Introduction of islamic banking
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  • Beef and Pork Festival by JNU students- Some JNU students convened a peculiar Festival named Beef and Pork Festival in 2012. It aims at breaking the cultural and religious barrier by taking both beef and pork by Hindu and Muslim students. The organizers think that thus this will spread across the country and will altimately lift the social evils. But I suggest that the students should not take such initiative against the culture of the society. It is a futile exercise. Moreover it is not an urgent necessity in the country like economic development.

    I have also found Condom Vending Machine inside the campus near the hostels while visiting JNU campus. I came to know that authority has erected them to combat sexually transmitted deases (You may please verify). I have come to know by inquisition that most students start sexual life from 2nd year onwards. Many view it as part of modernity. But authority should not encourage the students in pre-marial sex which is against the norms of the society. Because, they will be habituated in nefarious sexual life.

    Now many people fear to send their daughters to JNU for education in such adulterous environment. The daughter and son will be habituated in nefarious sexual life. If you don’t believe please verify.
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  • Islam and Islamic Banking,Interest Free-banking is the solution to
    Global Financial crises and day to day global problems. To be convinced read these Islamic Books and presentations. Thank you
    as you read these Islamic presentations & articles.
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    Buddhism is the best religion in the world. It is the only religion which is based on philosophy and not on rituals and myths. Other religions are more ritualistic and mythological or more imaginative than philosophical. Ritualistic religions are full of superstitions while mythological or imaginative religions are unhistorical and unscientific. That is why now a days many people are accepting Buddhism as their faith.

    In Buddhism religion is equivalent to philosophy and fully consistent with modern scince. Other religions based on rituals and myths are inconsistent with modern science.

    Accepting Buddhism is very simple. No formal conversion is necessary in Buddhism. One needs only to follow the path of Lord Buddha. Learn Buddhist philosophy and do practice in life. Do meditation in Buddhist temples. You will get peace in your life.
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    Introduction of islamic banking Introduction of islamic banking Presentation Transcript

    • Introduction Of Islamic Banking
    • Introduction of Islamic Banking
      • Islamic banking is interest free banking, in which there is no fixed rate of return. Islamic banking is the banking system which is run in accordance with the Islamic laws and the Shari a` board; that guides the institutions. This Shari a` board authorizes the products that whether these are Shari a` compliant or not. Islamic banking is the banking that is guided by Islamic law ( Shari a`) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest,
      • also commonly called Riba in Islamic discourse”. Islamic banking also finds its roots in Islamic finance and all type of transactions are interest free and of risk sharing. The interest is prohibited in Islamic ways of banking as it is also obvious from Quran. In Quran, in Sura Al-Imran, Allah said that; “O you who believe! Do not devour Riba multiplying it over and keep your duty to Allah that you may prosper” (3:130). Same kind of prohibition regard fixed interest is also lead in Sura Al-Rum(39) , Al-Nisa(160-161) and Al-Baqarah(275-281) of Quran.
      • Riba and Gharar are illegal under Islamic law. Riba refers to fixed rate of interest. Gharar refers to speculation. Islamic banking shows dramatic improvements and developments in Pakistan. Islamic banking is taken as national policy and it is supported but there exist dual banking structure in the Muslim countries. Mostly the banks of conventional system are also opening their separate Islamic banking divisions and branches.
      • The expectation of increase in growth of networking of Islamic banking system is increasing. The Islamic banking has increased in terms of branches, deposits, capital funds, sources. The ratio of income to expenses is high which indicates increasing profitability of the sector.
    • Riba or Interest
      • Riba literally means increase, addition, expansion or growth. It is however not every increase or growth, which is prohibited by Islam. In shariah, Riba technically refers to the premium that must be paid without any consideration.
    • Types Of Riba
      • According to jurists of Islam Riba have two types.
      • Riba Al-Naseah
      • Riba Al-Fadl.
