Is Islamic Banking Really Islamic (Finance)

7/24/2019 Is Islamic Banking Really Islamic (Finance)

1/40

IS ISLAMIC BANKING REALLY ISLAMIC

By

Kashif Shakeel

A Thesis Submitted to the Fa ulty of I!stitute Ma!a"eme!t S ie! es# $esha%a i! the$a&tial Fulfilme!t of the Re'ui&eme!ts fo& the (e"&ee of

BBS )Fi!a! e*

I!stitute of Ma!a"eme!t S ie! es# $esha%a&

+,-./-0


2/40

Certificate of Approval

I e&tify that I ha1e &ead Is Islamic Banking Really Islamic by Kashif Shakeel# a!d

i! my o2i!io! this %o&k meets the &ite&ia fo& a22&o1i!" a thesis submitted i! the

$a&tial Fulfilme!t of the Re'ui&eme!ts fo& the (e"&ee of BBS )Fi!a! e* at the

I!stitute of Ma!a"eme!t S ie! es# $esha%a&3

Su2e&1iso&

Name4 (&3 Yasi& Kamal

(esi"!atio!4 Assista!t $&ofesso&

Si"!atu&e45555555555555555555

55

Coo&di!ato& Resea& h 6(e1elo2me!t (e2a&tme!t

Name4 (& 7%ais Mufti

Si"!atu&e4555555555555555555555

Declaration


3/40

I# he&eby de la&e that the &esea& h submitted to R6(( by me is my o&i"i!al %o&k3 I

am a%a&e of the fa t that i! ase if my %o&k is fou!d to be 2la"ia&i8ed o& !ot "e!ui!e#

R6(( has the full autho&ity to a! el my &esea& h %o&k a!d I am liable to 2e!al

a tio!3

Stude!t9s Name4 Kashif Shakeel

(ate4 (e embe& -:# +,-;

Dedication

This Resea& h is dedi ated to my Family# F&ie!ds a!d &es2e ted tea he&s fo& thei&

2atie!t a!d su22o&t3


4/40

Abstract

This 2a2e& studies Islami ba!ki!" that %hethe& it is 2u&e Islami o& !ot3 Some Islami

s hola&s say that Islami ba!ks a&e 2u&e Islami %hile the&e a&e othe&s %hi h ha1e

diffe&e!t 1ie%s about Islami ba!ks3 So to he k this# 'uestio!!ai&e su&1ey a!d

i!te&1ie%s of Islami s hola&s# Islami ba!ks offi ials a!d o!1e!tio!al ba!ks offi ials

a&e o!du ted3 Sam2le si8e of ;, is take! th&ou"h o!1e!ie!t sam2li!" te h!i'ue fo&

the 'uestio!!ai&e %hile < Islami s hola&s# + Islami ba!k offi ials a!d + o!1e!tio!al

ba!k offi ials a&e i!te&1ie%ed3 Afte& studyi!" Islami ba!ki!" a!d the &esult of

'uestio!!ai&es a!d su&1eys# it is &e1ealed that Islami ba!ks a&e a22a&e!tly %o&ki!"

a o&di!" to sha&iah &ules a!d &e"ulatio!s3 A!d the &esult also sho%s that Islami

ba!ki!" is Asset ba ked ba!ki!" a!d fulfils the Sha&iah &e'ui&eme!ts i! its t&a!sa tio!s3

But o! the othe& ha!d# 2u&2oses of Islami ba!ks a&e !ot a o&di!" to Islam %hi h

makes diffe&e! e of o2i!io!s amo!" Islami s hola&s a!d 2eo2le3 To mai!tai! its

se2a&ate 2ositio!# Islami ba!ks should a1oid su h 2&a ti es %hi h a&e !ot fo& the

%elfa&e of 2eo2le a!d made =ust to ea&! 2&ofit to make the 2u&2ose also Islami 3


5/40

Acknowledgment

I am "&ateful to Almi"hty ALLA># ?hose blessi!"s ha1e al%ays bee! sou& e of

e! ou&a"eme!t fo& us a!d %ho "a1e us the ability to om2lete this task3 I also %ish my

hea&tiest tha!ks to my 2a&e!ts %ho su22o&ted me fi!a! ially as %ell as mo&ally

th&ou"hout my a ademi a&ee& a!d 2&ay fo& me all the time3 I a! !e1e& tu&! do%!

thei& effo&ts they 2ut fo&%a&d fo& my b&i"ht a!d 2&os2e&ous futu&e3

I also dedi ate this disse&tatio! to my ma!y f&ie!ds a!d %ho ha1e su22o&ted me

th&ou"hout the 2&o ess3 I %ill al%ays a22&e iate all they ha1e do!e# es2e ially

I a! !e1e& fo&"et "uida! e the effo&ts of my humble tea he&s3 I am 1e&y tha!kful to

them %ho hel2ed me du&i!" the ou&se of study a!d moti1ated me all the time3 I am

tha!kful to my su2e&1iso& Si& (&3 Yasi& Kamal fo& his ki!d su22o&t a!d hel2 i! this

thesis3

Kashif Shakeel


6/40

Table of contents

(e la&atio!333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

(edi atio!3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

Abst&a t4333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

A k!o%led"me!t3333333333333333333333333333333333333333333333333333333333333333333333333333333333

Cha2te& -4 I!t&odu tio!4333333333333333333333333333333333333333333333333333333333333333333333333333

-3- B&oad o1e&1ie%4333333333333333333333333333333333333333333333333333333333333333333333333

-3+ (efi!itio! of Islami ba!ki!"433333333333333333333333333333333333333333333333333333333333333333

-3< Islami ba!ki!" i! $akista!433333333333333333333333333333333333333333333333333333333333333333

-3. Sa&iah om2lia! e Modes of Islami fi!a! i!"4333333333333333333333333333333333333333333333333

-3; Im2o&ta! e of the to2i 43333333333333333333333333333333333333333333333333333333333333333333

-30 7b=e ti1es433333333333333333333333333333333333333333333333333333333333333333333333333333

-3: Resea& h 'uestio!s433333333333333333333333333333333333333333333333333333333333333333333333

-3@ S heme of Study4333333333333333333333333333333333333333333333333333333333333333333333333

Cha2te& + Lite&atu&e Re1ie%4333333333333333333333333333333333333333333333333333333333333333333333

Cha2te&


7/40

.3- I!te&1ie%s of Islami s hola&s4333333333333333333333333333333333333333333333333333333333333

.3+ I!te&1ie%s of Islami ba!k offi ials433333333333333333333333333333333333333333333333333333333

.3< I!te&1ie%s f&om Co!1e!tio!al ba!ks9 offi ials43333333333333333333333333333333333333333333333333

.3. uestio!!ai&e43333333333333333333333333333333333333333333333333333333333333333333333333333

Cha2te& ;4333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

Co! lusio!3333333333333333333333333333333333333333333333333333333333333333333333333333333333

Re omme!datio!s4333333333333333333333333333333333333333333333333333333333333333333333333333

