Documente Academic
Documente Profesional
Documente Cultură
Financial
System
Sources
of
the
Shariah
• Primary
Sources
– The
Holy
Quran
Differentiating
Conventional Banking Islamic Banking
Factor
The functions and Based on man-made principles Based on Shariah rules and
operating modes principles
Interest-based Most of the activities are Absence of interest-based (riba)
transactions interest-based transactions
Investment and No restriction Subject to Shariah restrictions. Must
financing portfolio be constructive and beneficial to the
ummah.
Penalty Impose penalty and Charge in the form of ta’widh
compounded interest in case of (compensation) or gharamah
defaulters (penalty) for charity.
Bank-customer Creditor and debtor Partners, investors and trader,
relationship buyer and seller
Ethics No religious based guideline Must follow Shariah guideline
Zakat Not necessary to pay zakat Pay zakat
3/
FEATURES
ISLAMIC
BANKING
&
FINANCE
Differentiating
Conventional Banking Islamic Banking
Factor
Underlying Asset No need for underlying asset Underlying asset is compulsory
because they can create money because any benefit/ earning from
with money. loan is prohibited.
Terminologies Interest (lending money) Profit (sale & purchase)
(Requirements on Penalty based on interest Ta’widh
communication)
Loan Financing
Insure Cover
Premium Contribution