Islamic Banking:System of banking consistent with principles of Islamic law and Islamic economics.

Islamic law prohibits the collection of interest, commonly called riba, although revenuesharing arrangements are generally permitted. With increased trade between western nations and Islamic nations in the Middle East, Citibank, Deutsche Bank, and other western banks have been opening Islamic banking units since 1996. Because modern Islamic banking is relatively new, rules for financial accounting, bank governance, and lending standards are continually evolving as business practices become more refined. The Institute of Islamic Banking and Insurance, a London organization, says Islamic banks are structured to retain a clearly differentiated status between shareholders' capital and clients' deposits to ensure correct profit sharing according to Islamic law.

History and Evolution of Islamic Banking:The first instance of Islamic banking came into the picture in Egypt in 1963. The pioneering efforts by Ahmad El Najjar brought this bank into existence, whose key principle was profit sharing (non-interest based philosophy of Shariah). By the end of 1976 there were 9 such banks in the country. These banks neither charged nor paid interest but their activities were mostly limited to trade and industries where these banks invested directly or as partners of depositors. Hence, functionally these banks were working more as financial institutions rather commercial banks. In 1971, Nazir Social Banks is known to be the first commercial bank in Egypt, though its charter never made references to Shariah. The first bank explicitly based on Shariah principles was established by the Organization of Islamic countries (OIC) in 1974, called Islamic Development Bank (IDB). This bank was primarily engaged in intergovernmental activities for providing funds for development projects running into member countries. Its business model involved fees for financial services and profit sharing financial assistance for projects. The number of Islamic banks all over the world until 2008 was (396) in (53) countries and try to attract his attention by the best decoration, and the balance of funding in these banks is estimated by (442) billion dollars, whereas the number of traditional banks which provide Islamic products reached (320) banks and a balance of finance equals (200) billion dollars. Some Islamic financial institutions established in countries where Muslims are a minority. There was a proliferation of interest-free savings and loan societies in India during the seventies (Siddiqi l988). The Islamic Banking System (now called Islamic Finance House), established in Luxembourg in l978, represents the first attempt at Islamic banking in the Western world. There is also an Islamic Bank International of Denmark, in Copenhagen, and the Islamic Investment Company has been set up in Melbourne, Australia

History of Islamic Banking in Pakistan:Efforts to Islamize the economy of Pakistan started in the mid 60s. However a significant attempt was made in the mid 80s1 to convert the banking system to an Islamic banking system. The Banking Companies Ordinance (BCO, 1962) was amended to accommodate non-interest based transactions and the industry was given a specific timeline to convert to the non-interest based system. In early 90s, the whole exercise was

challenged in the Federal Shariat Court which declared some products and processes being used by the banking system un-Islamic. List of Islamic banks worldwide: These are divided into two categories:-

Islamic countries Albania Algeria Bahrain Bangladesh Brunei Djibouti Egypt Indonesia Iran Iraq Jordan Lebanon Malaysia Mauritania Niger Nigeria Oman Morocco Pakistan Palestine Qatar Saudi Arabia Senegal Sudan Tunisia Turkey United Arab Emirates Yemen

Non-Islamic countries Australia Bahamas British Virgin Island Canada Cayman Island France Denmark Gambia Germany Guinea India Italy Ivory Coast Luxembourg Russia Sirilanka Switzerland South Africa United Kingdom Ireland United State of America

Current Status of Islamic Banking Industry in Pakistan:-

As at end of the year 2003 only one bank operated as a full-fledged Islamic bank and three conventional banks were operating Islamic banking branches. Today there are 6 full fledge licensed Islamic banks (IBs) and 12 conventional banks have licenses to operate dedicated Islamic banking branches (IIBs).

Islamic Banks in Pakistan: AlBaraka Bank (Pakistan) Limited BankIslami Pakistan Limited Dawood Islamic Bank Limited Dubai Islamic Bank Pakistan Limited Meezan Bank Limited Al Burj Islamic bank Bank AlBaraka Bank (Pakistan) Limited Meezan Bank Limited Dubai Islamic Bank Pakistan Limited BankIslami Pakistan Limited Dawood Islamic Bank Limited Al Burj Islamic bank

Year of Establishment 1991 January 27, 1997 27 May 2005 April 7, 2006
Friday, April 27, 2007

Friday, April 27, 2007

Islamic Banks in Islamic Countries:-

1:- Iraq
First Bank & Other Major Banks Iraqi Islamic Banks For Investment And Development Date of Establishment of first bank 1993

2:-Kuwait
First Bank & Other Major Banks Kuwait Finance House The International Investment Group The International Investor,Safta Kuwait Finance House,Safta Kuwait Investment CO-DarAl-Isethmar Securities House. Date of Establishment of first Bank 1977

3:-Jordan
First Bank & Other Major Banks Jordan Islamic Bank Jordan Islamic Bank for Finance and Investment,Amman 4:- Lebanon First Bank & Other Major Banks Al barka bank Bank of Beirut Gulf International Bank,Behrain 5:- Nigeria Jaiz International Bank Habib Nigeria Bank Ltd Ahmed Zakari Bank Date of Establishment of first Bank 1978

Date of Establishment of first Bank 1992 -

April 1, 2003

jan 8, 1995

6:- Plestine
Arab Islamic Bank Arab Islamic International Bank (IIIB)PIC Cairo Amman Bank Palestine International Bank The Palestine Islamic Bank

January 1, 1991

7:- Qatar
Qatar International Islamic Bank Qatar Islamic Bank,SAQ Doha

1995

8:- Yemen
Islamic Bank of Yemen for Finance and Investment Saba Islamc Bank

Yemen Islamic Bank Faisal Islamic Bank

13 May 2010

9:- Morocco
Dar Assafaa Faisal Finance Maroc S.A The Netherlands

1927

10:- Iran
Bank Melli Iran Bank Maskan Iran(Hiusig Bank)Tehran Bank Mellat,Tehran Bank Saderat Iran,Tehran Bank Sanat Va Maadan (Bank ofIndustry and Mines),Tehran Bank Tejarat Tehran Bank Keshavarzi(Agricultural Bank) Tehran Bank Sepah,Tehran

1977

11:- Sudan
Faisal Islamic Bank Al Barka,Al Sudani,Khatoum Al Shamal Islamic Bank Al Tadamon Islamic Bank,Khartoum Al Gharb Islamic Bank(Islamic Bank FOR Western Sudan Islamic Co-operative Development Bank,Khartoum Sudanese Islamic Bank

12:- Egypt
Faisal Islamic Bank of Egypt Alwatany Bank OF Egypt Egyptian Saudi Finance Bank (Dallah Al Barka),Cairo National Bank for Development May 1979

13:- Bangladesh

Islami Bank Bangladesh Limited

Al-Arafah Islami Bank Limited (Al-Arafah); Social Investment Bank Limited (SIBL) Faysal Islamic Bank of Bahrain EC (FIBB)

1983

1979

14:- Bahrain
Bahrain Islamic Bank ABC Islamic Bank Al Amin Bank Al Baraka Islamic Bank Bahrain Islamic Bank B.S.C Gulf Finance House (B.S.C) E.C Shamil Bank of Bahrain B.S.C Citi Islamic Investment Bank Gulf Finance House Commersial Bank

27 December 2008

15:- Djibouti
Salam African Bank Banque Albakka djibuti

Islamic Banks in Non-Islamic Countries 1:-Australia

Muslim Community Co-operative August 1990 (Australia) Limited Muslim Community Co-operative (MCCA) MCCU(Muslim Community Credit Union)