Refe&e! es333333333333333333333333333333333333333333333333333333333333333333333333333333333333333


8/40

Chapter 1: Introd ction

1!1 Broad "verview:

Islami ba!ki!" is 1e&y old o! e2t3 A o&di!" to Kha! )+,--* the histo&y of the

Islami ba!k sta&ts fo&m A&abs e&a3 ?ealthy me& ha!ts "a1e mo!ey to 2oo& 2eo2le o!

hi"h &iba a!d the 2oo& 2eo2le a!!ot &etu&! thei& debts3 As a &esult they be ame thei&

sla1es a!d e1e! thei& "&a!d hild&e! a&e u!able to 2ay the debts3 To 2&e1e!t this Islam

"i1e a solutio! i! the fo&m of a fi!a! ial system %hi h is made fo& the %elfa&e of 2oo&

2eo2le a!d based o! Islami &ules a!d 2&i! i2les3

But u!fo&tu!ately o!1e!tio!al ba!ki!" &e2la e Islami ba!ki!" a!d Islami ba!ki!"

be ame o!ly a desi&e of Muslims3 But i! late - :,s i! ki!" Abdul A8i8 u!i1e&sity

Makkah Saudi A&aba fi&st Islami o!fe&e! e %as held3 Be ause of this Islami

o!fe&e! e fi&st Islami ba!k !amed (ubai Islami ba!k %as established3 Thus f&om

this time Islami ba!ki!" a"ai! sta&ted i! the %o&ld a!d Islami ba!ks %e&e established

i! ma!y ou!t&ies3 The "&o%th of Islami ba!ki!" o!ti!ued at a 1e&y fast s2eed i! a

little time o& %e a! say i! fe% yea&s its de2osits %e&e "&o%! f&om fe% thousa!ds to

hu!d&ed millio! dolla&s3 The "&o%th of Islami ba!ki!" Islami !ot o!ly o!fi!ed to

Islami ou!t&ies but some !o!/Muslim ou!t&ies also sta&ted Islami ba!ki!" a!d

e isti!" omme& ial ba!ks also established thei& Islami b&a! hes3 It is also a fa t that

the sum of all Islami ba!ks de2osits is less tha! a si!"le ;, bi" ba!ks i! the %o&ld but

still it is "&o%i!" fast be ause =ust thi&ty o& i! fo&ty yea&s its "&o%th is 1e&y "ood3

-


9/40

Besides this a o&di!" to Mansoori, (2011) some &eli"ious s hola&s say that it9s

2u&e Islami a!d they ha1e a&"ume!ts about its 1alidity3 7! the othe& ha!d the&e a&e

othe& s hola&s %hi h say that Islami ba!ki!" is !ot 2u&e Islami 3 It is =ust a o2y of

o!1e!tio!al ba!ki!" a!d is made to de ei1e 2eo2le i! the !ame of Islam a!d they also

ha1e st&o!" a&"ume!ts to su22o&t thei& o2i!io!3

1!# Definition of Islamic banking:

A o&di!" to State ba!k of $akista! Ka&a hi DIslami ba!ki!" is defi!ed as

ba!ki!" system %hi h is i! o!so!a! e %ith the s2i&it# ethos a!d 1alue system of

Islam a!d "o1e&!ed by the 2&i! i2les laid do%! by Islami Sha&iah3

A o&di!" to I!stitute of Islami ba!ki!" a!d I!su&a! e# Islami ba!ki!" is the

ba!ki!" system %hi h is a o&di!" to Sha&iah 2&i! i2les3

A o&di!" to Al Ba&ka ba!k Islami ba!k is a! i!stitute %hi h ha!!eli8es the

fu!ds a!d i!1est them i! a e2ted Islami %ays a!d a hie1e ob=e ti1es %hi h

a&e a o&di!" to Islami &ules3 A!d these all ha!!eli8atio! a!d i!1estme!ts

must be a o&di!" to sha&iah &ules3

Islami ba!ks a&e based o! shai&ah3 I!te&est is st&i tly 2&ohibited i! Islam#

Islami ba!ki!" is based o! e'ual sha&e of 2&ofit a!d loss bet%ee! "i1e& of

a2ital a!d the 2e&so! %ho use the mo!ey )S haik +,,-*3

Islami ba!k is the i!stitutio! %hi h %o&ks o! basis of a hie1i!" the ob=e ti1es

of Islami i! fi!a! ial a!d ba!ki!" se to& )>assa! +,,


10/40

1!$ Islamic Banking in %akistan:

$akista! is a! Islami ou!t&y %hi h is made o! the !ame of Islam3 It is 1e&y im2o&ta!t

fo& su h ou!t&y to ha1e su h fi!a! i!" system %hi h is based o! Islami &ules3 So fo&

this 2u&2ose Cou! il of Islami Ideolo"y is o!du ted 3As a &esult all o!1e!tio!al

ba!ks o!1e&t thei& lo al Cu&&e! y a ou!t i!to i!te&est f&ee a ou!ts %hile the fo&ei"!

u&&e! y a ou!ts a&e o!ti!ui!" i! the same %ay mea!s o! i!te&est based3 But late& o!

the Fede&al Shai&ah Cou&t de la&ed this !/Islami 3

A o&di!" to Kha! a!d Mi&akho& )- ,* Islami ba!ki!" sta&ts i! Feb&ua&y - : i!

$akista! due to se1e&al yea&s study of Cou! il of Islami ideolo"y %hi h is fo&med by

the "o1e&!me!t of 2akista! afte& the a!!ou! eme!t of 2&eside!t of 2akista! that i!te&est

should elimi!ate fo&m the e o!omy3 A!d i! - : the fi&st Islami ba!k )Mee8a! ba!k*

establish i! $akista!3

1!& 'ariah Compliance (odes of Islamic )inancing:

The&e a&e some modes of Islami ba!ki!" %hi h a&e dis ussed i! this 2a2e& %hi h a&e

Mu&abaha # I=a&ah# Bai Mua==9al# Salam# (imi!ishi!" Musha&akah3

1* ( rabaha:Mu&abaha is most %idely used mode of Islami fi!a! i!"3 I! this o!t&a t the a tual

ost of the asset is tell to ustome& a!d the! add the 2&ofit )%hi h i! lude the late

2ayme!t 2&emium* a!d sell to ustome&3 I! this ba!k do! !ot "i1e mo!ey to the

ustome& fo& use but i!stead of mo!ey# ba!k 2u& hase the desi&ed asset fo& the ustome&

a!d sell fo& late 2ayme!t3 The asset 2&i e a!!ot ha!"e i! ase of late 2ayme!t o& ea&ly

2ayme!t but to a1oid late 2ayme!t Islami ba!ks im2ose 2e!alty fo& late 2ayme!t but

the 2e!alty amou!t is !ot i! lude to i! ome of the ba!k but "i1e as ha&ity to diffe&e!t

ha&ity o&"a!i8atio!3


11/40

A o&di!" to Kha!) +,-;* Mu&abaha mea!s sale o! 2&ofit# i! Mu&abaha o!t&a t the

selle& sell the 2&odu t to buye& but also tell the a tual 2&i e a!d the 2&ofit3 But fo& the

