3.0 Islamic Banking
Now that, Islamic law has been defined and explained in detail, Islamic Banking can be observed further. There are four rules that govern investment behaviour in Islamic banking (Suleiman 2001):
1. Interest (Riba)
2. Deception/Uncertainty (Garar) and Change/Speculation (Maiser)
3. Trade (Haram)
4. Support Islamic tax system (Zakat)
Alongside these four rules, unethical behaviour needs also needs to be considered. Followed, on I will discuss each of these four/five compliances of Islamic banking.
3.1 Interest (Riba)
Interest, also known as Riba in the Quran is strictly prohibited in Islamic banking. It is the key difference between Islamic banking and conventional banking. In Islamic banking interest is defined as an exploited increase or a gain, which can’t be justified. Creditors are not allowed to take advantage of borrowers if there is the need to lend a loan .So, adding interest on top of the existing amount borrowed is prohibited. Alongside Islamic law, Christianity and Judaism also state that interest (Riba) should be condemned, as it leaves the bo...
Prior to Fuller’s transfer, management at the Carson’s location was poorly run using the classical approach. While this approach can be successful, management has to find a good middle ground between caring for the company and caring about their employees. A traditional classical approach recognizes that there are five important factors to running a successful business (Miller, 19). According to text, these factors are planning, organizing, command, coordination and control (Miller, 19-20). These factors can be seen when you look at Third Bank as a whole. In the study, the CEO saw the issues in his company and put a plan together to improve. He had meetings with management, like fuller, to organize a solution. He then commanded all locations
1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the bank’s 25th Anniversary.
Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. However, these entities are governed both by Islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process. It would based on two sources which are Al-Quran and As-Sunnah.
Introduction Pramuka Savings and Development Bank (PSDB) was incorporated in 1997 as the first private savings bank in Sri Lanka. Mr. Rohan Perera was the founder of Pramuka Bank and was the founder and chief executive officer of Seylan Bank previously. After resigning from Seylan Bank, Mr. Perera applied for license to incorporate a commercial bank from Central Bank Sri Lanka. But Central Bank only gave license to operate a Savings and Development Bank. But that was also a debatable topic.
Prohibition of Riba, a term literally meaning “an excess “and interpreted as “any unjustifiable increase of capital whether in loans or sales” is the central tenet of the system. More precisely, any positive, fixed, predetermined rate tied to the maturity and the amount of principal (i.e., guaranteed regardless of the performance of the investment) is considered Riba and is prohibited. The general consensus among Islamic scholars is that Riba covers not only Usury but also the charging of “interest” as widely practiced. This prohibition is based on arguments of social justice, equality, and property rights. Islam encourages the earning of profits but forbids the charging of interest because profits, determined ex post, symbolize successful entrepreneurship and creation of additional wealth whereas interest, determined ex ante, is a cost that is accrued irrespective of the outcome of business operations and may not create wealth if there are business losses. Social justice demands that borrowers and lenders share rewards as well as losses in an equitable fashion and that the process of wealth accumulation and distribution in the economy be fair and representative of true productivity. Under the Sharia, it is not permissible to charge, pay or receive interest. The Sharia does not recognize the time value of money and it is therefore not permissible to make money by lending it. Money must be used to create real economic value and it is only permissible to earn a return from investing money in permissible commercial activities which involve the financier or investor taking some commercial risk. This prohibition is the main driving force behind the development of the modern Islamic finance
It is unanimously agreed that riba means increase or growth (chapter 2). This kind of increase is divided into two types: the first is an increase in money from the money itself. This occurs when the owner of the money raises the rate of the debtor’s debt due to a delay in payment (REFRENC). This type is called riba al-naseia or riba alQuran. This type has many verses which confirm its prohibition, not only in Islam but also in Judaism (chapter 2, p. 36).
The Bardi banking family started to emerge in the eleventh century. The Bardi family grew by the twelfth century to be large enough to establish branches in the England and throughout Europe. They expanded further with a transistion into offering more financial services. This included the first usage of checks in banking.
In the post-colonial context , there is a desire to change the current currency system to improve the management of money and credit ; and to foster a favorable climate for the development of domestic enterprises in which the World Bank proposed the establishment of the National bank of each country . A National bank is seen as a tool of control of financial freedom , which no political independence would not be complete . Therefore, Sir Sydney Caine , former Vice Chancellor of University of Malaya , and Mr. GM Watson , an executive of the Bank of England , has been appointed to carry out a detailed investigation on problems of central banking and to provide advice on the establishment of a center in Malaya , including law rules.
First Abu Dhabi Bank (FAB), the UAE’s largest bank and one of the largest financial organizations in the world. The Bank offers an extensive variety of Personal Banking products and services to the UAE market and globally.
Paulo Freire compares two concepts of education, “banking” and “problem-posing”. In banking teachers assume students are passive, take all control, determine what will be learned, and "force-feed" information to students. In problem-posing, students and teachers carry on a dialogue to teach one another. Students are therefore active, becoming empowered to criticize the world and so change it.
First of all, let us outline how Islamic banks actually work and what their main differences are in comparison with conventional banks. In this banking system, banks are operated by Islamic laws (known as Sharia), so Islamic economic principles are considered as primary guidance. Two basic doctrines behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest . Hence unlike conventional commercial banks, Islamic banks do not pay or charge interest on lending or borrowing of money. This is because the Sharia’s strictly prohibits, among other things, the receipt and payment of riba (interest) /. The interpretations to clarify the meaning behind this restriction suggests that earning or charging extra amount of money from debtor has to be seen something as immoral behavior, because making pressure on your borrower is actually unfair from the view point of Islam. To make it clear, the religion of Islam basically promote the principle of justic...
...ation, for the whole idea is a myth and cannot be introduced in a country where normal banking exists, and which claims to be secular. To create a legislation which allows no interest to be paid or received would mean subjecting ordinary savers to enormous risks - which surely cannot be the intention of Islamic banking. If Islamic banks cannot invest in bonds, T-bills, and commercial paper, or lend to finance inventory or projects for interest, it defeats the whole purpose of banking. Even in Muslim countries, what is called Islamic banking is - to put it in the dismissive words of one western critic - "normal banking sprinkled with holy water." At best, Islamic banking is a way to deny the existence of interest and make it easier for Muslims to accept the idea of banking since the Qur’an includes strong injunctions against the giving or taking of "riba" - interest.
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 :-
Actually interest is the one of categories of Riba for the reasons that interest is taken over and above to principal amount, without any risk, efforts, activity without loss sharing and the return is guaranteed within a specific time. Riba is regarded as unjust because it is received without any sharing in risk or contribution of any labor or other activities for which a payment or reward has been
The accounting process refers to reporting, analyzing and summarizing transactions in order to prepare financial statements to the stockholders or creditors in order to help them to invest in an organization.