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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 Banking Windows
New Horizon, No. 119, May 2002, 3-5
Justice Mohammed Taqi Usmani
The past two decades have witnessed a substantial increase in the number of Islamic banks, financial institutions and Islamic funds in different parts of the world. Initially... Read More |
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Making Sense of Islamic Banking
- By Osama Mohamed Ali
New Horizon, 26, April 1994, 4-6
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Barkat - India’s Islamic Banking Pioneers
- By Syed Muhammad Hussain
New Horizon, No.32, October 1994, pg 20
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Enter Asya Finance House
- By Mohammed Dawood
Islamic Banker, Volume: 12, December 1996/January 1997, 8 - 9
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Islamic Banking Takes on the Conventional Sector in Bangladesh
- By Hussain Uz Zaman Chowdhury
New Horizon, No. 25, March 1994, 14-15
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Islamic Banking Discovers New 'Faithfuls'
- By Staff writer
New Horizon, No. 34, December 1994
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| Islamic Banking—The Jordanian Experience
Arab Law Quarterly, 2, Part 3, August 1987, 207-229 Read
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| ISLAMIC BONDS (SUKUK): ITS INTRODUCTION AND APPLICATION
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