Islamic Banking: a brief history

Islamic banking began with the celebration of the 15th Hijra Century in the mid-70s. The world's first development bank in compliance with Sharia, the Islamic Development Bank, was established in 1974. Islamic banking emerged as an alternative financial system that introduced a fair system of social justice and equality while fulfilling the financial needs of people.

Understanding Islamic Banking

Understanding Islamic Banking

Islamic banking is a financial system that operates on the principles of Islamic Sharia, which promotes fairness, equality and social justice. In contrast to conventional banking, Islamic banking does not deal with interest-based transactions. Instead, it offers Sharia-compliant financing and investment tools that are based on the principles of profit and loss sharing.

Innovative Financial Models

Innovative Financial Models

Islamic banks offer a range of innovative financial models that are based on Sharia principles. These include Murabaha, Musharaka, Mudaraba, Istisna, Salam and Ijara, among others. These models formalise the unique partnership between the bank and the customer, where both parties share the risks and profits of the partnership or ownership.

Features of Islamic Banking

Features of Islamic Banking

Islamic banking promotes ethical and responsible banking practices. It forbids the use of its finances or services for misleading, dishonourable, immoral, and other harmful purposes that would be detrimental to society. Islamic banks are also forbidden from indulging in any practice that may prove harmful to customers.

Islamic Banking: A Global Movement

Islamic Banking: A Global Movement

Islamic banking has spread all over the world, with the establishment of big Islamic banks with large capital bases in the Gulf region. Some of the notable Islamic banks include the Islamic Finance House in Luxembourg, Dar Al Mal Al Islami in Geneva, American Finance House (LARIBA), Al Baraka Bank, Islamic Bank of Britain, Islamic Investment Bank, and Emirates International Islamic Bank in the UK.

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