      • The organization of term interest dates back to 17 th century with the emergence of banking system at global level. Interest means giving and/or taking of any excess amount in exchange of a loan or on debt. Hence, it carries the same meaning/ value as that of Riba is defend in the previous question. Further, it is narrated that “ the loan draws interest is Riba”.
    • Riba in Quran
      • In the Holy Quran, Allah (SWT) says in Sura Al-Baqarah (2-279):
      • “…… . And if you repent, yours is your principal”
      • And what ever Riba you give so that it may increase in the wealth of the people, it does not increase with Allah. ( Sura Al-Rum 30:39)
      • And because of their charging Riba while they were prohibited from it. ( Sura An-Nisa 4:161)
      • O you who believe! Be mindful of God and give up what remains of  al-rib a if you are believers. If you do not do so, then receive a declaration of war from God and his Messenger. But if you repent,  you shall have your capital sums ( ru` u s al-amw a l) . You do not deal unjustly and you are not dealt with unjustly  (2:278-279)
    • Riba in Hadith "Every loan that derives a benefit (to the creditor) is  rib a." This Hadith is reported by  Hazrat Ali Radi-AllahuAnhu  
      • Abu Said al Khudri Radi-AllahuAnhu narrated that Holy Prophet( peace be upon him) said:
      • “ Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, payment made hand by hand. If anyone gives more or asks for more, he has dealt in Riba. The receiver and giver are equally guilty.
      • If the creditor received a goat as mortgage from the debtor, the creditor may use its milk to the extent he has spent in providing fodder to the goat. However, if the milk is more than the price of the fodder, the excess is  rib a." Usmani, para 99)
      • From Usamah ibn Zayd: The Prophet, peace be on him, said: "There is no riba except in nasi'ah [waiting]." [ Bukhari, Kitab al-Buyu, Bab Bay al-dinari bi al-dinar nasa'an, # 386 ; also Muslim and Musnad Ahmad]
      • "There is no riba in hand-to-hand [spot] transactions." [ Muslim , Kitab al-Musaqat, Bab bay'i al-ta'ami mithlan bi mithlin ; also in Nasa'i]. 
    • Difference between conventional banking and Islamic banking
    • Bank Client money money + money (interest) Conventional Banking System
    • Bank Client Islamic Banking System Goods & Services money
    • Islamic banking tends to create link with the real sector of the economic system by using trade related activities. Conventional banks use money as a commodity which leads to inflation The execution of agreements for the exchange of goods & services is a must while disbursing funds under Murabaha, salam & Istisna contracts While disbursing cash finance, running finance or working capital, no agreement for exchange of goods & services is made. Islamic bank operates on the basis of profit and loss sharing Interest is charged even in case the organization suffers losses by using bank’s fund Profit on trade of goods for charging on providing service is the basis for earning profit Time value is the basis for charging interest on capital Money is not a commodity thought it is used as a medium of exchange and store of value Money is a commodity besides medium of exchange and store of value Islamic Banks Conventional Banks
    • Islamic banks cannot guarantee of all its deposits. A conventional bank has to guarantee of all its deposits. The status of Islamic bank in relation to its clients is that of Partners, Investors, and Trader, Buyer and Seller. The status of a conventional bank, in relations to its clients, is that of creditors and debtors. Islamic banking only deals in Halal products and services, all transactions must be in SHARIAH COMPLIANCE Conventional banks invest their deposit in interest based modes The Islamic banks have no provision to charge any extra money from the defaulters. It can charge additional money incase of defaulters Compounding calculation is strictly prohibited under Islamic banking system Lending money and getting it back with compounding interest is the fundamental functions of the conventional banks In contract it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur) The investor is assured of a pre determined rate of interest Islamic Banks Conventional banks
    • Basic Principles of Islamic Banking
      • Sanctity of contracts.
      • Risk sharing.
      • No Riba / Interest.
      • Economic purpose / activity.
      • Fairness.