1alid Mu&abaha e&tai! o!ditio!s a&e !e essa&y %hi h must be fulfilled -* the asset

%hi h is "oi!" to be sell o& 2u& hase must be e ist3 +* A!d the asset must be i! the

o%!e&shi2 of selle&3 3M )+,,:* I=a&ah de&i1es f&om the &oot %o&d a=a&a to

&e om2e!se# om2e!sate o& "i1e a o!side&atio! a!d &etu&!3 A=& &efe&s to a %o&ke&9s

%a"e# a!d u=&ah to &e!tal 2ayme!t3 I! its =u&isti usa"e# i=a&ah 2&ima&ily &efe&s to both a

&e!tal as %ell as a hi&e o!t&a t that e!"a"es the se&1i es of 2e&so!s3HI! this mode of fi!a! i!" Islami ba!ks lease a s2e ifi asset to a ustome& fo& a

s2e ifi &e!tal 2ayme!t but the o%!e&shi2 title a!d all the &isk &elated to asset &emai!ed

%ith the ba!k a!d the ustome& )lessee* is &es2o!sible of that loss o!ly %hi h is aused

miss use of asset by the ustome&3 The be! h ma&k used fo& the 2ayme!t of &e!t is

i!te&ba!k &ate3 The leased 2&o2e&ty may be the i! the o%!e&shi2 of =oi!t 2a&t!e&s a!d

the &e!tal i! ome is o!t&ibuted amo!" themsel1es a o&di!" to the a"&eed &ate3 At the

e!d of the leased 2e&iod the asset may &etu&! to lesso& )ba!k* o& 2u& hased by the

ustome& o& ba!k "i1e the asset to lie!t as "ift3$* Bai ( a++,al:This mode of fi!a! i!" is based o! defe&&ed 2ayme!t i! this ty2e of Islami fi!a! i!"

Islami ba!k 2u& hased the desi&ed asset fo& the ustome& a!d the ustome& 2aid the

amou!t i! some late& date the o!ly diffe&e! e bet%ee! Mu&abah a!d Mua==9al is that i!

Mu&abaha the ost of the asset is dis losed %hile i! Mua==9al the ost of the asset is !ot

dis losed to the ustome&3&* 'alam:It is basi ally used fo& fi!a! i!" a"&i ultu&e3 I! this ty2e of fi!a! i!" the ba!k

2u& hased 2&odu ts fo& s2ot 2ayme!t %ith defe&&ed deli1e&y3 It fulfils the !eeds of

fo&me&s a!d also some small ma!ufa tu&e&s3 These ma!ufa tu&e&s a!d fo&me&s "et

fu!ds fo& thei& 2&odu tio!s a!d seeds a!d %he! the 2&odu ts a&e ma!ufa tu&ed o& the

.


12/40

&o2s a&e "&o%! the! it is "i1e! to ba!k at the a"&eed 2&i e %hi h is mostly less tha!

the ma&ket 2&i e of the 2&odu t3 To se u&e himself the ba!k a! also ask fo& "ua&a!to&

%hi h e!su&e the deli1e&y of the "oods o& a! also take some ollate&als to as a se u&ity

%hi h is sold i! ase if the "oods a&e !ot deli1e&ed to ba!k u2 to a"&eed date a!d fulfil

his !eed by 2u& hasi!" the same "ood f&om ma&ket o& take his mo!ey3-* Diminishing ( sharakah:(imi!ishi!" Musha&akah is a mode of fi!a! i!" %hi h basi ally fi!a! e 2eo2le fo& the

2u& hase of houses3 I! this ty2e of fi!a! i!" i! %hi h a o!t&a t is made bet%ee! ba!k

a!d ustome& i! this %he! a ustome& %a!ts to 2u& hase house the! ba!k fi!a! e the

ustome& but some mo!ey also sha&e of fu!ds a&e 2aid by the 2u& hase& a!d the

&emai!i!" is 2aid by ba!k a!d the o%!e&shi2 of the 2&o2e&ty is dist&ibuted amo!" ba!k

a!d ustome& i! the same 2&o2o&tio!3 Ba!k "i1es his sha&e to ustome& o! &e!t basis3

The 2o&tio! of ba!k is di1ided i! to small 2ie es3 I! this o!t&a t the ustome& 2&omise

to buy the 2o&tio! of ba!k "&adually o& %e a! say i! i!stalme!ts3 The! ustome&

2u& hase the small 2ie es of la!d th&ou"h 2e&iodi 2ayme!ts %hi h i! lude the

2ayme!t of &e!t a!d the 2u& hase 2&o ess o!ti!ue u!til the o%!e&shi2 is om2letely

t&a!sfe&&ed to lie!t f&om ba!k3

1!- 'ignificance of the 't dy:

?e a&e Muslims a!d %a!t to do e1e&y =ob a o&di!" to the &ules a!d 2&i! i2les of

Islam3 So ba!ki!" is bi" se to& %hi h fulfil the day to day !eeds of e1e&y 2e&so! but

u!fo&tu!ately befo&e - :,s all the ba!ki!" system is based o! i!te&est %hi h is st&o!"ly

2&ohibited i! Islam3 So afte& a lo!" time Islami ba!ki!" omes i!to 2&a ti e o! the

desi&e of Muslims3 Muslims %a!t su h ba!ki!" system %hi h is f&ee of i!te&est a!d

based o! sha&iah &ules3 So the u&&e!t Islami ba!ki!" system laims that it is f&ee of

i!te&est a!d based o! sha&iah &ules a!d the&e a&e ma!y Islami s hola&s su22o&t this

;


13/40

ty2e of ba!ki!" system but the&e a&e some othe& Islami s hola&s %hi h says that

u&&e!t Islami ba!ki!" is !ot a o&di!" to 2u&ely Islami it is made =ust to de ei1e

Muslims i! the !ame of Islam3 So my to2i DIs Islami ba!ki!" &eally Islami %ill

hel2 i! dete&mi!i!" that the u&&e!t 2&a ti es of Islami ba!ki!" fulfil the desi&e of

Muslims o& !ot3

1!. "b+ectives:

The&e is lot of o!fusio! about Islami ba!ki!"3 That %hethe& the u&&e!t Islami

ba!ki!" is 2u&e Islami o& !ot a!d it %o&k a o&di!" to the &ules of Islam a!d also

a hie1e the 2u&2ose of Islami fi!a! i!" o& !ot3 The ob=e ti1e of my to2i is this that

%hethe& this u&&e!t ba!ki!" system is &eally Islami o& =ust a subte&fu"e3

1!/ Research 0 estions:

Resea& h has the follo%i!" 'uestio!s3

Is Islami ba!ki!" &eally Islami Is ob=e ti1es of Islami ba!ki!" a&e Islami Is the&e a!y si"!ifi a!t diffe&e! e bet%ee! Islami a!d o!1e!tio!al ba!ki!"

