Shari’ah Compliant Banking
When the concept of banking became popular and gained world-wide recognition; it became a serious problem for Muslims all over the globe as the very basic concept of banking which is interest does not go with the ideology of their religion, Islam. This is precisely how the concept of Islamic banking emerged and over the decades has become a much matured branch of banking.
A banking system which follows the basic underlying principles of Islamic (Shari’ah) law is called Islamic banking. This is also known as Shari’ah compliant banking. Shari’ah prohibits Muslims from dealing in anything which involves interest (riba); they can neither pay nor accept interest according to the teachings of Islam.
Shari’ah compliant banking is same like the traditional banking except that it operates in accordance to Fiqh al-Muamlat, Islamic rules on transactions. The sources of these rules are the Holy Book, Quran and recorded sayings and actions of the Prophet, Hazrat Muhammad (SAW).
Shari’ah Compliant Investments & Insurance
The investments require considerable amount of efforts as immense attention needs to be paid to assure that investment is being done with alignment to the Sharia’h principles. It includes the fund operation level as well as the underlying investments. As a general rule, Shari’ah compliant funds are strictly prohibited from investing in organizations and companies which drive their income, directly or indirectly, from the sales of pornography, pork-based products, alcohol, and gambling.
Islamic or Shari’ah compliant insurance is commonly known as Takaful. Literal meaning of the word Takaful is mutual interest, co-operations or joint guarantee. Takaful is not limited to an individual rather it is based on the fundamentals of Islamic teachings which is about making the whole community strong. This Shari’ah compliant insurance is supported with the donations given by the members of community.
The collected funds are then provided to the ones who are inflicted with any type of misfortune or accident. Takaful is dependent upon two factors: Community and Donations. Each member of the community donates money according to his/her will and when a community member suffers a loss, the collected sum is used to help the person.
The very basic difference between the traditional insurance and Takaful is that in Shari’ah compliant insurance, the members of community donate money without any expectation of getting the money back. This is in direct contradiction to the otherwise pre-dominant insurance system.
Islamic Banking in Dubai
Dubai being considered the hub of the modern world has innumerable options when it comes to Islamic banking. The Islamic banking ideology is not only given quite a weight in the region but also is pretty prevalent there. Huge number of banks has appeared on the face of Dubai in the recent few years which provide Islamic banking to residents and visitors in Dubai.
Dubai Islamic Bank is one such example which offers Islamic banking in Dubai. The most constructive point about the bank is that it was the world first Islamic bank therefore to this day; it is successful in having the largest bulk of clients and bank holders.
Credit banking refers to the usage of credit banks. It is the exact opposite of debit banking or debit cards. In debit cards, an individual pays from the money he/she holds while in credit banking, the card holder pays from the bank’s money and the bank later on deducts that money when he/she has. This type of banking gained popularity for the past three decades and at the point of time is used quite immensely.
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