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MAZHAR ALI BOKHARI Head of International Operations & Strategic Planning Division GULF AFRICAN BANK LIMITED Nairobi, KENYA At AlHuda CIBE Awareness workshop B.Z University - Multan Phone Nos. +254 20 2740000 / +92 321 4402900 Email: [email protected] [email protected] Honorable Guests, Participants, Ladies & Gentlemen Thank you for giving me the honor of presenting an overview of Islamic Banking Importance of Trade in Islam Islam has given an immense importance to trade The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH). Before explaining the concept “what is Islamic Banking” the elaboration of concept “why Islamic Banking” is very important. Islam is a complete code of life that provides guidance regarding each aspect of life. WHY ISLAMIC BANKING The primary objectives of Islamic Economic System are as under. Equal Distribution of wealth Social justice These objectives can never be achieved in Interest/Riba based economic systems. WHAT IS ISLAMIC BANKING Now we come to our core question “Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the principles laid down by Islamic Sharia’h” DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 1) Functions and operations are based on Sharia’h principles 1)Functions and operations are based on fully man made principles DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 2) Investor is assured of presharing between provider of capital determined rate of (investor) and user interest of funds (entrepreneurs) 2) Promote risk- DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 3) Aim at maximising profit but subject to Sharia'h restrictions 3) Aim at maximising profit without any restrictions DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 4) Creditor-Debtor 4) Partners, relationship investor and traders, buyer or seller relationship DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 5) Based on money 5) Encourage trading. Money is a asset-based medium of financing and exchange and not a based on commodity, its sale commodity trading and purchase is prohibited in Islam. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking Conventional Banking 6) No right of profit 6) It is almost risk if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss. free banking and depositor has no risk of losing its money because interest is guaranteed. ISLAMIC BANKING PRODUCTS AND SERVICES Currently available Islamic Banking Products and services are a) Partnership based modes of financing Musharaka Finance, Mudaraba Finance, b) Trade based modes of financing Murabaha Finance, Salam finance c) Rental based modes of financing Ijarah Finance, Diminishing Musharaka Finance MAZHAR ALI BOKHARI Phone Nos. +254 20 2740000 / +92 321 4402900 Email: [email protected] [email protected]