What is Islamic Banking

What is Islamic Banking ?

When Halal is connected to economy, it refer to business transaction in the lawful moral management practices. Halal natural partner are Islamic Banking and Islamic Finance.

Islamic Finance today touches a large option of institutions and functions: banks, mutual funds, investment advice, capital and money markets and insurance.

There are five principles of Islamic finance: interest free, encourage trading, avoidance of conflicts and ambiguities, ban of gambling, and disallowed of Haram investments and activities such as business particiating with pork products, pornography, etc.

 
Islam not only ban dealing in interest but also in alcoho, swine, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. Some of the salient tools of this order may be summed up as:

 
While permitting the individual the right to seek his economic well-being, Islam makes a clear statement between what is Halal (lawful) and what is Haram (forbidden) in pursuit of such economic activity. In large, Islam forbids all forms of economic activity, which are morally or socially injurious.

While acknowledging the individual's right to ownership of wealth legitimately acquired, Islam makes it obligatory on the individual to spend his wealth judiciously and not to hoard it, keep it idle or to squander it.

While allowing an individual to retain any extra wealth, Islam seeks to reduce the margin of the surplus for the well-being of the community as a whole, in particular the destitute and deprived sections of society by participation in the process of Zakat.

While permitting ways of human nature and yet not yielding to the consequences of its worst propensities, Islam seeks to prevent the accumulation of wealth in a few hands to the detriment of society as a whole, by its laws of inheritance.

Viewed as a whole, the economic system envisaged by Islam aims at social justice without inhibiting individual enterprise beyond the point where it becomes not only collectively injurious but also individually self-destructive.

eg. Dubai Islamic Bank