1! 'cheme of 't dy:

The &e2o&t o!sists of fi1e ha2te&sJ ea h ha2te& o!1ey diffe&e!t i!fo&matio!3 The

ha2te& - is about the i!t&odu tio! a!d histo&y of the study# ha2te& + e 2lai!s the

lite&atu&e %o&k do!e by s hola&s simila& to this &e2o&t3 I! additio!# ha2te& < sho%s the

methodolo"y a!d the !e t ha2te& . is about data olle tio! th&ou"h uestio!!ai&e a!d

fa e to fa e a!d tele2ho!i u!st&u tu&ed i!te&1ie%s a!d ha2te& ; a!alyse the data a!d

i! ha2te& 0 the &e2o&t omes u2 %ith a o! lusio! a!d &e omme!datio!3

0


14/40

Chapter # 2iterat re Review

This ha2te& aims to "i1e a &iti al &e1ie% of the lite&atu&e %hi h is &elated to Islami

ba!ki!"3 The ha2te& fi&st &e1ie% the %hole Islami ba!ki!" the! ome to its Sha&iah

om2lia! e 2&odu ts3

A o&di!" to Ma!soo&i )+,--* %ho e ami!ed Islami ba!ki!" that %hethe& Islami

ba!ki!" is Islami o& !ot 3A!d o! luded that Islami ba!ki!" is f&ee f&om i!te&est#

"ambli!" a!d othe& su h a ti1ities %hi h a&e fo&bidde! by Islam a!d Islami ba!ki!" is

based o! asset3 Mo!ey has !o 1alue i! Islami ba!ki!" it is o!ly a medium of

e ha!"e3 But thei& 2u&2oses a&e !ot Islami most of its t&a!se tio!s did !ot "i1e a!y

be!efit to so iety so if Islami ba!ki!" %a!ts to mai!tai! its se2a&ate ide!tity Islami

ba!ks should elimi!ate su h t&a!sa tio!s %hi h a&e o22osite to 2u&2oses of Islami

fi!a! e3

Cho!" 6 Liu )+,, * o!du ted a study i! %hi h they looked at Islami ba!ks that

%hethe& Islami ba!ks a&e i!te&est f&ee o& !ot3 They fo used o! Malaysia i! thei& study

a!d o! luded this that the&e is !o si"!ifi a!t diffe&e! e i! Islami de2osit &ates a!d

o!1e!tio!al they &e1ealed that theo&eti ally Islami ba!ki!" is totally based o! 2&ofit

a!d loss sha&i!" but i! &eality o!ly a !e"li"ible 2o&tio! follo% this a!d most of its

t&a!sa tio!s a&e !ot a o&di!" to sha&ia 2&i! i2les3 A o&di!" to them the mai! &easo!

of this is om2etitio! a!d &etu&! o! Islami ba!k de2osits a&e effe ti1ely 2e""ed %ith

o!1e!tio!al ba!ks &etu&!3

A o&di!" to >a!if)+,-,*# Islami fi!a! ial i!stitutio!s %o&k u!de& sha&iah 2&i! i2les3

Islami ba!ks a!!ot issue loa! o! i!te&est# it fulfils the !eed of 2eo2le th&ou"h

su22lyi!" the &e'ui&ed asset o& th&ou"h 2&ofit a!d loss sha&i!" a ti1ities3 These

:


15/40

i!stitutio!s a!!ot issue fu!ds to !o!/Islami a ti1ities su h as "ambli!"# 2o&!o"&a2hy

a!d li'uo&3 All the &e'ui&eme!t of busi!esses a! be fulfilled th&ou"h Islami fi!a! ial

i!stitutio!s but fi!a! i!" of !ot fo& 2&ofit o&"a!i8atio! is omitted i! Islami ba!ki!"3

Islami ba!ki!" is !ot a o2y of o!1e!tio!al ba!ki!" it has its o%! &ules %hi h a&e

made u!de& sha&iah a!d its o%! %ay of fu!di!" diffe&e!t a ti1ities %hi h a&e a o&di!"

to the &ules set by sha&iah ad1iso&y boa&d3

A o&di!" to Af8al et al3 )+,-;* Islami ba!ks a&e diffe&e!t fo&m o!1e!tio!al ba!ks

be ause Islami ba!ks a&e "uided by Islam a!d u&a!3 Islam seeks the be!efit of

e1e&yo!e %hile o!1e!tio!al ba!ks a&e !ot "uided by a!y &eli"io! a!d seeks thei& o%!

be!efit i! all t&a!sa tio!s o!ly3

A o&di!" to Kha! ) +,-;* Islami ba!ks a&e e'uity based a!d i! &isis it 2&o1es "ood

tha! all othe& ba!ks be ause the ha!"e i! 1alue of assets ause ha!"e the 1alue of

sha&es o%!ed by the 2eo2le3 A!d Islami ba!ks do !ot "i1e a fi ed amou!t i!te&est to

its de2osito&s a!d also !ot ha&"e fi ed amou!t of i!te&est f&om its ustome&s3 The

1alue of &eal assets of Islami ba!ks is al%ays e'ual to liabilities o! them3 So the mai!

diffe&e! e bet%ee! Islami ba!k is !ot o!ly the that o!e ha&"e i!te&est %hile the othe&

do !ot ha&"e i!te&est %hile the o!e o!1e!tio!al ba!ks "ua&a!tee the !omi!al 1alue of

the assets %hile o!1e!tio!al ba!ks do! !ot "ua&a!tee the !omi!al 1alue of the assets

o& de2osits# they =ust t&eat it as sha&e3

A o&di!" to Kha!)+,--* %ho obse&1ed Islami ba!ki!" f&om the 2&os2e ti1e that is

Islami ba!ki!" i!te&est f&ee o& !ot a!d fo us its studies o! Mu&abahah %hi h is the

most %idely used mode of fi!a! i!" i! Islami ba!ki!"3 Muslim ou!t&ies %idely used

Islami ba!ki!" be ause Islami ba!ki!" fulfil thei& !eeds a o&di!" to the tea hi!"s of

Islam by 2&o1idi!" i!te&est f&ee loa!s but a tually Islami ba!ki!" 2&o1ide 2&odu ts

%hi h a&e te h!i ally i!te&est f&ee but a tually based o! fi ed &etu&! a!d use diffe&e!t

@


16/40

!ame i!stead of those !ames %hi h t&aditio!al o!1e!tio!al ba!ks used i! o&de& to

make thei& 2&odu t a o&di!" to Islami 2&i! i2les a!d &ules3 Islami ba!ki!" should

&e1ise its diffe&e!t 2&odu t s2e ially Mu&abahah to make it 2u&e Islami a!d a o&di!"

to Islam a!d sha&ih &ules3

A o&di!" to Shaikh )+,--* %ho studied the most %idely used mode of Islami ba!ki!"

