The document provides an overview of Islamic banking, including its key principles and differences from conventional banking. It discusses how Islamic banking is based on Sharia law and prohibits interest, instead operating via profit and loss sharing models or financing the purchase of goods with a markup. It outlines various Islamic financing contracts and compares Islamic and conventional approaches. The challenges of implementing Islamic banking principles and its prospects for continued growth are also summarized.

1. Glossary Of Islamic Banking Training Session of BDO’s

13. Difference between conventional banking and Islamic banking

14. Bank Client money money + money (interest) Conventional

15. Bank Client Islamic Goods & Services money

16. 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 Banking Conventional Banking

17. 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

18. Basic Principles of Islamic Banking

20. Shariah / Islamic Law

23. Islamic Mode of Financing

26. Role of Islamic banking in Economic Development of the Country

27. Principles Governing Islam Aqidah (Faith and Belief) Shariah (Practices and Activities) Akhlaq (Moralities and Ethics)

30. Is Islamic Banking Viable

32. Nature of Deposits in Islamic Banks

35. ISLAMIC BANKING AS AN ALTERNATIVE APPROACH

42. CHALLENGES AND PROSPECTS

46. Growth of Islamic Banking in Pakistan

47. Focus Areas

48. Worldwide Statistics

49. Market Performance

50. Thank You...