Introduction to Islamic Finance

Table of Contents Sr.no. Page no.

1.

Shariah Department...2 Musharakah Contract.....3 Mudarabah Contract..7 Murabahah Contract.....11 Ijarah Contract..14 Salam Contract.....18 Istisna...20 Conclusions..22 Recommendations22 References

2. 3. 4. 5. 6. 7. 8. 9.

10.

Introduction to Islamic Finance

ISLAMIC BANKING
SHARIAH DEPARTMENT:
In Islamic Banking the Shariah department is working on Islamic modes of financing.

ROLE OF SHARIAH DEPARTMENT IN ISLAMIC BANKING:

ISLAMIC BANKING strives to bring to its customers, World Class Banking in Islamic Way. To ensure that every transaction complies with Islamic Law, we have in place a Fatwa & Shariah Supervision Board, comprising of scholars of the highest repute, with vast experience in the field of Islamic Jurisprudence, economics and banking. The Fatwa & Shariah Supervision Board ranks above the Board of Directors and is empowered to issue Fatwas on any matter proposed before it by the different business units of the Bank. This framework has made ISLAMIC BANKING an organization that practices Islamic finance in true letter and spirit.

DUTIES OF THE SHARIAH DEPARTMENT:

It is the source of expert knowledge on Islamic Principles (Including Fatwas). It oversees the development of all products to ensure no Shariah repugnant feature arises. It analyses unprecedented situations not covered by fatwa, in the Banks transactions to ensure Shariah compliance. It analyses contracts and agreements concerning the Banks transactions to ensure Shariah compliance. It ensures the immediate correction of breaches (if any) in compliance to Shariah.
It supervises Shariah training programmed for the Banks staff.

It prepares an annual report on the Banks balance sheet with respect to its Shariah compliance.

Introduction to Islamic Finance

ISLAMIC MODES OF FINANCING 1) MUSHARAKAH CONTRACT:
Musharakah is an Arabic word, means joint business enterprise. It refers to profit and loss sharing in which both parties contribute capital and entrepreneurship together. Musharakah agreement must clearly bring out role of the new equity. Loss caused due to partners misconduct must be faced by him. Any residual loss must be absorbed by partners as per their equity ratio. Partners may create reserve from profits which can be utilizes to absorb any further losses.

Shirkah

Shirkat UlMilk

Shirkat-UlAqd

Optional

Automatic

Shirkat-ulAmwal

Shirkat-ul Amal

Shirkat-UlWajooh

DIMINISHING MUSHARAKAH
In diminishing Musharakah the financier and the client participates, either in joint ownership of a property or equipment, or in a joint commercial enterprise. The share of the financier will be divided into a number of units. The client will purchase these units one by one periodically until he is the sole owner of the property.
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Diminishing Musharakah commonly used for the purpose of financing of fixed assets by various Islamic Banks, and can be successfully use in the following in Islamic banks

House Financing Car Financing Plant & Machinery Financing Project Financing Working Capital Financing Import and export financing All other fixed assets financing BASIC STRUCTURE OF DIMINISHING MUSHARAKAH
The client approach to the Islamic bank with the request for project / machinery / house

financing / working capital financing. Joint

Client

Ownership Musharakah

The bank inters into the Musharakah (joint ownership) agreement with the client and

both the partner pay their respective shares to the seller of the asset.
The profit shall be distributed in the proportion mutually agreed in the contract. The profit ratio must be determined as a proportion of the actual profit earned by the

enterprise.
The each partner shall suffer the loss according to the ratio of their investment. To meet the need of modern business we may conclude that the nature of capital may be

in cash or in form of commodities value taking at market price.

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Termination of Musharakah, every partner has right to terminate the Musharakah at any

time after giving his partner notice. If

The assets of Musharakah in cash form all will be distributed in Pro-rate (invested ratio)

between the partners. If not in cash form then market value will be consider.
Termination of Musharakah with out closing the business then,

The partner who wants to run the business may purchase the share of outgoing partner. The client also pays the rent for the use of banks shares in the property, with this process the ownership of the asset is gradually transferred to the client. Client Pays rent Joint Ownership Musharakah
Ownership Gradually transferred to Client

Client

MUSHARAKAH IN HOME FINANCE:

