WHAT IS ISLAMIC BANKING
WHAT IS ISLAMIC BANKING Islamic Banking is defined as the banking system that is based on the principles of Islamic law (also known Shariah) and is guided by Islamic economics. The two basic principles behind Islamic banking are : 1. The sharing of profit and loss 2. Prohibition of the collection and payment of interest. Islamic banking has been defined as banking in accordance with the philosophy and the value system of Islam. This type of banking’s concept is not use any instruments which consist of interest. Islamic banking, the more general term is expected not only to avoid interest-based transactions prohibited in the Islamic Shariah but also to avoid any unethical practices . However Islamic Shariah prohibits ‘interest’ but it does not prohibit all gains on capital. This system is based on risk-sharing, owning and handling of physical goods, involvement in the process of trading, leasing and construction contracts using various Islamic modes of ...