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Starting in the Name of Allah, The Most Beneficent, The Most Merciful
MAZHAR ALI BOKHARI
Head of International Operations & Strategic Planning Division
GULF AFRICAN BANK LIMITEDNairobi, KENYA
At AlHuda CIBE Awareness workshop B.Z University - Multan
Phone Nos. +254 20 2740000 / +92 321 4402900Email: [email protected]
Honorable Guests, Participants, Ladies & Gentlemen.
Thank you for giving me the honor of presenting an overview of Islamic Banking
Islam has given an immense importance to trade
The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH).
Importance of Trade in Islam
Before explaining the concept “what is Islamic Banking” the elaboration of concept “why Islamic Banking” is very important.
Islam is a complete code of life that provides guidance regarding each aspect of life.
WHY ISLAMIC BANKING
The primary objectives of Islamic Economic System are as under.
Equal Distribution of wealth
Social justice
These objectives can never be achieved in Interest/Riba based economic systems.
WHAT IS ISLAMIC BANKING
Now we come to our core question “Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the
principles laid down by Islamic Sharia’h”
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
1) Functions and operations are based on Sharia’h principles
Conventional Banking
1)Functions and operations are based on fully man made principles
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
2) Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs)
Conventional Banking
2) Investor is assured of pre-determined rate of interest
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
3) Aim at maximising profit but subject to Sharia'h restrictions
Conventional Banking
3) Aim at maximising profit without any restrictions
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
4) Partners, investor and traders, buyer or seller relationship
Conventional Banking
4) Creditor-Debtor relationship
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
5) Encourage asset-based financing and based on commodity trading
Conventional Banking
5) Based on money trading. Money is a medium of exchange and not a commodity, its sale and purchase is prohibited in Islam.
DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING
Islamic Banking
6) No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss.
Conventional Banking
6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.
ISLAMIC BANKING PRODUCTS AND SERVICES
Currently available Islamic Banking Products and services are
a) Partnership based modes of financing
Musharaka Finance, Mudaraba Finance,
b) Trade based modes of financing
Murabaha Finance, Salam finance
c) Rental based modes of financing
Ijarah Finance, Diminishing Musharaka Finance
MAZHAR ALI BOKHARI
Phone Nos. +254 20 2740000 / +92 321 4402900Email: [email protected] [email protected]