      • No valid subject matter.
    • Shariah / Islamic Law
      • Shariah lexically means a way or path. In Islam Shariah refers to the divine guidance and laws given by the Holy Quran, the Hadith (sayings) of the Prophet Muhammad (peace be upon him) and supplemented by the juristic interpretations by Islamic Scholars. Shariah embodies all aspects of the Islamic faith, including beliefs and practices.
    • Sources of Islamic Law
      • The Holy Quran
      • The Sunnah of the Holy Prophet (peace be upon him)
      • Ijma’ ( consensus of the Ummah)
      • Qiyas (Analogy)
    • Islamic Mode of Financing
      • Contracts
      • Mudarabah
      • Murabaha
      • Musawamah
      • Salam
      • Istisna
      • Ijarah
      • Ijarah wa Iqtina ( Ijarah Muntahiyyah Bitamleek)
      • Sub Contracts
      • Wakalah
      • Kafalah
      • Rahn
    • Islamic Banking Fare vis-à-vis Conventional Banking
      • The approach of Islamic banking to satisfy the business needs of the customers is entirely different from that of the approach adopted by conventional banking. Basically Islamic banking satisfies the business needs of the entrepreneurs by the following two methods.
      • Profit and loss sharing modes
      • Debt creating modes (financing the purchase of commodities on credit with a mark-up)
    • Role of Islamic banking in Economic Development of the Country
    • Principles Governing Islam Aqidah (Faith and Belief) Shariah (Practices and Activities) Akhlaq (Moralities and Ethics)
      • While functioning within the Shariah framework, Islamic banks an perform a crucial task of resource mobilization and efficient allocation using either profit sharing (Musharakah and Mudarabah) or trading & Ijarah based categories of Islamic mode of financing. Profit sharing modes can be used for short, medium and long-term project, financing, import financing, pre-shipment export financing and working capital financing transactions. In order to ensure maximum role of Islamic finance in the development of economy it would be necessary to create an environment which may induce to earmark more funds for Musharakah/Mudarabah based financing.
      • Small and medium enterprises (SME) sector has a great potential for expanding production capacity and self-employment opportunities. Enhancing the role of financial sector in development of SME sub-sector could mitigate the serious problems of unemployment and low level of exports.
      • it can safely be said that Islamic banking has a great potential of playing an effective role in the development of the country.
    • Is Islamic Banking Viable
      • Islamic banking is still in the stage of evolution. No one can disputes that there is a definite desire amongst Muslims savers to invest their savings in the venues which are permitted by the Shariah. Nevertheless, they must be provides with Halal returns on their investments. Islamic scholars and practical bankers took up this challenge and have made commendable progress in the last few decades in providing a number of such instruments. However, the concepts of Islamic banking and finance are still in their early stages of development and Islamic banking is an evolving reality for continuously testing and refining those concepts.
    • Nature of Deposits in Islamic Banks
      • Following are the nature of deposits in Islamic banks.
      Mudarabah Saving Qarz Current Nature Deposit
      • Qarz can be use for own need and amanah can not be used for any purpose, that’s why Islamic banks current accounts are based on Qarz and not in amanah.
      • Islamic banks offered three types of saving accounts.
      • Mudarabah Saving Account
      • Musharakah Saving Account
      • Wakalah Saving Accounts
    • ISLAMIC BANKING AS AN ALTERNATIVE APPROACH
      • One might wonder whether Islamic banking and finance is an alternative approach to modern banking. In fact, the banking business is no more than a possible means to satisfy the needs of society according to the prevailing conditions and circumstances. Those needs should always govern the means, not be its subject. The most important development in modern banking is the art of mobilizing funds for investment. It happened to be that the method of both collecting and using of funds was based in the West on interest paid and charged. In contrast, Islamic banking
      • is a system that provides financing and attracts savings on the basis of profit/loss sharing. One may have to think positively of such a scheme. By waiving the interest factor, we find an alternative vehicle to provide financing on a different basis which should be judged on its own merit.
