islamic banking

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islamic banking

  1. 1. Presentation on Islamic Banking <ul><li>Presented by : Ramesh Sharma (B-28) </li></ul><ul><li> Rohit Mishra (B-39) </li></ul><ul><li>Prabhat Mani Tripathi (A-20) </li></ul>
  2. 2. History of Islamic finance <ul><li>1500 years of development. </li></ul><ul><li>During Classical period, commerce flourished under Islamic commercial law. </li></ul><ul><li>Development languished under impact of colonialism and huge Western firms. </li></ul><ul><li>Revival began in 1960’s. </li></ul>
  3. 3. Inception of Islamic Banking <ul><li>Dubai Islamic Bank - 1975 </li></ul><ul><li>modest beginnings </li></ul><ul><li>Initiated by businessmen who did not want to deal with interest based system </li></ul><ul><li>Hostile environment </li></ul>
  4. 4. History of Islamic finance <ul><li>Increasing rapid growth and sophistication. </li></ul><ul><li>Challenged by conventional banking system </li></ul><ul><li>Lack of public awareness </li></ul>
  5. 5. Success Story <ul><li>300 + Islamic financial institutions </li></ul><ul><li>$ 500 - 800 bn in funds </li></ul><ul><li>Islamic banking by major academic institutions </li></ul>
  6. 6. Success Story <ul><li>Important database system (HIFIP) </li></ul><ul><li>Standards for the Industry (AAOIFI) </li></ul><ul><li>Recognition by IMF, World Bank and Basel Committee </li></ul>
  7. 7. Important Reasons for Global Interest in Islamic Banking <ul><li>Good opportunity for investment </li></ul><ul><li>Challenge to the conventional interest-based Capitalistic System </li></ul><ul><li>Demand of Muslim population in many countries outside the Muslim world. </li></ul>
  8. 9. Islamic Finance Today <ul><li>Widely used and flexible tool in international finance. </li></ul><ul><li>Devout Muslims have been locked out of many individual financial vehicles. </li></ul><ul><li>Many personal alternatives now available </li></ul>
  9. 10. Religious/Ethical/Legal <ul><li>In the West, Religion/Ethics/Legal only loosely overlap. </li></ul><ul><li>Islamic Sharia’a encompasses all three. </li></ul><ul><li>Sharia’a is the body of islamic principles with respect to life’s activities. </li></ul>
  10. 11. Religious/Ethical/Legal <ul><li>Derived from three sources: </li></ul><ul><ul><ul><li>Quran , revelations from God. </li></ul></ul></ul><ul><ul><ul><li>Sunnah , authenticated sayings and actions of the Prophet (Peace be upon him) . </li></ul></ul></ul><ul><ul><ul><li>Fiqh, collection of interpretations / rulings / precepts based on the Quran and Sunnah. </li></ul></ul></ul>
  11. 12. Difference between Islamic and Conventional Modes of Finance Bank Client money money + money (interest) Conventional
  12. 13. Difference between Islamic and Conventional Modes of Finance Bank Client Islamic Goods & Services money
  13. 14. Structure of Hierarchy
  14. 15. Major Contracts Used in Islamic Banking <ul><li>Buying & Selling </li></ul><ul><li>Mudaraba: Investment management </li></ul><ul><li>Musharaka: Partnership </li></ul><ul><li>Ijarah : Leasing </li></ul><ul><li>Wakalah : Agency </li></ul><ul><li>Istisna’: Contract of works </li></ul>
  15. 16. Objective Of Islamic Banking: Banking Without Riba The main objective of an Islamic Bank is to prohibit Muslims from dealing with interest or usury ( Riba ) which has been strictly prohibited by Allah, and to protect them from one of the biggest sins Dubai Islamic Bank Statement
  16. 17. Principles Governing Islam Aqidah (Faith and Belief) Shariah (Practices and Activities) Akhlaq (Moralities and Ethics)
  17. 18. Shariah Requirements <ul><li>Avoidance of prohibitions </li></ul><ul><li>Ensuring that the contract have all their essential elements with their necessary conditions </li></ul>
  18. 19. Shariah Requirements <ul><li>The prohibitions are: </li></ul><ul><ul><ul><li>Producing and trading of impure materials, </li></ul></ul></ul><ul><ul><ul><li>Producing and trading of materials which are of no use, </li></ul></ul></ul><ul><ul><ul><li>Gharar, </li></ul></ul></ul><ul><ul><ul><li>Riba ands </li></ul></ul></ul><ul><ul><ul><li>Involvement of gambling </li></ul></ul></ul>
  19. 20. Strategies <ul><li>Financial services are growing fast in the world. </li></ul><ul><li>Year 1998 the finance institution and insurance represented 7.98% from GDP of UAE </li></ul><ul><li>Year 2001 the finance sector had grown to reach 11%, which shows the level of financial services in the country. </li></ul><ul><li>This presentation includes information about the PEST Analysis </li></ul>
  20. 21. Focus Areas
  21. 22. Worldwide Statistics
  22. 24. Market Performance
  23. 25. Strategic Difference
  24. 26. <ul><li>Principles & values </li></ul><ul><ul><li>Known and trusted for our high standards of corporate responsibility, we are committed to building a sustainable business through social inclusion, environmental protection and good governance. </li></ul></ul>
  25. 27. PEST Analysis <ul><li>Political Factors </li></ul><ul><li>Economic Factors </li></ul><ul><li>Socio culture factors </li></ul><ul><li>Technical Factors </li></ul>
  26. 28. Five Forces Model <ul><li>Threat of New entrants </li></ul><ul><li>Rivalry among Existing firms </li></ul><ul><li>Bargaining power of buyers </li></ul><ul><li>Bargaining power of suppliers </li></ul><ul><li>Threat of Substitute products or services </li></ul>
  27. 29. Threat of New entrants <ul><li>Economy of Scale </li></ul><ul><li>Product Differentiation </li></ul><ul><li>Legal Barriers </li></ul>
  28. 30. Rivalry among Existing firms <ul><li>Equally balanced </li></ul><ul><li>Competitors </li></ul><ul><li>Lack of differentiation </li></ul><ul><li>Diverse Competitors </li></ul>
  29. 31. Bargaining power of buyers <ul><li>Size of buyers </li></ul><ul><li>Differentiation </li></ul><ul><li>The buyer has full </li></ul><ul><li>information </li></ul>
  30. 32. Bargaining power of suppliers <ul><li>Concentration or Size of Suppliers </li></ul><ul><li>Differentiation </li></ul><ul><li>Switching costs </li></ul><ul><li>Threat of Substitute products or services </li></ul>
  31. 35. Thank you..

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