ISLAMIC ECONOMIC SYSTEM II

ISLAMIC BANKING AND

FINANCE
INTRODUCTION

ISLAMIC BANKING AND FINANCE IS THE

SYSTEM OF FINANCIAL INSTITUTION
WHICH IS BASED ON THE PRINCIPLE OF
ISLAMIC LAW ALSO KNOWN AS SHARIAH
KEY DIFFERENCE B/W

ISLAMIC BANKING: CONVENTIONALBA

NKING:it is based
It works as trading
on lending and
and finance house.
borrowing with
interest.
TRADE AND COMMERCE
GOALS & OBJECTIVES

● Transparent & fair

● Social justice
● Equality
● Economic development
MODES OF ISLAMIC
BANKING &
FINANCE
 MUSHARAKAH

● Literal meaning is sharing

● Joint partnership
● Profit is distributed according to
the specific ratio
● Loss is shared according to the
ratio of contribution.
MUDARABAH

● one partner invest,

RAB-UL-MAAL
● Other provides
services, MUDARIB
● Profit shared a/c to pre
determined ratio.
TYPES OF MUDARABAH

AL-MUQAYYADAH AL-MUTLAQAH
● RESTRICED BY UNRESTRICTED BY
RAB UL MAAL RAB UL MAAL
MURABAHA

● Kind of sale
● Seller mention the
actual cost and profit
SALAM

● Seller undertake to
supply goods to buyer
at a future date.
● Buyer pays fully at the
spot in exchange.
ISTISNA

● It is an order to
manufacturer to
manufacture goods.
● Price doesn’t need to
be paid fully before.
IJARAH

● To give something on
rent.
● Employer(Mustajir)
● Employee(Ajir)
● Wages (Ujrah)
FINANCING
OVERVIEW
 ASSET & LIABLITY SIDE OF IB

ASSET LIABLITY
● short term ● Current
● Long term ● Saving
 FINANCING

SHORT TERM LONG TERM

● Murabaha ● Musharakah
● Salam ● Diminishing
● Istisna Musharakah
● Ijarah
 LIABLITY SIDE OF IB

CURRENT SAVING ACCOUNT

ACCOUNT
MUDARABAH
● QARZ
● AMANAT
THANK YOU..
QUESTION &
ANSWER