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Principles
Of Islamic Banking
For us millions of Muslims, banks are institutions to be avoided. Our Islamic beliefs prevent us from dealings that involve usury or interest (Riba).
Yet we Muslims need banking services as much as anyone and for many purposes: to finance new business ventures, to buy a house, to buy a car, to facilitate capital investment, to undertake trading activities, and to offer a safe place for savings. For us Muslims are not averse to legitimate profit as Islam encourages people to use money in Islamically legitimate ventures, not just to keep our funds idle.
However, in this fast moving world, more than 1400 years after the Prophet (s.a.w.), can we Muslims find room for the principles of our religion?
The answer comes with the fact that a global network of Islamic banks, investment houses and other financial institutions has been established based on the principles of Islamic finance laid down in the Qur'an and the Prophet's traditions 14 centuries ago. Islamic banking, based on the Qur'anic prohibition of charging interest, has moved from a theoretical concept to embrace more than 100 banks operating in 40 countries with multi-billion dollar deposits world-wide. Islamic banking is widely regarded as the fastest growing sector in the Middle Eastern financial services market. Exploding onto the financial scene barely thirty years ago, an estimated billions worth offunds are now managed according to Shari'ah.
Deposit assets held by Islamic banks were approximately $US5 billion in 1985 but grew over $60 billion in 1994.
The best known feature of Islamic banking is the prohibition on interest.
(Riba’a)
More on the principles of Islamic Finance . .
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