a!d o! luded that a22a&e!tly Mu&abahah is !ot too mu h diffe&e!t f&om loa! "i1e! by

ba!ks but i! &eality it is !ot like o!1e!tio!al ba!ks loa! it has some "ood featu&es

%hi h diffe&e!tiate Islami ba!ki!" f&om t&aditio!al o!1e!tio!al ba!ki!"3 But still

Islami ba!ks should use se2a&ate i!de es fo& Mu&abahah a!d should also make some

o2e&atio!al ha!"es to &emo1e o2e&atio!al simila&ities %ith o!1e!tio!al ba!ki!" a!d

to mai!tai! its u!i'ue ide!tity3 Th&ou"h this %ay Islami ba!ks a! "et mo&e su22o&t

f&om de2osito&s a!d im2&o1e the le1el of o!fide! e of de2osito&s3

( ,a++al or baithaman is also a mode of Islami fi!a! i!" %hi h is based o! defe&&ed

2ayme!t i! this the "oods a&e immediately deli1e&ed a!d 2ayme!t is made i! some late&

dates so fo& this delay of 2ayme!t Islami ba!ks ha&"e some e t&a mo!ey3 A!d it is

2e&missible f&om Islami 2oi!t of 1ie% be ause i! Islam o!e a! ha&"e hi"h 2&i es

tha! the u&&e!t ma&ket 2&i e fo& defe&&ed 2ayme!t3)Ahmad# -


17/40

a "ua&a!tee o& mo&t"a"e to se u&e thei& mo!ey a!d e!su&e the deli1e&y of 2&odu ts i!

ase of "ua&a!to& if the fa&me& default a!d a!!ot "i1e "oods to fi!a! e& the! Islami

ba!ks a! ask "ua&a!to& to deli1e& the 2&odu t a!d i! ase of mo&t"a"e if the fo&me& o&

selle& default the! ba!k a! sell the mo&t"a"ed item a!d a! 2u& hase the same amou!t

of 2&odu t f&om the ma&ket o& a! "et ba k thei& mo!ey3 ) sma!i# +,,+*

A o&di!" to Muhammad >a!if 6 Syed Tahi& >i=a8i# )+,-,* %ho o!du ted study o!

Islami house fi!a! i!" %hi h is !o!e as Diminishing ( sharka 3 I! e1e&y lo al

ma&ket the&e is la&"e !umbe& of ustome&s of house fi!a! i!" so to fulfil thei& !eeds

Islami fi!a! ial i!stitutio!s sta&t this mode of fi!a! i!" but it !eeds some se&ious

o!side&atio!s a!d !eed some ha!"es i! the 1alue a!d i! 1a&iable &e!tals but if they

use &eal Musha&aka the! thei& dema!d effe t3 Islami ba!ks !o% om2eti!" %ith

o!1e!tio!al ba!ki!" a!d that9s %hy they offe& su h 2&odu t a!d se&1i es %hi h a&e

1e&y lose to o!1e!tio!al ba!ki!" %hi h a &eate a bad 2e& e2tio! about Islami

ba!ki!" i! the eyes of its ustome&s3 So to mai!tai! a se2a&ate ide!tity Islami ba!ks

should !ot follo% the &ules of a2italism a!d it must be 1isible f&om thei& 2&a ti es3 I!

t&ue Musha&aka 2&ofit a!d loss must be sha&ed bet%ee! the 2a&t!e&s a!d but i! Islami

house fi!a! i!" fi!a! e& ea&! mo&e mo!ey tha! o!1e!tio!al ba!ks3 The sole &easo! of

Islami ba!ks is that they must be shai&h om2lia! e3 But due to fea& of losi!" of

ustome&s Islami ba!ks is !ot %o&ki!" 2u&ely a o&di!" to sha&iah &ules so Islami

ba!ks should !ot lose thei& ide!tity due to this a!d Islami fi!a! e 2&a titio!e&s should

do e t&a o&di!a&y effo&ts to o!1e&t so iety to this !e% system3

Musha&akah is o!t&a t i! %hi h t%o 2a&t!e&s ombi!ed a2ital a!d sha&e 2&ofit a!d

loss3 Islami ba!ks i!t&odu ed a!othe& fo&m of Musha&akah fo& those 2eo2le %ho %a!ts

to 2u& hase house fo& &eside!tial 2u&2ose %hi h is !amed as (imi!ishi!" Musha&ahkah

i! %hi h o!e 2a&t!e& )ba!k* do o!t&a t %ith a!othe& 2a&t!e& ) ustome&* fo& the

-,


18/40

2u& hase of &eal estate fo& house i! this some sha&e is 2aid by 2u& hase& of la!d a!d the

&emai!i!" is "i1e! by ba!k a!d the! di1ide the full la!d i!to small 2ie es a!d fi the

2&i e of these 2ie es the 2u& hase& of la!d %ill 2u& hased the la!d i! i!stalme!ts o& i!

lum2 sum the 2u& hase of sha&es o!ti!ues u!til all the sha&es 2u& hased by the

2u& hase& of la!d f&om ba!k a!d this te h!i'ue is a22&o1ed si! e the fi&st Islami

o!fe&e! e held i! (ubai of +< to +; of =umadu sa!!i -< hi=&i3)Mahdi# - ;*

I+arah is a!othe& fo&m of Islami fi!a! i!" %hi h i! this ty2e of fi!a! i!" Islami

ba!k do! !ot di&e tly 2&o1ide fu!ds to the lie!t but i!stead of fu!ds ba!k 2&o1ide the

asset %hi h is !eeded by the ustome& a o&di!" to the s2e ifi atio!s 2&o1ided by the

ustome& a!d the! "i1e this asset o! lease to the lie!t a"ai!st fi &e!tal 2ayme!ts a!d

the time 2e&iod of lease is dete&mi!ed by the mutual o!t&a t bet%ee! ba!k a!d

ustome& %hi h may be f&om < moths to ; yea&s o& mo&e %hi h is dete&mi!ed

a o&di!" to the !atu&e of the asset3 I! the lease 2e&iod the o%!e&shi2 of the asset is

&emai! %ith the ba!k but i! the ustody of ustome& )lessee* du&i!" this 2e&iod the

mai!te!a! e of the asset is the &es2o!sibility of the ba!k be ause ba!k "ets be!efit of

the asset as a &e!t3 A!d afte& the e 2i&y of the leasi!" 2e&iod the asset &e1e&t ba k to the

ba!k3 This leasi!" of asset is 2e&missible a o&di!" to Islami la%s i! %hi h the use& of

the asset "ets be!efit a"ai!st the 2ayme!t of &e!t )Ahmad# -


19/40

Chapter $: Data and (ethodology

$!1 Data 'o rces:

The data is olle ted f&om t%o sou& es o!e f&om 'uestio!!ai&es a!d the se o!d is f&om

fa e to fa e a!d tele2ho!i i!te&1ie%s3 uestio!!ai&es a&e made fo& "e!e&al 2ubli a!d

