Professional Documents
Culture Documents
18550920-107 Usman Ali
18550920-107 Usman Ali
.
CONVENTIONAL BANKS
Usman Ali
18550920-107.
Islamic Banking
System
• Islamic Banking is an Ethical Banking System,
and its practices are based on Islamic
(Shariah) laws.
• Interest in completely prohibited in Islamic
banking.
• It is asset based financing, in which trade of
elements prohibited by Islam is not allowed.
• For example, you cannot take a loan for a
Wine Shop.
Conventional Banking
System
• On the other hand,
Conventional Banking is an
Un-Ethical Banking system
based on Man-Made Laws. It
is profit-oriented and its
purpose is to make money
through interest.
.
Isla
mic
Ba n
kin
ga
nd
Con
Ma venti
jor ona
Diff l
ere Bank
nce ing
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1
Medium of Exchange Medium of Exchange
Time value is the basis for charging Profit on exchange of goods &
interest on capital services is the basis for earning profit
3
Expanded Money in the
Money Market No Expansion of Money
.
4
No Loss Sharing Loss Sharing
Government very easily obtains loans Government can not obtain loans
from Central Bank through Money from the Monetary Agency without
Market Operations without initiating making sure the delivery of goods to
capital development expenditure National Investment fund
10
Poverty Takes Place Real Growth of Wealth