In ISLAMIC BANKING using the Musharakah, the Bank enters into a partnership with you and helps you in fulfilling in owning a home quickly, in a fully Shariah compliant manner. Whether you want to buy, repair or simply wish to switch from your present home finance with any other bank, ISLAMIC BANKINGs would be the best Shariah compliant alternative. E.g. If the client wants to purchase a house for which he does not have adequate fund, For this purpose the financer (Islamic Bank) who agrees to participate with him in purchasing the required house. For The purchase of house some price paid by financer and some by client and they get the ownership in the property according to their investment ratio. After purchasing the property jointly, the client uses the house for his residential requirement and pay rent to the financier for using his share in the property. At the same time according to this joint ownership the share of financier further divided in to a number of units and the client will be purchase the unit of
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Introduction to Islamic Finance

financier share one by one periodically. With the purchasing of financier share one by one will be increase the share of client in the property, this process goes on in the same fashion until after the end of Musharakah period. But if the client will not pay the payment on time then he will be liable to pay the penalty. If Islamic banks do not impose any penalties on late payment the customers shall not pay in time and thus the Islamic banks will not be able to run their business efficiently and give a good return to the investors. Therefore, the Islamic banks have decided to take from each client an irrevocable undertaking that in case of late payment he shall be charged a penalty which shall be donated to a charity supervised by the Shariah Board of the bank independently from the bank. The Islamic banks do not use these donations for their own benefit.

HOW IT WORKS?
Our Relationship Officer will visit and help you complete the Home Finance application form.
Once your application has been analyzed and approved you will receive an offer letter

stating the terms of offer and the finance amount ISLAMIC BANKING Is Willing To Provide.
On completion of these steps, the amount stated in the offer letter which is ISLAMIC

BANKINGs contribution towards Musharakah will be deposited by ISLAMIC BANKING to Musharakah account. You will be registered as the legal owner of the property at the local registrars office.
You will then be required to execute a lease agreement (Payment Agreement) to lease

ISLAMIC BANKINGs undivided share of the property ISLAMIC BANKING for an agreed number of years against monthly rentals. To complete the transaction you would sign the remaining transaction documents.
After successful completion of Lease, ISLAMIC BANKING will sell its undivided share

in the property to the customer for a nominal price.

Diminishing Musharakah Illustration

Client request financing for a fixed asset costing Rs. 200 Million

Introduction to Islamic Finance

Islamic bank agreed to provide financing up to 80% of the cost.

The bank pays it share of investment Rs. 160 Million, and client will invest 40 Million. The bank ownership will be 80% and client 20%.

Bank share are divided in to units according to the specific period.

Client agrees to buyout bank share (units) on yearly basis or the client promises to the

financier that he will purchase one unit after three month. The client pays the rent for the usage of bank units. Rental reduces after purchase of each unit by the client.

After the specific time may be five year or seven year Musharakah agreement ownership of the asset will completely transferred to the client.

2) MUDARABAH CONTRACT:
In Banking Institutes the Mudarabah contract is used for the account holders. Who deposits their money in the saving accounts or current accounts as an investment. Mudarabah contract is making for an agreed period of time and it is decided at the time of making the contract. And these are called Rab-ul-Mal. Because investments come from the depositor, The Islamic Bank act as Mudarib because the bank manage the finance of the depositor and invest in Islamic way by using their skills and experience to earn profit for the contract of Mudarabah. In contract of Mudarabah the profit is distributed among the bank and depositor according to pre agreed ratio. The Rab-ul-Mal can take the profit monthly, quarterly and annually. It is decided at the time of making the contract. But in case of any loss the Rab-ul-Mal is fully responsible unless caused by negligence or violation of terms of the contract by the Mudarib.

Introduction to Islamic Finance

Types of Mudarabah

If rab-ul-mal specified the particular business for the Mudarib is called Al Mudarabah Al Muqayyadah (restricted Mudarabah)

If rab-ul-mal dose not specify the particular business is called al Mudarabah Al Mutalaqah (unrestricted Mudarabah)

But in the contract of Mudarabah in Islamic bank the Rab-ul-Mal does not interfere in business affairs because his interference may render the Mudarabah void. USES OF MUDARABAH IN ISLAMIC BANKI NG:

Collective Mudarabah
Collective Mudarabah means a joint pool created by many investors and handled over to a single Mudarib who is normally a juristic person. Collective Mudarabah creates two different relationships: Relationship between investors, which is Shirkah or Partnership. Relationship of all the investors with Mudarib, which is Mudarabah.
Mudarabah application

can be used in the following areas or can replace according to Shariah

rules.
Project financing 8

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Import financing Rupee Saving Account:

