Conventional Banking

Conventional Banking
Functions and operating modes of
conventional banking are based on fully man
made principles
The investor is assured of a predetermined
rate of interest
It aims at maximizing profit without any
restriction.
Lending money and getting it back with
compounding interest is the fundamental
function of the conventional banks
Conventional banking Islamic banking
It does not deal with zakat In modern Islamic banking, it has become
one of the service oriented function of the
Islamic banks to be a zakat collection centre
and they also pay out their zakat

It can charge additional money in case of Islamic banks have no provision to charge
defaulters any extra money from the defaulters

Very often it results in the banks own interest It gives due importance to the public interest,
becoming prominent. it makes no effort to its ultimate aim is to ensure growth with
ensure growth with equity equity

Conventional bank has to guarantee all its Islamic bank can only guarantee deposits for
deposits deposit account, thus depositors are
guaranteed repayment of their funds

The status of a conventional bank, in relation The status of Islamic bank in relation to its
to its clients is that of creditor and debtors clients is that of partners, investors and
trader buyer and seller