Diferenciation Between The Islamic and Conventional Bank
Diferenciation Between The Islamic and Conventional Bank
One must refrain from making a direct comparison between Islamic banking and conventional banking.This is because they are extremely different in many ways. The key difference is that Islamic Banking is based on Shariah foundation. Thus, all dealing, transaction, business approach, product feature, investment focus, responsibility are derived from the Shariah law, which lead to the significant difference in many part of the operations with as of the conventional
Islamic Banking
An Islamic bank is a deposit-taking banking institution whose scope of activities includes all currently known banking activities, excluding borrowing and lending on the basis of interest.
Mudarabah :A form of partnership where one party provides the funds while the other provides expertise and management
Bai-Salam :Salam means a contract in which advance payment is made for goods to be delivered later on.
Conventional Banking
Conventional banking is based on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks.
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1.Different Modes of Borrowing 2.Different Modes of Financing 3.Different Modes of Investment 4.Different Concept of Money
Theoretical and Practical Difference between Islamic and Conventional Banking 5.Different Concept of Risk-Sharing 6.Different Approaches of Income Distribution 7.Having Different Objectives and Goals
Finally we can say, Islamic banks can provide efficient banking services to the nation if they are supported with appropriate banking laws, and regulations.
It would be better if Islamic banks had the opportunity to work as a sole system in an economy. That would provide Islamic banking system to fully utilize its potentials.
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