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متابعة

What is the major difference between conventional and Islamic banking?

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تم إضافة السؤال من قبل Asif Hasan Khan , Team Manager , Askari Bank
تاريخ النشر: 2015/07/21
Md. Shahnawaz Karim Karim
من قبل Md. Shahnawaz Karim Karim , Economic Advisor , Ministry of Finance, Riyadh, Saudi Arabia

Conventional banking depends on interest rate system. If a person borrows from the bank, he needs to pay interest on the borrowed amount by a certain percentage each year. This is an obligatory interest payment. On the other hand, the depositors to a bank earns an interest gain by a certain rate, which is a financial obligation for the bank. On the other hand, Islamic banking depends on a variable rate of profit. The depositors to an Islamic bank will gain profit if the bank makes profit or loss, in case the bank makes a loss. Interest rate in conventional banking is fixed, whereas the rate of profit in Islamic banking system can vary.

Muhammad Fahim Qasmi
من قبل Muhammad Fahim Qasmi , Officer Grade 1 , Bank Al-Habib Limited, Main Branch

In conventional banking interest amount is fixed and express before making any contract like10% after one year where as Islamic banking says10% of THE PROFIT after one year. Money on Money is prohibited in islamic banking rather profit earned through appreciated value of goods sold.

 

Sheeba Aloshyas Varghese
من قبل Sheeba Aloshyas Varghese , Senior Accountant , Vision International Gen.Trading & Cont. Co.

Conventional Banks consider money as a commodity so it can be sold at a higher price.  Islamic Bank consider Money as a medium of exchange so it cannot be sold at a higher price than it face value. 

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