Islami ba!k ustome&s a!d %hile &eli"ious s hola&s# Islami ba!k em2loyees a!d

o!1e!tio!al ba!k em2loyees a&e i!te&1ie%ed3

$!# Data Types:

$&ima&y data is olle ted fo& this study3

$!$ Data Collection and 'ample 'i3e:

Co&&e t a!d effe ti1e data is esse!tial fo& a!y &esea& h a!d the use of o&&e t tools is

also im2o&ta!t3 So i! this se tio! all the methods %hi h a&e used to olle t data a&e

e 2lai!ed3 As me!tio!ed befo&e that $&ima&y data olle ted th&ou"h 'uestio!!ai&e3

uestio!!ai&e is dist&ibuted amo!" diffe&e!t 2eo2le i! %hom ustome&s of Islami

ba!ks a&e also i! luded a!d em2loyees of ba!ki!" se to&s a!d &eli"ious s hola&s a&e

i!te&1ie%ed to take some i!2ut f&om Islam a!d u&a!3 Sam2le si8e of ;, is take!

th&ou"h Co!1e!ie! e Sam2li!" a!d S$SS is used fo& the a!alysis a!d "&a2hs maki!" to

make the olle ted mo&e i!fo&mati1e3 Co!1e!ie! e Sam2li!" is used to olle t data

f&om 2eo2le be ause of limited time a!d limited &esou& es3 Fo& the 'uestio!!ai&e# .

ba!ks em2loyees of diffe&e!t ba!ks a!d < &eli"ious s hola&s a&e i!te&1ie%ed3

-+


20/40

Chapter &: Analysis and )indings

(ata is olle ted th&ou"h i!te&1ie%s a!d 'uestio!!ai&es %ith a! ob=e ti1e to fi!d

authe!ti data3 The &esult of the i!te&1ie%s a!d 'uestio!!ai&es is i! the follo%i!"

se tio!s3

&!1 Interviews of Islamic 'cholars:

Th&ee Islami s hola&s a&e asked about the authe!ti ity of Islami ba!ki!" system3

S hola& -4 Mola!a Abdu& Rehma! )(a&ul loom Ka&a hi*

S hola& +4 Mola!a Rehmat llah

S hola&


21/40

as us Muslims ha1e that is %hy %e a!!ot say that Islami ba!ks a&e u!/Islami

be ause of some loo2holes3 >e also a&"ues that all these loo2holes a!d defi ie! ies i!

Islami ba!ki!" system a&e all be ause of us be ause %e as Muslims do !ot 2&a ti e

Islam i! a 2e&fe t %ay o& !ea& to 2e&fe t3 If %e "o by Islami &ules a!d dedi ate

atte!tio! to%a&ds Islami ba!ki!" system the! these defi ie! ies i! Islami ba!ki!"

system %ould 1a!ish totally3

Ib&ahim Essa also a"&ees that Islami ba!ki!" is totally i! a o&da! e %ith Sha&iah

2&i! i2les a!d the&e is !o loo2hole %hatsoe1e& i! Islami ba!ki!"3 It is also st&essed

u2o! that Go1e&!me!t of $akista! should "i1e u! o!ditio!al su22o&t to Islami ba!ks

i! o&de& to kee2 them th&i1ed a!d mai!tai!ed as the Islami 2&i! i2les 2&o2ose3

uestio! +4 Should Islami ba!ks elimi!ate some of its 2&a ti es If yes the! %hi h

2&a ti es should be elimi!ated

Mola!a Abdu& Rehma! a!d Mola!a Rehmatullah a"&ee to the fa t that debt i!st&ume!ts

of Islami ba!ks should be elimi!ated so that the 2u&2ose of Islami ba!ki!" system

ould fully tu&! its %ay to Islami 2&i! i2les a!d Islami ba!ks should i!stead di1e&t

thei& 2&a ti es to e'uity a!d 2&ofit 6 loss based3 ?hile Mola!a Ib&aheem Essa a&"ues

that Islami ba!ks a&e fully Islami based a!d the&e a&e !o 2&a ti es that do !ot follo%

Islami 2&i! i2les3

&!# Interviews of Islamic Bank "fficials:

T%o Islami ba!ks9 offi ials a&e i!te&1ie%ed3

7ffi ial -4 Muhammad Ismail )72e&atio!al offi e& of Mee8a! ba!k# Ba!!u*

7ffi ial +4 Muhammad a1aid )Ma!a"e& of Mee8a! ba!k# Ba!!u*

uestio! -4 >o% do Islami ba!ks o!t&ibute to the %elfa&e of the so iety >o% do

-.


22/40

Islami ba!ks 2&e ede o!1e!tio!al ba!ks i! this &e"a&d

Muhammad Ismail a!d Muhammad a1aid 2&o1ide some fa ts about the %o&ki!" of

Islami ba!ks3 Both of them a&"ue that Islami ba!ks o!t&ibute to the so iety o! ma!y

f&o!ts3 7!e fa t# %he&e Islami ba!k diffe&e!tiate f&om o!1e!tio!al ba!ks# is that

ustome&s %ho 2ay thei& loa!s late a&e 2e!ali8ed fo& bei!" late i! 2ayme!t3 This

amou!t of 2e!alty is added to the ha&ity a ou!t a!d this bala! e of ha&ity a ou!t is

usually "i1e! to ha&ity o&"a!i8atio!s o& as s hola&shi2s to stude!ts3 Besides# Islami

ba!ks also 2&o1ide a&s# la2to2s et 3 to its ustome&s th&ou"h Islami %ays3

uestio! +4 Is it Islami to use KIB7R 6 LIB7R as a base of &etu&! o! fi!a! i!"

Both offi ials asse!t to the fa t that it is Islami to use KIB7R 6 LIB7R as a

be! hma&k3 It is !ot a"ai!st Islam be ause if the&e is !o Riba o& Gha&a& i! t&a!sa tio!

itself# the! o!e a!!ot !ame this a ti1ity as u!/Islami =ust be ause of be! hma&k3

These offi ials la&ify this by "i1i!" a! e am2le that o!1e!tio!al ba!ks di&e tly

ha&"e mo!ey fo& mo!ey %hi h is totally a"ai!st Islami 2&i! i2les %hile Islami ba!ks

i! lude ommodity i! a t&a!sa tio! a!d ha&"e &e!t usi!" the KIB7R 6 LIB7R &ates#

%hi h is !ot u!/Islami 3 Fu&the&mo&e Islami ba!ks a&e i! 2&o"&ess to de1elo2 thei&

o%! be! hma&ki!" system3

&!$ Interviews from Conventional Banks, "fficials:

I!te&1ie%e& -4 Fa8al >a' )Ma!a"e& MCB Ba!!u*

I!te&1ie%e&+4 Alam eb )72e&atio!al Ma!a"e& of MCB Ba!!u b&a! h*

Same 'uestio!s that a&e asked f&om Islami ba!k offi ials a&e &e2eated he&e to k!o%Co!1e!tio!al ba!ks9 offi ials 1ie%3

uestio! -4 >o% do Co!1e!tio!al ba!ks o!t&ibute to the %elfa&e of the so iety besides

the basi se&1i es

-;


