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.€ Islamic law (Sharia·h) principles € guided by Islamic economics.

€ Conventional banking is based on the principle that the more you have. . the more you can get.

Importance of Trade in Islam Islam has given an immense importance to trade The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH). .

The primary objectives of Islamic Economic System are as under. Equal Distribution of wealth Social justice These objectives can never be achieved in Interest/Riba based economic systems. .

.€ Conventional banking practices are concerned with "elimination of risk" where as Islamic banks "bear the risk" when involve in any transaction.

charge additional money . maximizing profit without any restriction. small amount of compensation CONVENTIONAL: predetermined rate of interest.ISLAMIC: promotes risk sharing between provider of capital (investor) maximizing profit but subject to Shari·ah restrictions.

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking 1) Functions and operations are based on Sharia·h principles Conventional Banking 1)Functions and operations are based on fully man made principles .

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking 2) Promote risk- Conventional Banking 2) Investor is assured of presharing between provider of capital determined rate of (investor) and user interest of funds (entrepreneurs) .

DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking 3) Aim at maximising profit but subject to Sharia'h restrictions Conventional Banking 3) Aim at maximising profit without any restrictions .

buyer or seller relationship .DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 4) Creditor-Debtor 4) Partners. relationship investor and traders.

. Money is a asset-based medium of exchange financing and and not a commodity.DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 5) Encourage 5) Basaed on money trading. based on its sale and purchase commodity trading is prohibited in Islam.

.DIFFERENCE BETWEEN ISLAMIC AND CONVENTIOANL BANKING Islamic Banking if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss. Conventional Banking 6) No right of profit 6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.