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Abdur Rashid Mirza University of Lahore School of Accountancy and Finance Lecture no.1
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The interest is prohibited in Islamic ways of banking as it is also obvious from Quran. In Quran, prohibition regard fixed interest is also lead in Sura Al-Imran, Sura Al-Rum(39) , Al-Nisa(160-161) and Al-Baqarah(275-281) of Quran.
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Riba in Hadith
"Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother." (Ibn Majah)
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
Islamic Banks
Profit on trade of goods for charging on providing service is the basis for earning profit Islamic bank operates on the basis of profit and loss sharing
Interest is charged even in case the organization suffers losses by using banks fund
While disbursing cash finance, running finance or working capital, no agreement for exchange of goods & services is made.
The execution of agreements for the exchange of goods & services is a must.
Islamic banking tends to create link with the real sector of the economic system by using trade related activities.
Islamic Banks
In contract it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur) Compounding calculation is strictly prohibited under Islamic banking system
The Islamic banks have no provision to charge any extra money from the defaulters.
Islamic banking only deals in Halal products and services, all transactions must be in SHARIAH COMPLIANCE The status of Islamic bank in relation to its clients is that of Partners, Investors, and Trader, Buyer and Seller. Islamic banks cannot guarantee of all its deposits.
Establishment
of
IFSB
(Islamic
Financial
Services Board),
Shariah laws.
Global Scenario
Global Scenario.
According to The Bankers 2009 survey, the volume of the Shariah Compliant Assets of the top 500 Islamic Financial Institutions grew by 28.6% rising to US$822bn from $639 in 2008 at a time when the top 1000 World Banks assets slumped to 6.8% from 21.6% from the previous year.
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
The Shariah Compliant Assets are projected to grow to US$1.60 trillion by 2012.
Sukuk (Islamic Bond) Issuance expected to hit US$200 Billion by 2010 The opportunities to tap the surplus funds of oil rich Muslim nations is strong as many non Muslim countries are trying to tap it including, Japan, UK, Singapore, France, Hong Kong US, Germany, Australia, Thailand, etc.
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Global Scenario.
Governments
of
Bahrain,
Malaysia and now Pakistan have issued Islamic Bonds (Sukuk) in order to facilitate
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
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Global Scenario.
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
Harvard University has developed a major database by the name of Harvard Islamic Financial Information Program (HIFIP) for Islamic Banking.
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Focus Areas
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Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
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= about PKR 370 bn Deposits = about PKR 280bn Financing and Investment = about PKR 230 bn Projected growth for the next 5 years of Islamic Banking is 15% to 20% per annum. In 2008 the assets of Islamic Banking increased by 34% as compared to the assets of overall industry by 8.8%. (SBP Bulletin)
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
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Islamic Banking In Pakistan: An Overview There are 06 full fledged Islamic Banks and 13 Commercial Banks having Stand alone dedicated Islamic Banking Branches At present there are more than 600 Islamic Banking Branches in Pakistan.
Islamic Banking: The Common Perception & the Future Prospects by : A. J. Karimi
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Author Introduction
Abdur Rasid Mirza, Economic and Financial Analyst Associated Consulting Engineers ACE (Pvt.) Ltd. Faculty Member of University of Lahore, School of Lahore, School of Accountancy and Finance Research Scholar (Islamic Banking and Finance) Mobile no. 0300-4210261 Email Address: yourarm1972@hotmail.com Email address: yourarm@yahoo.com
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