23/40

As 2e& o!1e!tio!al ba!ks9 offi ials# it is a&"ued that o!1e!tio!al ba!ks# besides

2&o1idi!" basi ba!ki!" se&1i es# 2&o1ide loa!s to those ustome&s %ho ha1e o2e!ed

sala&ied a ou!ts %ith these ba!ks3 These ustome&s a&e 2&o1ided %ith loa!s a!d the!

these loa!s a&e dedu ted f&om the ustome&s9 a ou!ts %he! thei& sala&ies a&e de2osited

i!to thei& a ou!ts3 This is o!e of the se&1i es %he&e o!1e!tio!al ba!ks 2&e ede

Islami ba!ks be ause ustome&s a! "et small loa!s to fulfil thei& !eeds a!d the! 2ay

late& %he! they a&e 2aid sala&ies at the e!d of the mo!th3

?hy do you thi!k o!1e!tio!al ba!ks a&e bette& tha! Islami ba!ks

A o&di!" to the o!1e!tio!al ba!ks9 offi ials# Islami ba!ks a&e !o diffe&e!t tha!

o!1e!tio!al ba!ks be ause both ba!ki!" systems use same method to "i1e &etu&! to

thei& ustome&s a!d ha&"e ustome&s fo& %hat se&1i es they ha1e 2&o1ided to them#

that &ate %hi h is bei!" used by both is KIB7R 6 LIB7R3

Is 2&ofit a!d loss based system of Islami ba!ks bette& tha! o!1e!tio!al ba!ks

Co!1e!tio!al ba!k offi ials e 2&ess that e1e! o!1e!tio!al ba!ks ha1e 2&ofit a!d loss

a ou!ts as laimed by Islami ba!ks3 But the&e is a fa t that Islami ba!ks a&e !ot

totally 2&ofit a!d loss based# it is =ust a mea"&e 2o&tio! of the total system that is 2&ofit

a!d loss based %hi h is a&ou!d < to . 3

-0


24/40

&!& 0 estionnaire:

uestio!!ai&e is made o! the basis of follo%i!" 1a&iables to he k that is Islami ba!ks

%o&k u!de& 2e&fe t Sha&iah &ules o& !ot3 All the uestio!s a&e made sim2le so that

e1e&yo!e a! u!de&sta!d it3 To k!o% the 2e& e2tio! a!d e 2e&ie! e of 2eo2le about

Islami ba!ki!"3

a* Riba )i!te&est* f&ee ba!ki!"3 b* E'uity based ba!ki!"3

* $&ofit a!d loss based ba!ki!"3 d* Ethi s-3 I!te&est is st&i tly 2&ohibited i! Islam fo& Islami ba!ks it is &eally !e essa&y that it9s all

2&a ti es must be i!te&est f&ee3 So fi&st 'uestio! of the 'uestio!!ai&e is that u&&e!t

Islami ba!ki!" is totally i!te&est f&ee o& !ot to he k that is the u&&e!t 2&a ti es a&e

f&ee f&om i!te&est f&om all 2&os2e ti1e o& me&e o2y of o!1e!tio!al ba!ki!" a!d use

othe& !ames fo& talki!" i!te&est so this 'uestio! asked fo&m diffe&e!t 2eo2le a!d they

"i1e &es2o!se o! the basis of thei& e 2e&ie! e3+3 Se o!d 'uestio! is about %hethe& i!te&est is the o!ly fa to& %hi h make a ba!k Islami

of !/Islami o& the&e a&e some othe& fa to&s %hi h make 2&a ti es of ba!k Islami o&

!/Islami 3 As Islami ba!ks a&"ues that i!te&est is 2&ohibited a!d ou& ba!ki!" is

i!te&est f&ee so the u&&e!t 2&a ti es is Islami is it t&ue o& !ot3


25/40

that a&e 2eo2le i! fa1ou& of "i1i!" mo!ey o! i!te&est o& !ot be ause t&adi!" of mo!ey

as ommodity is 2&ohibited a!d alled it i!te&est3:3 Se1e!th 'uestio! is about the u&&e!t Islami ba!ki!" 2&a ti es a&e a o&di!" to 2&ofit

a!d loss sha&i!" basis o& !ot %hi h is the ideal %ay of fi!a! i!" i! Islam3 7& Islami

ba!ks do othe& tha! 2&ofit a!d loss sha&i!" basis fi!a! e %hi h is mostly &iti ised by

most of the &eli"ious s hola&s3@3 Ei"hth 'uestio! is about %hethe& the 2eo2le a&e also i! fa1ou& of 2&ofit a!d loss o& they

%a!t fi ed &etu&!3 To k!o% that %hethe& the 2eo2le beha1iou& is suitable fo& Islami

ba!ks o& !ot a!d also k!o% that Islami ba!ks usi!" 2&ofit a!d loss a o&di!" to

Islami 2&a ti es a&e they =ust use the !ame a!d do somethi!" %hi h is %o&se tha!

o!1e!tio!al ba!ks33 Ni!th 'uestio! is about ethi al o!side&atio! that is Islami ba!ks i!1ol1ed i! o&2o&ate

so ial &es2o!sibility o& !ot be ause Islam 2&a ti es fo& the %elfa&e of %hole so iety !ot

o!ly fo& the i!1esto&s3-,3 The last 'uestio! is about the 2u&2ose of Islami ba!ki!" that is it be!efi ial fo& the

2oo& 2eo2le of so iety as Sh&iah su""est o& !ot3

The uestio!!ai&e is made to k!o% about the ustome& 2e& e2tio! about the Islami

ba!ks3

-@


26/40

The c rrent Islamic banking is totally Riba 4interest free*!

F&e'ue! y $e& e!t alid $e& e!t Cumulati1e $e& e!t

alid A"&ee +: ;.3, ;.3, ;.3,

Neut&al : -.3, -.3, 0@3,

(isa"&ee -0


27/40

Is Riba the only factor that makes a bank Islamic or 5n6Islamic7

F&e'ue! y $e& e!t alid $e& e!t

Cumulati1e

$e& e!t

alid A"&ee +: ;.3, ;.3, ;.3,

Neut&al -- ++3, ++3, :03,

(isa"&ee -+ +.3, +.3, -,,3,

Total ;, -,,3, -,,3,

Interpretation:

The se o!d 'uestio! asked the &es2o!ds a&e also about i!te&est that is i!te&est is the

o!ly fa to& %hi h makes a!y ba!k Islami o& !/Islami to k!o% that %hethe& 2eo2le

all it Islami =ust be ause of i!te&est o& the&e a!y othe& fa to&s of %hi h a&e a o&di!"

to Islam3 I! &es2o!se of this +: &es2o!de!ts a&e a"&ee# -- a&e !eut&al a!d -+ a&e

disa"&ee that i!te&est is !ot the o!ly fa to& %hi h makes a ba!k Islami o& !/Islami 3

+,


28/40

'ho ld banks eliminate interest7


Cumulati1e

$e& e!t

alid A"&ee


29/40

C rrent Islamic banking is e8 ity based!


