4. ISLAM
•Peace
•Submission
•Surrender
•Obedience to Allah
•A way of life that is
revealed by Allah to
Prophet Muhammad
ISLAMIC
ECONOMIC
•Science which studies
human behavior as
relationship between
ends and scare means
and which have
alternative uses
ISLAMIC BANKING
•Banco=shelf, brench,
counter
•Bank=person who
conduct a banking
business
•Banking business
•Receiving money
•Paying and collecting
cheque
•Provision of finance
•Islamic banking
•Banking activities that
based on shariah
principles
ISLAMIC FINANCE
•Process by which miney
is transferred (financing
and investing) among
business
•Islamic
finance=conducting of
banking and financial
operations in line with
islamic principles
INTRODUCTION TO ISLAMIC BANKING
5. ISLAM, ECONOMIC, BANKING AND FINANCE
Islam
Content of
Ilslam=Aqidah,
shariah
(ibadah+muamalah)
, akhlak
Economic
The knowledge and
application on
injuctions and rules
of shariah that
prevent injustice in
the acquisition and
disposal of material
resources in order
to provide
satisfaction of
human beings and
enable them to
perform their
obligation to Allah
and the society
Economic activities
includes
-> production
-> consumption
-> distribution
-> transaction
Important economic
and business
activities is financial
system@banking
system includes
=leasing,lending,Inv
esting,trading,insur
ance
managemenet,Secu
rities broking
Islamic
banking
Banking business
->receiving money
->paying and
collecting cheque
drawn or paid by
cutomer
->provision of
finance
Islamic finance
system
Divided into 2
1)Banking system
2)Capital market
6. FULFILLMENT OF
FINANCING NEED
Own capital Other’s capital
Equity financing
When economic unit takes on the
capital of other party@parties in
the form of equity to undertake a
commercial project
In form of
a)Partnership
b)co-operative company
c)Joint stock company
Party @parties involve has
1)Share in the entity propotionate
2)Voting right in the entity
3)Receive any profit
2 major contract
->al-musharakah (lost-profit
sharing)
->al-mudharabah (trustee profit-
sharing)
Debt financing
The need for debt
financing
=consumer financing
=domestic trade financing
=international trade
financing
=corporate finance
=international finance
Government financial
operation
Contract used=
bay’ bithaman ajil
Al-ijarah
Al-ijarah thumma bay’
Murabahah
etc
7. PRINCIPLES OF ISLAMIC BANKING AND
FINANCE
Based on shariah
Based on shariah product and service offered known as shariah
complience
Concept of islamic banking and financial
Risk sharing
Right and duties of individual
Sanctity of contract
Major rules of islamic banking and finance
Prohibition of usury (riba)
Application of bay’
Avoidance of gharar
Prohibition of maisir
Prohibition in engaging of prohibited commodities
Principles
Al-Amanah (trusthworthy)
Al-Hurriyah (freedom)
Al-milk (ownership)
8. • To promote and develop products and services based on shariah principles
• Uphold consistantly the concept of islamic universal brotherhood and solidarity of mankind
• To provide facilities and services in the various fields (trade, investment, industry, &commerce)
Inter-related to
islamic economic
system
•Dar al-Mal al-Islami Trust
•To put before all muslim, contemporary islamic financila services
•To serve all muslim communities in mobilizing and utilizing financial resources needed
•To serve the ummah islamiyyah
•Bank Islam Malaysia Berhad
•To continualy develop and innovate universal accepted financial solutions in line with the shariah principles
•To provide a reasonable and sustainable return to shareholders
•To provide for a conducive working environment and to become an employer of choice for top talents in market
•To deliver comprehensive financial solutions of global standard using state-of-the-art technology
Own set of
operational
objectives
• To provide a competitive banking products and services both in deposits and financing
• To promote a banking system based on principles of justice, welfare, equality and legitimate profit
• To establish an economic system which completely based on islamic principle or shariah –based
economic model
• To contribute for social welfare through zakat
General set of
objectives
OBJECTIVES OF ISLAMIC BANKING AND
FINANCE
9. NEEDS
FOR
BANKING
Surplus unit
vs defisit unit
Bank as
intermediary
Deposit,
financing,
investing,
using services
Fulfill
individual
needs
Fulfill
business
needs
Import &
export
activites
Other
(depend on
the role of
banking)
10. GOAL AND STRATEGIES
OF ISLAMIC BANKING
GOAL STRATEGIES
Economic well-being
Full employment
Optimum rate of
growth
Socio-economic
justice and equal
distribution of
income and wealth
Stability and in the
value of money
Mobilization of saving
for economic
development
Intergration of all
supposedly mundane
aspect of life with
spiritual uplift
Provide blueprint for
the reorganization of
all aspect of life
The role of the state
Reform of the money
and banking system
11. Avoiding the
abuse of power
Avoiding the
misuse of
information
Improve
accuracy and
perfectness of
bookkeeping
Secracy and
confidentially
in relationship
with customer
Improving
justice and fair
treatment
Avoiding the
conflict of
interest
ETHICS OF ISLAMIC BANKING
12. ISLAMIC BANKING
Shariah based
Offer financing
Mobilize resources to develop the
society
Review by certified auditors and
shariah advisory board
Pay zakat (religious obligation) and
tax (government requirement)
CONVENTIONAL
BANKING
Conventional and interest based
Offer cash loan
Attract resources and lend them to
gain maximum profit
Review solely by certified auditors
Pay tax as required by the
goverment
COMPARISON
13. SOURCES OF
ISLAMIC LAW
• Al-Quran
• Al-Sunnah
• Ijma’
• Qiyas
Primary
• Istihsan
• Masalih mursalah
• ‘Uruf
• Istishab
• Sadd al-zhara’I
• Revealed laws prior to islam
• Fatwa of al-sahabah
Secondary