Ensuring Truly Halal Savings with Comprehensive Returns On agreeing to become a Rupee Saving Account holder, the customer enters into a relationship based on Mudarabah with Meezan Bank. Under this relationship, the customer is an Investor (Rab-ul-Maal) and the Bank is the Manager (Mudarib) of the funds deposited by the customers. The Bank allocates the funds received from the customers to a deposit pool; funds from the pool are utilized to provide financing to customers under Islamic modes Profit sharing & Distribution Method The Bank calculates the profit of the deposit pool every month. Gross income of the deposit pool is shared between the Bank Mudarib and customers (Rab-ul-Maal) on the basis of a predetermined profit-sharing ratio announced at the beginning of the month. The profit is distributed amongst the Account holders on the basis of predetermined weight ages, announced at the beginning of the month. In case of a loss, as per the rules of Mudarabah, the Rab-ul-Maal shall bear the loss in the ratio of their investment.
Labbiak Saving Asaan A specialized Saving Account designed to save for Umrah &

Hajj
Business Plus Account- Serving you the perfect blend of convenience and flexibility Dollar Saving Account - A Truly Halal Dollar Saving Account Euro Saving Account A Truly Halal Euro Saving Account Pounds Saving Account- A Truly Halal Pound Saving Account

Certificate of Islamic Investment The Certificate of Islamic Investment (COII) is a Mudarabah-based deposit product through which you can invest your savings for periods ranging from 3 months to 5 years and earn Halal profit on a periodic basis. investment can be made for 3 months, 6 months, 1 year, 2 years, 3 years and 5 years Profit payment options are monthly, quarterly or at maturity Monthly Mudarabah Certificate
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The Riba-Free Monthly Mudarabah Certificate (MMC) is a short-term deposit product which has been designed to give you expected monthly returns. Dollar Mudarabah Certificate the Dollar Mudarabah Certificate (DMC) is a deposit product through which you can invest your US Dollars with Islamic Bank for periods ranging from 3 months to 3 years and earn sixmonthly or at maturity profit payments on your investment.

Termination of Mudarabah
Termination of Mudarabah, every partner has right to terminate the Mudarabah, at any

time after giving his partner notice. If

The assets of Mudarabah, in cash form all will be distributed in Pro-rate (invested ratio)

between the partners. If not in cash form then to sell and liquidate them so that the actual profit may be determined.
At the time of termination and some profit earned on the principal amount it shall be

distributed between the parties according to the agree ratio.

3)

MURABAHAH CONTRACT:

Murabahah One of the most common modes of finance employed by Islamic Banks, Murabahah is based on the exact requirements of each customer. It can be defined as a sales transaction

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where Islamic bank purchases the commodity and sells it after adding an agreed profit. Thus, it is not a loan given on interest - it is sale of a commodity on a deferred price or may be at spot. Murabahah involves the purchase of a commodity by Islamic Bank on behalf of a customer and subsequent sale to the customer on cost-plus-profit basis. The cost and profit margin to the bank is expressly disclosed to the customer. Simply put, rather than advancing money to the customer, Islamic Bank buys the commodity from a third party and sells it to the customer at an agreed price, which includes an element of profit. Murabahah is not purely a mode of financing actually it is a type of sale. Murabahah is a product, used to finance a commercial transaction which consists of purchase by the Bank. It is not a loan given on interest. It is a sale of commodity for a deferred price which includes an agreed profit added to the cost. Murabahah financing is extended to all types of trade transactions. They have to purchase and sell assets in order to make profit from the higher sale prices or enter into investment. Islamic Bank buys the item from the seller, and sells it to the buyer at a profit with the sale price deferred and paid to the bank by the buyer/customer in installments. Because the commodity must come into the possession of financier (bank).The payment can be made on deferred. Murabahah can not be used as a mode of financing except where the client needs funds to actually purchase some commodities. It is a Shariah requirement that the bank must purchase the asset and get the title/ownership, and hence the associated risks and potential benefits before selling it to the customer. In conventional financing, the bank does not assume ownership or the associated risk. But if the client will not pay the payment on time then he will be liable to pay the penalty. If Islamic banks do not impose any penalties on late payment the customers shall not pay in time and thus the Islamic banks will not be able to run their business efficiently and give a good return to the investors. Therefore, the Islamic banks have decided to take from each client
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Introduction to Islamic Finance

an irrevocable undertaking that in case of late payment he shall be charged a penalty which shall be donated to a charity supervised by the Shariah Board of the bank independently from the bank. The Islamic banks do not use these donations for their own benefit.

