Transcript Introduction to Islamic Banking By Mazher Ali Bokhari

Starting in the Name of Allah,
The Most Beneficent, The Most Merciful
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]