Islamic Banking: A True Alternative to Interest-Based Conventional Banking
International Scholar Journal of Accounting and Finance,Volume-1, No.1(2015) 33-40
9 Pages Posted: 7 Dec 2015
Date Written: December 2015
Smooth financial operations are quite impossible without banking and interest is the pivotal element of conventional banking activities which is strictly prohibited in Islam. So, to avoid interest as well as to meet banking needs, the Muslim requires such a banking system that avoids interest and in compliance with the 'Shariah'; commonly known as Islamic banking. The study shows that the Islamic banking is not only a substitute to interest-based conventional banking, but also a real alternative to the Muslim. There are so many differences between the two systems and generally should not be compared with each other as they are operated under the different set of thoughts; values and rules-regulations. In spite of that, a large number of people are using Islamic Banking as an alternative to the interest-based conventional banking. This paper is aimed at discussing and sharing knowledge on Islamic banking by understanding the concept of Islamic banking; origin of Islamic banking; principles of Islamic banking; deposit mobilization and fund utilization mechanisms of Islamic banking; welfare activities of Islamic banking and the regulatory framework of Islamic banking.
Keywords: Islamic Banking, Interest-free Banking, Riba-free Banking, Shariah-based Banking, Halal Banking, Muslim's Banking, PLS Mechanisms
JEL Classification: G21, R15
Suggested Citation: Suggested Citation