The basic feature of Murabahah

Murabahah is not a loan given on interest, it is the sale of commodity for a deferred price which includes an agree profit added to the cost. Murabahah should fulfill all the condition necessary for a valid sale.
Murabahah can not be use as a mood of financing except where the client needs fund to

actually purchase some commodity. e.g. If client want fund to purchase some raw material for the bank purchase raw material and sell him with added some margin. If the funds required for some other purposes like paying salaries, utilities bill, for this Murabahah required a real sale of some commodity.
Before the selling the commodities first he must purchase by himself (owned the

commodity), then sell to the client. And the commodity must come into the possession of the financier.

Payment of Murabahah price may be: 1) At spot

2) In installments 3) In lump sum after a certain time 4) The deferred price may be more than the cash.

Structure of Murabahah

Client and bank sign an agreement to enter into Murabahah

Bank

Agreement to Murabahah

Client

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Introduction to Islamic Finance

Client appointed as agent to purchase goods on banks behalf Bank gives money to agent/supplier for purchase of goods.
The agent takes possession of goods on banks behalf.

Supplier
k Ris sfe n Tr a d rre

De liv er y

of G

Bank

Agent

oo ds

Client makes an offer to purchase the goods from bank through a declaration.

Bank accepts the offer and sale is concluded.

Bank

Agreement + Transfer of Title

Ijarah is a term of Islamic Fiqh Literally; it means To give something on rent

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Offer to Purchase

Bank

Client

Client

Ijarah.

Introduction to Islamic Finance

The term Ijarah is used in two situations: It means To employ the services of a person

on wages e.g. A hires a porter at the airport to carry his luggage

Another type of Ijarah relates to paying rent for use of an asset or property defined as

LAND in Islamic Economics In the Islamic jurisprudence, the term 'Ijarah' is used for two different situations. In the first place, it means 'to employ the services of a person on wages given to him as a consideration for his hired services." The employer is called 'Mustajir' while the employee is called 'ajir', while the wages paid to the ajir are called their 'ujrah'. The second type of Ijarah relates to the usufructs of assets and properties, and not to the services of human beings. 'Ijarah' in this sense means ' to transfer the usufruct of a particular property to another person in exchange for a rent claimed from him.' In this case, the term 'Ijarah' is similar to the English term 'leasing'. Here the lessor is called 'Mujir', the lessee is called 'Mustajir' and the rent payable to the lessor is called 'ujrah'. The rules of Ijarah are very much similar to the rules of sale, because in both cases something is transferred to another person for a valuable consideration. The only difference between Ijarah and sale is that in the latter case the corpus of the property is transferred to the purchaser, while in the case of Ijarah, the corpus of the property remains in the ownership of the transferor, but only its usufruct i.e. the right to use it, is transferred to the lessee.
IJARAH AS A MODE OF FINANCING

VENDOR
Transfe r of Title

The customer approaches the Bank with the request for financing and enters into a

promise to lease agreement. The Bank purchases the item required for leasing and receives title of ownership from the vendor
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Price Payment
ISLAMIC BANK
Agreement

CUSTOMER

Introduction to Islamic Finance

The Bank makes payment to the vendor.

VENDOR

ISLAMIC BANK

Agreement

Transfer of Title

The Bank leases the asset to the customer after execution of lease agreement. The customer makes periodic rental payments as per the contract At the end of the tenure customer can purchase the asset from the bank with the help of

separate Sale agreement

Rules governing Ijarah

1. Leasing is a contract where the owner of an asset transfers its use to another person against an agreed price.
2. However, ownership of the leased asset remains with the Lessor 3. Since ownership of the leased asset remains with the Lessor, all rights and liabilities

relating to ownership are borne by the Lessor. i.e. Water tax, electricity bill etc are to be borne by the Lessee 4. Subject matter of Lease should be Valuable, Identified and Quantified. 5. The period of Lease must be determined in clear terms. 6. The Lessee is responsible for damage to the asset caused by fraud or negligence.
7. Any damage to the asset not caused by the Lessees neglect is to be borne by the Lessor.

