What is Islamic Finance?
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.
History of Islamic Finance
The modern Islamic Finance industry is young, its timeline begin only a few decades ago. However, islamic finance is involving rapidly and continues to expend to serve a growing population of muslims as well as conventional.
Here are the short history on the modern Islamic financial industry :
1. In 1963, the Mit Ghamr Savings Bank in Egypt was opened, becoming the first modern islamic bank record.
2. Also in 1963, the Pilgrims Saing Corporation of Malaysia began to incorporate basic islamic banking concepts.
3. In 1975, the Islamic Development Bank opened in Saudi Arabia and gave the islamic finance industry an international presence. It recruited member countries and offer them financial products to promote economic and comunity development.
4. In 1979, the first islamic insurance (takaful) company was established. All muslims at that time cannot purchase the conventional insurance products as it involed interest-based transactions,uncertainty, and gambling whi...
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.... 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.
Lastly, in term of services and management of the Islamic institutions. The Islamic needs to have a training process for all theirs staff who works under the Islamic institutions. They needs to provide a huge knowledge of Islamic and important of Islamic financing to our life. From this, it would increase the awareness of Islamic finance. The workers also can deal with their customers or investors more effectively and effeciently when it goes to the Islamic financing. It also would create customers loyalty on their products and services. The information also would spread accordingly based on the shariah principles.
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