B.com English Essay: Islamic banking
B.com English Essay: Islamic banking
In the 20th century, the advancement of economic systems and fiscal complexities experienced an increased dependency on banking system by individuals and organizations for finance management. As the western banking system is centered on the interest rates, the need of an interest free banking to adhere to Islamic canonical law made the Islamic economist to contemplate the rules of Islamic banking. Now, Islamic banking is an established division in Muslim countries, and has become a popular source of finance management with swelling clientele.
To fulfill the prerequisite of an Islamic financial system and conform to Islamic traditions, Muslims wanted a system in which they could abstain from ‘perceived evil’ i.e. Riba (fixed interest). So, the fundamentals of Islamic banking are profit and loss sharing accounts in which bank as well as client is among the stakeholders. There are no fixed interest rates on loan and saving accounts. In mortgage system, bank buys the entity itself and then sells it to buyer on an increased price. In another arrangement in the form of house loans, the bank and buyer forms a partnership to buy the property at a decided percentage, the bank then rents the property to buyer.
Furthermore in Pakistan, assets and consumer ship of Islamic banking have grown at a breakneck speed in last decade. One of the major reasons is the preference to comply with shariah laws, but another observant cause is the diversity in the products offered by Islamic banks which has given them a competitive standing with conventional banks. The wiser approach in media campaigns adopted by competent marketing managers showcases an option for better conformity to religion rather than being judgmental about the non-followers.
To conclude I would like to say that not only Islamic banking has strengthened the Islamic jurisprudence for the followers but has also given the world at large another scheme to defend the ailing banking markets. Hence the growth of such systems in future will not only be limited to Islamic states but will seep into western world as well.