8. Normal maintenance is Lessees responsibility

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Transfer of Title

Payment of rental fee

Price Payment

CUSTOMER

Introduction to Islamic Finance

9. Lease rentals for the entire lease period must be fixed at the time of Lease Agreement; 10. The Different amounts of rents can be fixed for different periods, but they must be known. 11. The rent may be tied to a known benchmark, acceptable to both the parties.
12. The Lessor cannot increase the rent unilaterally 13. The Lessor may receive the rent in advance, but such payment should be recorded as an

Advance rental. Balance Sheet should reflect this payment as Liability, since rent can be received only for use of an asset.
14. Lease period will start when the asset has been delivered to the Lessee

15. If the leased asset is destroyed, the lease will terminate.

16. If the Lessee is at fault, he is liable to compensate the Lessor for the loss.

Termination of Ijarah
1. If the Lessee contravenes any term of the Lease agreement the Lessor may unilaterally

terminate the agreement 2. If there is no contravention, the agreement can only be terminated by mutual consent
3. Conventional Financial Lease agreements give termination right to Lessor in all cases.

This is diverse to Shariah laws

IJARAH CONTRACT:
Islamic Banks Car Ijarah unit provides a car financing, based on the principles of Ijarah and is free of the element of interest. Car Ijarah is Pakistans first Interest Free car financing based on the Islamic financing mode of Ijarah (Islamic leasing). This product is ideal for individuals looking for car financing while avoiding an interest-based transaction. islamic Bank
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Car Ijarah is a car rental agreement, under which the Bank purchases the car and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the contract. Upon completion of the lease period the customer gets ownership of the car against his initial security deposit.

RIGHTS & LIABILITIES OF OWNER V/S USER:

An Islamic Ijarah is an asset-based contract; the lesser should have ownership of the asset during the period of the contract. Under Islamic Shariah, all ownership related rights and liabilities should lie with the owner while all usage-related rights and liabilities should lie with the user. Under Ijarah, all ownership-related risks lie with the Bank while all usage related risks lie with the user, thus making the Lesser the true owner of the asset and making the income generated through the contract permissible (Halal) for the Bank.

LEASE RENTALS IN CASE OF LOSS OR THEFT OF VEHICLE:

The Islamic system, rent is consideration for usage of the leased asset, and if the asset has been stolen or destroyed, the concept of rental becomes void. But in conventional leasing if the leased vehicle is stolen or completely destroyed; the conventional leasing company continues charging the lease rent till the settlement of the Insurance claim.

TAKAFUL INSTEAD OF INSURANCE:

Legally, it is required for all leasing entities to insure the leased assets. As such, Islamic Bank insures its leased assets, through Takaful only, which is Islamic product for insurance.

PERMISSIBILITY FOR PENALTY OF LATE PAYMENT:

Under Ijarah, the Lessee may be asked to undertake, that if he fails to pay rent on its due date, he will pay certain amount to a charity, which will be administered through the Islamic Bank. In most contemporary financial leases, an extra monetary amount is charged, in their income, if the rent is not paid on time. This extra amount is the considered as Riba and is Haram.

SALAM CONTRACT:
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This mode of financing can be used by the modern banks and financial institutions especially to finance the agricultural sector. In Salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. The price is in cash but the supply of purchased goods is deferred. Salam is used to meet the need of traders for import and export business. Under Salam, it is allowed for them that they sell the goods in advance so that after receiving their cash price, they can easily undertake the aforesaid business. Salam is beneficial to the seller because he received the price in advance and it was beneficial to the buyer also because normally the price in Salam is lower than the price in spot sales.

CONDITIONS IN SALAM:
It is necessary for the validity of Salam that the buyer pays the full price to the seller at

