Islamic Banking Vs Conventional Banking
Islamic banking refers to a system of banking or banking activity thatis consistent with Islamic law (Sharia’h) principles and guided byIslamic economics. In particular, Islamic law prohibits usury, thecollection and payment of interest, also commonly called riba.Generally, Islamic law also prohibits trading in financial risk (which isseen as a form of gambling). In addition, Islamic law prohibitsinvesting in businesses that are considered unlawful, or haraam.Islamic finance has been gaining momentum on a global scale for thelast 30 years.Many Islamic Banks have sprung up over the last few years. Thesechanges are occurring both in Muslim and in western countries, andare driven by a global trend amongst Muslims to become moreobservant of their faith. It might have been the reason why IslamicBanking emerged, however, today Islamic Banking is sought byMuslims and non-Muslims due to the benefits it offers.Industry size is currently estimated at more than $400 billion, withprojected growth of 15% per annum.Financial institutions around the globe are trying to keep pace with thegrowing demand for Sharia’h compliant products and services.
Islamic Banking Global Scenario
Over the last three decades Islamic banking and finance has developedinto a full-fledged system and discipline reportedly growing at the rateof 15percent per annum. Today, Islamic financial institutions, in oneform or the other, are working in about 75 countries of the world.Besides individual financial institutions operating in many countries,efforts have been underway to implement Islamic banking on acountry wide and comprehensive basis in a number of countries. Theinstruments used by them, both on assets and liabilities sides, have