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Islamic vs. Conventional Banking
Islamic vs. Conventional Banking
Banking
Summary of the Previous Lecture
Definition of Gharar
ownership undisputed.
Unrestricted profit
It also aims at maximizing
maximization illustrated by
profit but subject to Shariah
derivatives trading, deposit
restrictions.
multiplication, etc.
Comparison of Islamic with
Conventional Banks
Islamic banks Conventional banks
In the modern Islamic Conventional banks do offer
banking system, it has the service of Zakat
become one of the service- deduction but the depositors
oriented functions of the are reluctant to pay Zakat
Islamic banks to be a Zakat from their accounts in
collection centre and they conventional banks.
also pay out their Zakat.
Comparison of Islamic with
Conventional Banks
Islamic banks Conventional banks
Participation in partnership Lending money and getting
business is the fundamental it back with compounding
function of the Islamic interest is the fundamental
banks. function of the conventional
banks. Money is a
commodity and the
motivation.
Comparison of Islamic with
Conventional Banks
Islamic banks Conventional banks
Islamic banks have no It can charge additional
provision to charge any money (penalty and
extra money from the compounded interest) in
defaulters except for case of defaults.
compensation and is used
for charitable purposes.
Comparison of Islamic with
Conventional Banks
Islamic banks Conventional banks