Laws Providing For Parallel Islamic Banking Systems: In most jurisdictions where Islamic banks

Main competitive pitch of Islamic banking is in Sharia compliant and interest free. But the real business of Islamic banking is producing profit.

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

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

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

The UK Financial Services Act of 2012 was put into effect the 1st of April 2013 and contained the government reforms on the financial regulatory structure in the United Kingdom. This Act gave new guidelines for management of the banking sector and other supervisory roles in the financial services sector, which include the following. The oversight role of the Bank of England was bestowed therefore, it is expected to be responsible for the occurrences in the financial system and how financial institutions manage themselves. Moreover, the Act stipulates that three more bodies are to be formed to assist in managing this sector, these include; the Financial Policy Committee (FPC), Prudential Regulatory Authority (PRA) and

11 Sheikh, N. A. and Karim, S., “Determinants of profitability of Islamic commercial banks: Evidence from Pakistan”, Pakistan Journal of Islamic Research, Vol. 17

The primary model of Islamic managing an account framework came into picture in 1963 in Egypt. Ahmed al Najjar was the boss originator of this bank and the key peculiarities are

Political environment plays vital role in the progress of banking organizations. Pakistan despite all international and public thinking’s is a functioning democracy and gradually change in complexion and composition of legislatures with more educated people and women entering into politics. These talented politicians’ helps in designing best strategies to implement that could support the revival of bank industry. Political stability brings foreign investment and deposits in banks when people finds jobs. Some political decisions

the First International Conference on Islamic Banking, held in Dubai in 1979, it has not been widely implemented throughout Islamic financial system (Bendjilali and Khan,1995, p. 16). It is a relatively new and very little used product available for Islamic banks. The paper claims that MMQ is more in line with Shari’ah teachings and as such should be used more by Islamic financial institutions. The study indicates that MMQ possibly has a comparative advantage for both financiers and the customer when compared with

This growing practice of Islamic banking will be discussed more fully in a later section as a modern application of usury prohibition.

Bank regulation plays a vital part in the economy today and can be attributed for a lot of its success. It has even been taken to the extent of individuals claiming bank regulation to be the backbone of our modern day economy. To fully understand this topic it is first important to define what bank regulations are. Bank regulations are a kind of government regulation that makes banks liable to certain requirements, restrictions and guidelines. Bank regulation includes determining specific regulations and guidelines to oversee all of the activities and operations of banking organizations. Banking regulations can vary widely between nations and can even be changed due to certain jurisdictions. However, even though they can differ, most

The Central Bank of the UAE was established in 1980 (Crystal & Peterson,2017). It is the UAE’s highest financial regulator. The Central Bank works with the state by directing changes in Monetary, Banking, and Credit-based policies appropriately. It implements those policies in accordance to the state’s current Financial and Economic needs. Moreover, the Central Bank aims to stabilize the economy and the current exchange rate by maintaining gold and other foreign currency reserves. The UAE Central Bank, “prohibits lending an amount greater than 7 percent of a bank's capital base to any single customer” (United Arab Emirates - Banking System, n.d). Furthermore, Islamic banking in the UAE has shown a boundless level of progress due to no interest fees per Sharia Law. The UAE Islamic Financial Sector was estimated to be worth around 127 Billion US Dollars in 2014, it is also the third largest Islamic market by value after Saudi Arabia and Malaysia (John,2015). In November 2011, the Central Bank introduced the IBAN system, its main purpose was to ease the process of automatic money transfers and improve the accuracy and speed of payment transactions (Standard Chartered Bank of UAE, n.d).

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.

Islamic banks use a number of non-interest-based finance modes. The use of a mode is dependent on the nature, purpose and size of transactions. In selecting the modes, it is very much the know-how and knowledge of the Islamic banker which comes into play. These modes could be classified as debt type instruments, quasi - debt type Instruments, profit and loss sharing or hybrid instruments.

Functions and governing modes are stood on Shariah and Islamic banks must make sure that all business actions are conforming to shariah necessities.