The known Islamic Banking System refers to a system where the banking activity must be consistent with the principles of the Islamic Law or Sharia and its application through the development of the Islamic Economic Activities.
Unlike the western banking style, this "approach", based on the Islamic Law, prohibits payments and acceptances of interest fees for lending and receiving money respectively, also, it prohibits the investments in businesses that provides goods or services inconsistent with the mentioned 9 principles, shown below.
Principles
• The sharing of profit and loss and the prohibition of riba.
• Allowing the buyer to pay the bank in installments.
• There are no additional penalties for late payment.
• The goods or land is registered to the name of the buyer from the start of the transaction.
• Islamic banks lend their money to companies by issuing floating rate interest loans.
• The borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
• Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc.
• To engage in only ethical investing, and moral purchasing.
Anyway, this banking system has addapted to the nowadays' needs in the middle east and has grown extremely rapidly within nations with small Islamic communities besides the middle east.
References
• http://en.wikipedia.org/wiki/Islamic_banking
• Allowing the buyer to pay the bank in installments.
• There are no additional penalties for late payment.
• The goods or land is registered to the name of the buyer from the start of the transaction.
• Islamic banks lend their money to companies by issuing floating rate interest loans.
• The borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
• Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc.
• To engage in only ethical investing, and moral purchasing.
Anyway, this banking system has addapted to the nowadays' needs in the middle east and has grown extremely rapidly within nations with small Islamic communities besides the middle east.
References
• http://en.wikipedia.org/wiki/Islamic_banking
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