the time of affecting the sale. Salam is to fulfill the "immediate need" of the seller. If its not paid in full, the basic purpose will not be achieved. Only those goods can be sold through a Salam contract in which the quantity and quality can be exactly specified. Salam cannot be affected on a particular commodity or on a product of a particular field or farm. It is necessary that the quantity of the commodity is agreed upon in absolute terms. All details in respect to quality of goods sold must be expressly specified. The exact date and place of delivery must be specified in the contract. Salam cannot be affected in respect of things, which must be delivered at spot. The time of delivery should be at least fifteen days or one month from the date of agreement. The price in Salam is generally lower than the price in spot sale, the difference in the two prices may be a valid profit for the Bank. A security in the form of a guarantee, mortgage may be required for a Salam in order to ensure that the seller delivers. The seller at the time of delivery delivers commodities and not money to the buyer.
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BENEFITS:
After purchasing a commodity by way of Salam, the financial institution can sell it through a parallel contract of Salam for the same date of delivery. The period of Salam in the second parallel contract is shorter and the price is higher than the first contract. The difference between the two prices shall be the profit earned by the institution. The shorter period of Salam, the higher price and the greater the profit, and in this way institution can manage their short term financing portfolios. The institution can obtain a promise to purchase from a third party. This promise should be unilateral from the expected buyer. The buyer does not have to pay the price in advance. When the institution receives the commodity, it can sell it at a pre-determined price to a third party according to the terms of the promise.

Istisna
1. Istisna is a contract of sale of specified items to be manufactured (or constructed), with an obligation on the part of the manufacturer (or contractor) to deliver them to the Customer upon completion. 2. Istisna is the second exception to the rules of sale where a sale is allowed without immediate delivery of the goods sold.

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3. An Istisna contract is permitted only for raw materials that can be transformed from their natural state by a manufacturing or construction process involving labor. 4. It is not permissible that the subject matter of an Istisna contract be an existing and identified capital asset. 5. If complete specifications (such as type, kind, quality and quantity) of the subject matter have been given to the manufacturer along with the contract price, then the manufacturer is bound to manufacture the Asset and cannot terminate the contract unilaterally. 6. The ultimate purchaser cannot be regarded as the owner of the materials in the possession of the manufacturer for the purpose of producing the subject matter. 7. The time of delivery of goods does not necessarily have to be fixed in Istisna however, a maximum time may be agreed upon between the parties. 8. The delivery of the subject matter may take place through constructive possession. At this point, the liability of the manufacturer in respect of the subject matter comes to an end and the liability of the ultimate purchaser begins. 9. It is necessary for the validity of Istisna that the price is fixed with the consent of the parties. 10. The Istisna price can either be paid in advance, or in installments or at the time of delivery of goods. 11. The price of Istisna transactions may vary in accordance with variations in the delivery date. 12. It is permissible to amend the contract price of an Istisna contract upwards or downwards, as a result of intervening contingencies (Force Majeure). 13. It is permissible if it is agreed between the parties that in the case of delay in delivery, the price shall be reduced by a specified amount per day.

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14. Unlike Murabahah where only raw material can be financed, Istisna can be easily utilized to facilitate payment of overheads etc. in addition to the purchase of raw material.
15. It is also to be noted that amount paid out as Istisna price to the manufacturer can be

used by the manufacturer anywhere he deems fit. It doesnt have to be utilized exclusively for the production process.

Istisna' as a mode of financing

Istisna may be used to provide financing for construction of house. If the client owns a land and seeks financing for the construction of a house, the financier may undertake to construct the house on the basis of an Istisna. If the client does not own the land and wants to purchase that too, the financier can provide him with a constructed house on a specified piece of land. Istisna may also be used for similar projects like installation of an air conditioner plant in the clients factory, building a bridge or a highway. The modern BOT (buy, operate and transfer) agreements may be formalized through an Istisna agreement as well. So if the government wants to build a highway, it may enter into an Istisna contract with the builder, the price of Istisna can be the right of the builder to operate the highway and collect tolls for a specific period.

Conclusions:
After this we conclude that Islamic modes of financing are based on Islamic rules and regulations.

RECOMMENDATIONS:

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The rate of rent in Islamic modes should low as compare to the rate of interest in conventional banking. The rate of returns in Islamic modes should high as compare to the rate of interest in conventional banking system.
In Pakistan all banking system should be based on Islamic modes and there is no trend of

conventional banking in Islamic countries. In Pakistan, the trend of Islamic banking is very low it should be high as compare to conventional banking.
It is important for the Muslim peoples that they should boycott the conventional banking

system in Islamic countries.

It is important for the Islamic banks that they should provide high rate of returns for the

attraction of customers.
Interest is Haram in Islam Muslims should totally avoid the interest based transactions.

All the banking system should be online because the processing of transactions is very low as compare to online banking system.

REFRENCES:
http://www.Islamic Banking.com.pk/ http://www.meezanbank.com.pk/

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http://www.google.com/

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