      • For Muslims, this system of profit/loss sharing coincides with their belief in the prohibition of interest, and helps in mobilizing unused funds for investment and creating new job opportunities.
      • As for non-Muslims, the Islamic banking system does not contradict their faith, while it provides the society with alternative ideas for venture capital and other tools of investment.
      • Mudarabah as a contract of participation between the provider of capital and the managing entrepreneur responds to normal human needs. An enterprising engineer living in the West, as an example, would welcome any possibility that enables him to be provided by venture capital to establish a new factory. This could be the case with many individuals of the same spirit. The ultimate test of such alternative is whether it is successful or not. It can be safely said that the idea of Islamic banking has been successful. It is, therefore, not surprising to find several international banking institutions started the establishment of Islamic units or windows for some of their customers. Islamic banking was partially practiced by some of the Western banks and financial institutions in Switzerland, U.K. and the United States.
      • The establishment of City Islamic Investment Bank in Bahrain is the latest example for the possible adoption of the Islamic banking system by traditional bankers. Economists have proven that the wider is the freedom of
      • choice the higher is the level of social welfare. In addition, wider choice implies greater respect of human rights. When an alternative concept such as Islamic banking is introduced, a new choice is open to the market, with obvious economic and social benefits. Introducing Islamic banking as a new choice has also further benefits related to the advantages it provides to many fund users. Commodity and service producers would certainly appreciate equal opportunities for obtaining capital based on the merits of their businesses
      • rather than on their personal creditworthiness alone. Those entrepreneurs who prefer to be self employed need ways to obtain financing other than borrowing. Islamic banking gives those pioneers such an opportunity on the basis of profit/loss sharing. In general, Islamic finance places more weight on the merit
      • of the business to be financed, rather than the wealth of the fund user. As a result under this new banking alternative, a better distribution of credit may be achieved. Therefore, I would like to recommend strongly to the Western World that all obstacles remaining in the way of establishing Islamic banks in their countries be removed.
    •  
    • CHALLENGES AND PROSPECTS
      • Last but not least, I would like to conclude with a word about the challenges facing Islamic banks and what prospects they may have. The biggest challenge Islamic banks have faced from their very beginning is how to narrow the gap between the Islamic banking model and its application; in other words, between theory and practice. Difficulties arise in this respect come from being relatively small in a traditional banking environment, having to rely on bankers trained in traditional banking, and attempting to balance the unquenchable enthusiasm on the side of depositors, with a limited supply of investment opportunities.
      • Islamic banks have been trying hard to meet those challenges through several means. The first is to work for a better understanding of the concepts upon which their operations are based. This has been a success to the extent that now traditional bankers are mostly cooperative and accommodating. Central bankers have also come forward with new ideas of better methods for supervision and control, to suit the operations of Islamic banks. Another means is to train their staff in this new form of banking and to press for more banking and financial innovations which are necessary for the new modes of finance. Fortunately, financial engineering has come in handy with bold and new ideas in finance which made the Islamic model so much more applicable. Innovations in this regard did not come exclusively from
      • Islamic banks. Surprisingly, financial markets produced some useful innovations, perhaps indicating that Islamic banking is an idea whose time has come. Nonetheless, many challenges still remain, not the least to the predominance of Murabaha (sale mode) in the operations of some Islamic banks, as well as the relative scarcity of short-term Islamic financial instruments. The prospects of Islamic banking and finance will depend extensively on the ability of Islamic banks to continue facing challenges with resourcefulness and creativity, in addition to being worthy of trust and understanding. I believe that competition, if allowed and maintained, not only within Islamic banks, but also between all banks whether Islamic or traditional, would insure a promising future for the banking industry as a whole.
    • Growth of Islamic Banking in Pakistan
    • Focus Areas
    • Worldwide Statistics
    • Market Performance
    • Jazak Allah...