Islamic Banking - Rashed Buhumaid

Islamic banking, is the most preferable way that Muslims nowadays can depend on to have their deposits, money transactions and other products they can use from the Islamic banks, and the reason why is that Islamic banking is different from conventional banks because Islamic banking grows it’s business and makes its products or in other words it started its business under the foundation of Sharia which is the Islamic law. Islamic banking unlike conventional banking which is about risk transfer, Islamic banking is about risk sharing and there are many types of products that came out from this risk sharing foundation which are like Mudharabah and Musharakah and many other Islamic banking products. Islamic banking also doesn’t allow interest and also against having products that are involved with some forbidden goods in Islam, also we should remember that Islamic banking also is against having practices in their business that involve speculations and oppression. Islamic banking got popular especially in the UAE, where you can read throughout history about Dubai Islamic bank, the first Islamic bank that used the Islamic law as their foundation to make its products and business, and that was a very successful business which attracted Muslims in the UAE. Dubai Islamic Bank was established in the UAE in the year 1975 and now has over 60 branches in the UAE and also has business outside the UAE, for an example in Pakistan and Turkey. Today, Islamic banking grew much bigger than it was before and many Islamic banks started to come out like Abu Dhabi Islamic Bank, Sharjah Islamic Bank and many more, and even some conventional banks in the UAE started offering some services based on Islamic banking. There is many differences between both Islamic banking and conventional banking, for an example Islamic banks can’t charge interest, while conventional banks do, also when a customer gets late in paying the bank it’s loan, conventional banks will charge the customer extra, while Islamic banks won’t. Considering also the relationship between a conventional bank and its customers will be a creditor-debtor relationship, while on the other hand, an Islamic bank relation with its customer will have more than one type of relation for an example a buyer-seller relation, partners relationship and trader-investor relation, convetional banks also don’t have a restriction on what goods and services they can be involved on, while Islamic banks can only be involved with goods and services that are not against the Sharia law, so Islamic banks have more restrictions than conventional banks.

Student name:

Rashed Buhumaid – H00132143