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Islamic Banking

# Difference between Islamic Banking and Commercial Banking on following points

islamic-banking-new

  • Social Consideration
  • Types of Accounts
  • Project Financing
  • Trade Financing
  • Karz-E-Hasana (Beautiful Loan)
  • Interest versus P/L sharing
  • Share Market and Investment Banking (IB)

 

*Commercial Bank (CB) gives loans to any kind of business, E.G. A businessman wants to start a Liquor or tobacco business or any other business which is indecent and harmful to human beings and society, CB will grant loan.

*Islamic Bank will not give loans to any kind of business like Liquor, Tobacco, Pubs, Bars, Making Films, Casino, Gambling Dens, Brothels and Dance bars, or to build dargah, temples, churches or Mosque etc.

Islamic banking loans are given on project financing basis or a type of Bizness a person proposes without interest but as a partner in the Bizness. E.g. If a person do not have money to start a Bizness but has any plan or Bizness proposals, Islamic banks will check and analyze the risk and profit and accordingly invest without charging any interest as a partner in the Bizness

Islamic banking is based on real business deals and real economic activities that bear risk and are open to acquire profits while conventional banks are based on Riba (interest) lending and borrowing activities which avoid risk and thus promote social injustice and later leads to economic crises and depressions.

 

  • Commercial Banking: Money is a commodity besides medium of exchange and store of value. Therefore, it can be sold at a price higher than its face value and it can also be rented out.
  • Islamic Banking: Money is not a commodity though it is used as a medium of exchange and store of value. Therefore, it cannot be sold at a price higher than its face value or rented out

https://en.wikipedia.org/wiki/Islamic_banking_and_finance

http://www.hindustantimes.com/india/islamic-banking-to-make-india-debut-in-modi-s-home-state-gujarat/story-qp9TjJ5v9Hwmp3WM3iSPKI.html

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