that Islamic banking not just an alternative for finacial approach, but it also provides better value to the customers. Lastly the challenges faced by the Islamic banking is the lack of unity in giving Shariah’s view. Therefor, it gives problem to the agencies as there are different methodologies that are being proposed when elaborating the law. In order to counter this challenges, agencies need to take initiatives of choosing the view which is parallel or nearly parallel with what was underlined by the Al-Quran and As- Sunnah.
The term “ethical business” is seen, by many people, as an oxymoron. This is because a business’s main objective is to make as much money as possible. Making the most money possible, however, can often lead to unethical actions. Companies like Enron, WorldCom, and Satyam have been the posterchildren for how corporations’ greed lead to unethical practices. In recent times however, companies have been accused of being unethical based on, not how they manage their finances, but on how they treat the society that they operate in. People have started to realize that the damage companies have been doing to the world around them is more impactful and far worse than any financial fraud that these companies might be engaging in. Events like the BP oil
In business the primary focus is on maximizing returns to owners or shareholders. The manner in which a business conducts itself while attempting to make its profit can be considered ethical or not. For instance, a business that has a positive sense of social responsibility will make some effort to have a positive impact on society, contributing to the welfare of the community in which it operates in some way or another. Unethical practice in business could include the converse of this, where a business is solely concerned about its profit and does not attempt to mitigate the impact of its operations in that society. For example, a mining exploration company that does not attempt to ease discomfort and inconvenience of the people that are displaced by its operations could be considered unethical.
The industry is composed by a continuum of banks which produce a homogenous product — banking service. Domestic as well as foreign competition is violent. Not to forget the fact that ICBC has not been the first bank to embrace internet banking. So, it is all the more reason which places the bank in the most precarious position to continuously shield it self from the volleying competition.
For a common human being the bank means a place which represents a top level of security. On a daily basis we are involved in banking transaction. To secure our expensive jewellery, important documents or cash, we use to use bank locker rooms. It has become an important part of our life. To survive in this competitive world and for a continuous growth, the banking industry needs to provide a high degree of security. Because of the public interest every day new branches are opening. The more number of branches required more security.
.... If the Islamic finance needs to imposed higher risk to their customers, but still follow the rules and regulations that include in Al-Quran and Al-Sunnah. From this, the Islamic finance still can focus on the well being of their customers and wealth.
In this study, I will describe the concept of al-istisna by Islamic law as well as I will compare istisna in Islamic fiqh muamalat with conventional system which is practiced by banks nowadays. As we know, that the conventional banking system was produced a lot of economic products same as istisna concept. So, in this study, I will disclosure and explain all perspectives that is associated with al-istisna sales, and in the last point, I’ll give the best recommendation as the solutions to the risk that is involved in istisna.
...ofit. Hence, in terms of risk management Islamic banks are more reliable. In addition, with the increasing population of Muslims all over the world, and the recent economic theories proving Islamic banks’ advantages over traditional banks especially during hard times, I believe that new financial system that are based on Islamic principles will play a very important role in the near future.
Communication modern technological tools that have been enhanced by Information Technology are having an impact on changing the very structure and communication of banking. That is, clients are enabled to make their banking transactions whenever and wherever they want. Bank clients, by just logging on their online account, can transfer any amount of money from their account to any other account, check their last processed banking transactions and apply for loans and other banking services. According to Keyes ( 2000, p.591) 'electronic checks provide consumers with the benefits of convenience and safety while allowing billers to maintain their existing depository relationships with their banks'. Further, e-mails has enabled bank employees to notify their customers of any new enhanced bankin...
Islamic Banking is a concept that is based on Sharia’ah principles. Conventional banks is a concept are based on fully manmade principles. Sharia’ah is the fundamental religious concept of Islam. Sharia’ah principles is a code of conduct that guides Muslims in social, economic, and political matters. Sharia promotes balance and justice and discourages behaviors of excess.
The overall discussion of risk management based on the Islamic law or maqasid al-shariah. Chapra quotes al-Ghazali in defining maqasid as promotion of “the well-being of the people, which lies in safeguarding their faith, self, intellect, posterity, and wealth (ISRA, 2011). Economic activities are not judged by their inherit risks, but by whether they add value and/or create wealth from an islamic perspective. To makes risk management an imperative for a flourishing financial system, wealth protection is being one of the major shariah objectives.
The increasingly change in worldwide intensity in business conducts has improved the volume of bank in the world. It has produced additional banking knowledge and also improved customer demand of services given by banks like online support etc. (Balachandher, 2001).
The study is primarily designed to find out the continuous issue of the banking system in
It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)
Over the years, religion has played a major impact on the functioning of Banks. Judaism, Jewish, Christianity and Islam being the ma...
As Mudharabah applies the concept of profit- sharing, the probability of attainment of profits or suffering of losses is resultant from economic activities. The maturity of Mudarabah Interbank Investment in the Islamic Interbank Money Market is possible to be an overnight basis, but yet Mudarabah Interbank Investment, within this short-term period can help contribute to the economic condition. The Islamic Interbank Money Market is destined for managing short-time period liquidity to support activities banks carry out, which is the usage of funds from the excess unit, to fund the shortage units, and to match or equalize the socioeconomic and financial needs between the two units. Mudarabah Interbank Investment, may actually indirectly contribute to economic growth as a part of the entire organization of the Islamic Financial Institutions needs Islamic Interbank Money Market to guarantee the continuousness of their businesses, and Mudarabah Interbank Investment is as a tool for this purpose. (Saiti, Hasan, & Adawiah, Islamic Capital Markets: Volatility, Performance and