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Islamic banking & finance institutions would neither pay interest nor earn interest. Bank-depositor relation would be based on the depositor sharing the profit accruing as a result of the bank's profitable use of the deposits pooled together. On the asset side a number of ways were tried to earn profits including partnerships and profit-sharing (mudaraba) with businessmen. Many Islamic banks entered into business directly, buying and selling commodities, land or real estate. Experimentation soon led to what is currently the predominant form of Islamic finance.
In a nutshell, the core idea behind commercial and investment banking, that of financial intermediation, is retained but the ethically repugnant practice of interest on loans is discarded. Within a short period of fifty years, the first half of which was devoted mainly to theory and model building, Islamic banking established itself as an alternative, claiming ethical superiority over conventional banking.
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Islamic Banks: A Model And The Challenge
The Challenge Of Islam, Gauhar, Altaf, 1923-(Ed) / Islamic Council Of Europe (Collab),London, Islamic Council Of Europe, 1978, 220-234
El Nagger, Ahmed A.
In any under-developed country the only successful long term... Read More |
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Business of the Bank
- By Muhammad Nejatullah Siddiqi
Banking without Interest, London, Islamic Foundation, 1983, pages: 19-38.
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Prospects Of An Islamic Banking System At National And International Levels
- By Muhammad Kayser Hussain
Thoughts on Islamic Banking: Articles Presented at the 2-Day Seminar on Islamic Banking Held under the Auspices of Islamic Economics Research Bureau,edition: 1, Dacca Bangladesh, Islamic Economics Research Bureau, 1982, pages: 71-72
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Interest Free Banking System its Objectives Constraints and Prospects In a poor country like Bangladesh
- By Ataul Huq
Thoughts on Islamic Banking: Articles presented at the 2-day International Seminar on Islamic Banking held under the auspices of Islamic Economics Research Bureau, Islamic Economics Research Bureau, Dacca, Bangladesh, 1982, pages: 73-82.
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Conversion of Interest Based Banking to Islamic Interest-Free Banking
- By Dr. Ziauddin Ahmad
Encyclopedia of Islamic Banking and Insurance, London, Institute of Islamic Banking and Insurance, 1995, pages; 174-189.
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Musharaka Financing For Working Capital
- By Nawazish Ali Zaidi
Journal of Islamic Banking and Finance, Vol-4, Issue-3, Yr-Jul.-Sept. 1987, pgs 44 - 56.
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