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Good day.
Islamic economic principles and banking system avoid speculative activity and aims to support the real sector of economy.
A bank is a financial institution established to provide financial services for the population and corporates. In other words a bank gives a loan (credit) under some conditions.
If the banking system provides loans/finance under Shariah norms (no usury, no uncertanities, profit and loss sharing, any transaction based on asset) for the real sector economy how do you think it becomes like?
Islamic Banks provide all solutions except some like issuing of letter of credit etc other wise following methods of investment of Islamic Banks cover all products of conventional banks loand
1. Moarabaha
2. Musharika
3. Ijarah
etc
If we convert commercial banks to islamic banks Islamic Banks will play direct role in the economy of the country, Islamic Banks will enjoy usufructs of its investments and loss
Musharika & Modarabah is the examples where both parties enjoy long term benefits and profit increases as per the business increases
Start Riba free banking it is the best concept for islamic banking
Now a days every Economy is suffering from common economic issues that hike in inflation.
If we study the causes of inflation, the main reason for hike in inflation is Interest.
All Commercial banks apply interest on their funding, and almost every business enterprise is run by Financing from bank or Financial Institution, they are paying huge cost of capital in the form of interest. This result in high cost of products and end result high selling price and hike in inflation.
Whereas in Islam interest has been prohibited and it is "HARAM". If all Commercial converted into real Islamic Bank and follow the "PRINCIPLES OF ISLAM",
1) No Interest,
2) no usury, no uncertainties, profit and loss sharing,
3) any transaction based on asset.
These will reduce inflation and All Economy will become strong, sustainable, no indebtedness.
THANK YOU FOR YOUR INFORMATIONS ABOUT ISLAMIC ECONOMIC.
No by replacing bank its not the solution to stregthen the economy of country or organization. First of all check the resources which your country depend upon and then struggle to strong that area of field for example a country depend upon his agriculture sector and other depend upon indutry so you have to focus strenghining the agriculture sector improve the deficiencies in that area. So your economy will boost.. Bank itself have no role to imprive the economy instead of this bank uses interest which is to much draw back of economy.
Most of the Islamic banks that i have come across they have no interest charge on loans and that will be high demand situation where everyone would want to be part of that investment. But for commercial banks is all business they have a high percentage interest on loans which will generate as an income for the survival of the banks and that will ensure that they play apart of generating the economy because they will have to pay taxes.
1: Deduct Zakat as per islamic laws
2: Riba free Banking
3: Control Speculation
There is no problem whether it is islamic bank or any.
The main important issue is how the bank manages and apply service charge rather interest which Islam do not allow as religion.
i am trying it
The economy will rely on the real investments rather than financial investments, because the Islamic finance focus on assets-based finance and risk sharing much more in comparative to commercial banking.
Moreover, we can recognize that the most of the commercial banking lending operations stand on risk-transferring basis instead of risk-sharing basis.
In Other words, Islamic banking and finance will give more opportunities to the deficit units to access to financial resources and channels.
Therefore, the economy will have a solid ground to activate all the productive and social sectors, to achieve a sustainable and higher level of recovery, and very fair tools to wealth and income redistribution.
