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Date Submitted: 06/25/2011 10:25 AM
AN INTRODUCTION
TO
ISLAMIC BANKING
Kuwait
November 23, 2008
PREFACE
This write up is a humble attempt to give an introduction about ‘Islamic Banking’ to those who are new to the subject.
Attempt has been made to explain the basic differences between Conventional and Islamic Banking, which may help to get rid of the general feeling that the only difference between ‘Conventional’ and ‘Islamic Banking’ is related with ‘interest’. Also the common Islamic products have been briefly explained in a simple manner.
This brief write up ‘An Introduction to Islamic Banking’ is an extract from one of my academic thesis works and it is presented with gratitude to ‘Path Solutions’, from where initially I heard about Islamic Banking, learned the basics and advanced a little bit. This cannot be considered as an authoritative document, still I believe that for the newcomers this will be helpful to get an insight into ‘Islamic Banking’.
TABLE OF CONTENTS
Introduction 4
Islamic Banking – Origin And Development 7
Islamic Banking Products 11
Deposit accounts 11
Modes of financing 13
Murabaha 14
Mudaraba 15
Musharaka 17
Ijara 19
Salam and Parallel Salam 21
Istisna’a and Parallel Istisana’a 22
Differences Between Conventional And Islamic Banks-A Summary 25
Appendix 30
Islamic Banks And Financial Institutions In Different Countries 30
INTRODUCTION
Islamic Banking is comparatively a new banking concept which was emerged in 1960s and further developed in 1970s. Still it is in the developing phase and more and more Islamic banks and products are emerging, while conventional banks were started functioning in different forms, since centuries. Over the last decade, Islamic banking has experienced a global growth rates of 10 -15 percent per annum, and has been moving into an increasing number of conventional financial systems at such a rapid pace that Islamic financial institutions are present today in over 51...