Cumulati1e

$e& e!t

alid A"&ee +; ;,3, ;,3, ;,3,

Neut&al -@


30/40

5sing commodity instead of money is good for co ntry9seconomy!


Cumulati1e

$e& e!t

alid A"&ee +; ;,3, ;,3, ;,3,

Neut&al -@


31/40

(oney sho ld be traded as commodity!


Cumulati1e

$e& e!t

alid A"&ee +- .+3, .+3, .+3,

Neut&al @ -03, -03, ;@3,

(isa"&ee +- .+3, .+3, -,,3,

Total ;, -,,3, -,,3,

Interpretation:

Si th 'uestio! asked fo&m the &es2o!ds is that %hethe& they a"&ee o& !ot that mo!ey

should be t&aded as ommodity o& !ot mea!s they %a!t &etu&! o! thei& mo!ey o& they

%a!t to do t&ade a!d ea&! mo!ey3 This 'uestio! is asked f&om 2eo2le that the u&&e!t

situatio! is i! fa1ou& of Islami ba!k o& 2eo2le =ust %a!t Islami ba!ki!" but they do

!othi!" fo& the Islami8atio! of ba!ki!"3 I! &es2o!se of this +- 2eo2le a&e a"&ee that

mo!ey should be t&aded as ommodity# @ a&e !eut&al %hile the &emai!i!" +- a&e

disa"&ee3

+.


32/40

Islamic banking based on %2' 4profit and loss sharing bases*


Cumulati1e

$e& e!t

alid A"&ee


33/40

basis -- a&e !eut&al %hile the &emai!i!" @ a&e disa"&ee that u&&e!t Islami ba!ki!" is

!ot based o! $&ofit a!d Loss Sha&i!"3

Do yo prefer %2' 4profit and loss sharing* ret rn overfi ed ret rn7


Cumulati1e

$e& e!t

alid A"&ee


34/40

i! ome3 But still Islami ba!ks t&a!se tio!s ha1e &isk i! o!t&ast %ith o!1e!tio!al

ba!ki!"3 I! &es2o!se of this 'uestio!


35/40

t&uly a o&di!" to shai&ah &ules a!d 2&i! i2les3 So


36/40

I! &es2o!se +< &es2o!de!ts a&e a"&ee that Islami ba!ks a&e be!efi ial fo& the 2oo&

2eo2le of the so iety# a&e !eut&al %hile -@ a&e disa"&ee3

Chapter -: Concl sion

Study of diffe&e!t a&ti les about Islami ba!ki!" system a!d the &esults of

'uestio!!ai&es a!d i!te&1ie%s sho% that u&&e!t Islami ba!ki!" a&e a22a&e!tly

%o&ki!" a o&di!" to sha&iah &ules a!d &e"ulatio!s3 Islami ba!ki!" is asset based a!d

mo!ey has also !o 1alue i! Islami ba!ki!"3 It is o!ly used as medium of e ha!"e but

the&e a&e some fla%s i! Islami ba!ki!" mea!s u&&e!t Islami ba!ki!" is !ot ideal

ba!ki!" of Islam3 Cu&&e!t Islami ba!ki!" is !ot made fo& the 2u&2ose of %elfa&e of

2eo2le3 Islami ba!ki!" is doi!" all the same fu! tio!s of the o!1e!tio!al ba!ks but i!

Islami %ay# thei& t&a!sa tio!s a&e a o&di!" to the &ules of sha&iah but !ot ideal

ba!ki!" of Islam3 7! t&a!sa tio! basis it a! be alled as Islami but o! 2u&2ose basis

most of 2eo2le a!d Islami s hola&s ha1e some 'ue&ies about Islami ba!ki!"3

Recommendations:

Islami ba!ks a&e based o! Islami 2&i! i2les3 So the fi&st ob=e ti1e of Islami ba!ks

should be the be!efit of the Muslims a!d be!efit of the %hole so iety as Islam tea hes

us3 A!d the 2u&2oses of Islami ba!ks should also be a o&di!" to the Islami

2&i! i2les# a!d Islami ba!ks should also elimi!ate some of its 2&a ti es %hi h a&e 1e&y

mu h lose& to o!1e!tio!al ba!k 2&a ti es to mai!tai! its se2a&ate ide!tity3 So to a1oid

the o!fusio! bet%ee! Islami ba!ki!" a!d o!1e!tio!al ba!ki!"# Islami ba!ks should

a1oid all the a"e! y &elatio!shi2s a!d also the debt modes of fi!a! i!"3 Alo!"side this#

Islami ba!ks should make full ba!ki!" system o! 2&ofit a!d loss sha&i!" basis but

Islami ba!ks alo!e a!!ot do this3 But fo& the Im2leme!tatio! of this ty2e of ba!ki!"

system "o1e&!me!t su22o&t is 1e&y !e essa&y# a!d the ustome&s of Islami ba!ks

should also be loyal to ba!k a!d should also follo% the sayi!"s of Allah a!d

+


37/40

Muhammad )S3A3?* o!ly i! this ase Islami ba!ks a! %o&k fully a o&di!" to the

&ules a!d tea hi!"s of Islami 3

References

Af8al# Muhammad et al3 +,-;3 D$akista! E o!omi a!d So ial Re1ie%#3 .@)-*4 < 0,3

Ahmad# A3 )- AN( TRAINING INSTIT TE ISLAMIC

(E EL7$MENT BANK E((A># SA (I ARABIA3Moi!# M3 S3 )+,,@*3 $e&fo&ma! e of Islami Ba!ki!" a!d Co!1e!tio!al ba!ki!" i!

$akista!4 a Com2a&ati1e Study3 )Stude!t 2a2e&*3 > "skola! i Sk 1de3MANS77RI# M3 T33 )+,--*3 Is HIslami Ba!ki!"H Islami A!alysis of Cu&&e!t (ebate

o!


38/40

S haik# (iede&ik a!3 +,,-3 DIslami Ba!ki!"3 AIK># M3 A3 )+,--*3 Co!tem2o&a&y Islami Ba!ki!"4 The Issue of Mu& bah Uah3

Islami Studies# ;,)


39/40

'5R 05='TI"??AIR= "? @I' I'2A(IC BA? I? R=A22> I'2A(IC

December 1; #;1-

A"e4

Edu atio!4

Ge!de&4

%art 1: Riba4interest* free banking

-3 The u&&e!t Islami ba!ki!" is totally Riba )i!te&est* f&ee3

+3 Is Riba)i!te&est* the o!ly fa to& that makes a ba!k Islami o& !/Islami


40/40

+3 si!" ommodity i!stead of mo!ey is "ood fo& ou!t&ies e o!omy3

Date post:	23-Feb-2018
Category:	Documents
Upload:	muhammad-nawaz-khan-abbasi
View:	243 times
Download:	4 times

Is Islamic Banking Really Islamic (Finance)

Documents