What is the difference between islamic finance and banking concept in Bahrain, Malaysia and UK. Is malaysia and UK more liberal in this context?

Theoretically, there should not be any fundamental difference in the underlying principles of the Islamic finance and banking concept. However, difference can come from several reasons. These might include the practices of the industry players, degree of industry development in that contour, school of thought (مذهب), regulations in particular the governance of the Islamic markets and institutions, Taxes system. Thus, to answer such question, we have to put the question in the context of these reasons. Personally, I do not think, it is right to differentiate countries as liberal or non-liberal in Islamic finance. Instead, there is a need to understand the context of each in order to clarify the practices which might differ from country to country. Malaysia, for example, has a unique historical development line of its Islamic finance industry. It is clear that such line of development takes into consideration several things. One of these is the market readiness, customer perception, concept maturity among stakeholders as well as the regulation. UK also has its unique chapter but the difference is that the Middle Eastern players of the Islamic finance are the key players. In other words, we do not expect many differences in term of product structure, features compared with GCC practices except what is related to taxes. 

Once can't secure capital and endure risk at the same time. Securing capital means you're giving a secured loan (traditional deposit in conventional banks). There is zero risk on the lender's side in the actual contract (although there is a logical risk that the bank can go bankrupt and doesn't pay back the depositors, but this case is very limited to financial meltdown and bank runs). So, depositors in conventional bank secure their capital totally and they expect to get a fixed return on them (conventional Riba based banking). However if the depositor accepts to take some risk for a higher return (as well as being Shari^ah compliant) then he/she is not called a depositor anymore. They are called investors. And by definition, investors endure risk. 

The concept of Islamic finance and conventional finance are very different. They are not just about the return / interest / profits that comes back to those who enter such deals, but it's about the whole concept of abiding by the Islamic Shari^ah rules for the blessing that comes from doing so, it's about the risk sharing and mitigation strategies and about fairness and social justice. Back to the main question proposed here, Yes, there are differences in some Islamic schools of thought (Madzaheb) regarding certain business and financial dealings, but from my research I've also noticed that the Malaysian implementation of Islamic fiance, although one of the early experiments in this field, tend to take a more liberal path especially in regard to two points: 1. Their allowing the trade of certain kind of Sukuk which are debt based (Murabah Sukuk) which are not traded in the Bahrain-based system 2. Their monitoring criteria for the stocks of companies involved in debt based transaction are more lenient than that of Bahrain. Now whether this liberal approach of the Malaysian standards is backed up by a credible Sunni jurisprudence (Madzhab) or not is still something I'm in the process of researching. 

I do not know about UK or Malayasia but with1billion+ population and a big middle class I think Islamic Bankers cannot ignore India.

·         If money can be lent at capital +normal profit it would be lower than EMIs of commercial banks.

·         When a person deposits money in a bank he expects some return on capital. If the bank management is able to invest the money in secure but profitable ventures and shares with the depositors a part of the profit it is well and good.

·         Chit funds (people call then cheat funds)are duping people in the countryside by promising high rates of return which they cannot deliver in the end.

·         There is a big market here which can be tapped provided people are convinced that their capital is secure.

·         I think the concept is similar to cooperative banks where the whole community owns the bank and share in the normal profits.

·         The bank serves the community and vice versa

·         If the bank does not charge exorbitant late payment fees ,and other fees and penalties are logical such banks would gain people’s confidence.

·         People want loans at reasonable rates(profits+ establishment costs) and secure deposits with reasonable (secure capital +profit)returns.

·         When the depositor is treated like a owner with ownership of his/her share of the profit he/she would be glad to bear some risk provided that the capital is secure.

·         I think it would be something like   a Mutual Fund which promises security of capital .It is a good concept.

The UK has just begun to adopt. But they are more likely to adopt Bahrain style of Islamic finance.

Malaysia is a good learning ground for Islamic Finance students, it tends to be more liberal.