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.
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
1) Functions and
operations are 1)Functions and
operations are
based on Sharia’h
based on fully man
principles made principles
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
2) Promote risk-
sharing between 2) Investor is
provider of capital assured of pre-
(investor) and user determined rate of
of funds interest
(entrepreneurs)
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
3) Aim at
maximising profit 3) Aim at
but subject to maximising profit
Sharia'h without any
restrictions restrictions
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
4) Partners,
investor and 4) Creditor-Debtor
relationship
traders, buyer or
seller relationship
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
5) Encourage
asset-based 5) Based on money
trading. Money is a
financing and
medium of
based on exchange and not a
commodity commodity, its sale
trading and purchase is
prohibited in Islam.
 DIFFERENCE BETWEEN ISLAIC AND
CONVENTIOANL BANKING
Islamic Banking Conventional
Banking
6) No right of profit
if there is no risk 6) It is almost risk
involved. The profit free banking and
and loss sharing depositor has no
depositor may lose risk of losing its
money in case of money because
loss. interest is
guaranteed.