Difference Between Commercial Bank and Islamic Bank

A rule making body issues authorative shari’a auditing standards for all Islamic banks and other Islamic businesses and it will be the most effective way to eliminate problems within the Islamic economy. The most effort to develop a body of consistent standards for shari’a audits has been undertaken by

With the outstanding performance through the years of UOB, its mission statement has been realistic and it certainly have helped the company to stay on track and to achieve its vision of being a premier bank, as it has eventually became the top leading bank Asia and the Asia Pacific region. The mission has greatly equipped the bank with the right attitude and goals to help achieve its vision. By being committed to providing quality products and excellent customer service, it paved the way for great excellence which is a key factor to become an outstanding bank in comparison with the other competitors.

Becoming an expert in Islamic economics and finance field is one of my long-term goals in life. I started to organize and made a plan towards achieving that dream since senior high school. The concern towards Islamic economics and finance concept, and its application for society and the country began when I was reading a book entitled Islamic banking-theory and practice. After finishing reading the book, my interest in Islamic economic and finance topics rose and strengthen my own determination to become the expert of Islamic economics and finance. The main principle of Islamic economics and finance which offers the just and ethics in economic activity, poverty alleviation through income distribution mechanism, and prevention of economic and

Islamic banking is a structure that allows conducting banking activities and trades in line with the Islamic Shari’ah laws and principles by avoiding all the haram (prohibited) activity such as interest and financing prohibited businesses.

Islamic banking is the banking that is guided by Islamic law (Shariah) principles and guided by Islamic economics. Islamic law forbids the usury, the collection and payment of interest which commonly called as Riba in Islamic term. Islamic banking finds its roots in Islamic finance and all type of transactions are interest is prohibited in Islamic ways of banking as it is also obvious from Quran.

Almost 80% of respondents were non-Muslims. Therefore these research reports are mostly non-Muslim customer’s opinion on corporate banking Muslim. This study proves that Muslim banking products are not so popular among corporate customers in Malaysia and only a few maintain banking relationships under the Islamic banking system. In addition, nearly 65% of respondents indicated that their knowledge of Islamic banking system is very limited. This study shows that there is a misunderstanding among respondents regarding the objectives of Islamic banking. While 38.1% of respondents were uncertain about the nature of profit sharing system in Islamic banking, 50% believe that this principle is the only principle adopted by Islamic banks as a replacement Riba. Respondents were not familiar with other principles such as Musharakah, Ijarah, Wakala, and Istisna'a. Overall, the conclusions of the study are that there is a general knowledge that inadequate corporate banking products and services to Islam among

Islamic banking also provide the knowledge of Riba (interest) Hibha (gift) wadiah (safe keeping) ijarah ( lease , rent , wage) deposit product investment product and financing product (debt based) financing product (equity based ) trade finance

Shahjanaz Kamaruddin begins this article by stating that Malaysia has developed into becoming a full-fledged Islamic financial system operating in parallel to its conventional counterpart. Islamic finance is based on the Islamic principle of Syariah which is relevant in today’s world. According to the Islamic Finance Development (IFD) Report 2014, Malaysia is the undisputed in sukuk(bond) with a 63% of global market share. Malaysia performs very well across 5 indicators which are quantitative development, knowledge, governance, CSR (corporate social responsibility) and

Islamic Banking is quite similar to a conventional bank. Only here the essential feature is that it is Interest Free i.e. it purely follows the Islamic law – Sharia’h (Rules) and guided by the Islamic Economics that forbids the both the payment and the receipt of Riba (Interest). The two main principles are basically Banks will share the Profit & Loss (enabling risk sharing) and disallow Interest in any form.

Guidelines of Sharia' are genuinely clear and expound in characterizing the way of who are subject to pay zakah and who can advantage from zakah. The principal and important classification of potential recipients is the poor and the destitute. Therefore, Islamic microfinance organizations ought to have the capacity to prepare assets either through tolerating funds stores or acquiring reserves. This business approach involves charging and offering of benefits and is very predictable with Islamic Sharia'. Other than the procurement of different options for exploitable loaning by means of Islåmic Micrõfinance and it can permit the incorporation of the poorest by investment funds plans through wadiah and mudarabah stores, cash exchanges through zakat and sadaqah, and protection by means of takaful idea.

'' Islamic banking '' is interest free asset backed banking governed by the principles of Islamic shariah.

Islamic banking refers to a system of banking that complies with Islamic law, also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between the provider of capital (investor) and the user of funds (entrepreneur). In other words, it ensures an equal contribution for all parties involved, whether in profitability or in case of any loss occurred. Activities that involve interest (riba), gambling (maisir) and speculative trading (gharar) are prohibited (Bank Negara Malaysia, 2010). Islamic banking is interest free banking; making it compulsory to take active part in business profit and loss sharing. Islamic banks prefer to take less risk (Shaikh & Jalbani, 2009)

The main difficulties of applying IFRS in Islamic countries are driven by the difference treatments of interest. Under the conventional accounting, the interest is charged commonly as compensation to the lender, while under the Islamic law, Riba, which refers to the interest, is forbidden and considered as a major sin. Prohibition on charging interest gives rise to several different treatments in Shariah-compliant companies. For instance, in Islamic banking, due to the fact that the interest is forbidden with lending or depositing of capital, in order to prevent the default, the bank may ask for strict collateral, which refers to the concept of Murabahah. In general, Shariah-compliant companies conduct on the risk-sharing principle, while the traditional accounting is more rely on risk-transfer. (PwC,

The prosperity and peace of a society much or less depends on its economy. While for the smooth running of both, there are several instructions in Islamic Shariah and allows what is right and forbids what is wrong. When we talk about financial issues, Islamic Shariah strictly condemns Riba. The question may arise why Islam prohibits Riba? While it was already in practice before the advent of Islam and still it is a part of different economic systems throughout the world. It is simply because Islam gives respect to human beings and condemns all the attempts that are harmful and disgraceful for humanity. Therefore, Riba is not only forbidden in Islam but economic experts are also in search of its substitute. Since borrowing on interest rate creates several issues including: less efficient allocation of resources, indebtedness, unemployment and economic instability. While in society it causes injustices, inequity, poverty and imbalance etc. In this paper we are discussing how Riba causes imbalance in the society and instead Riba what Islam demands from its followers.

The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system is composed of four state-owned commercial banks, five specialized development banks, thirty private commercial Banks and nine foreign commercial banks. The Nobel-prize winning Grameen Bank is a specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh.