Ialmic Banking

What is the economic significance of the banks having in every day life?

First of all they are intermediaries and provide wide array of services, such as

1. Facilitate the development of trade and industry

2. They facilitate the service sector, by providing various services to people.

3. They are important for balanced growth of the economy, simply because they provide so many different services

4. They are very important for international trade

5. Banks are crucial in implementation of monetary policy, since they are intermediaries

6. Vital for social services

7. And in case of Islamic Banking they have meet demands and principals of Islamic law, Sharia

Islamic banking has been defined as banking in accord with ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the principles lad down by Islamic sharia. Interest free banking is a narrow concept displaying a number of banking instruments or operations, which avoid interest. Islamic banking is more general term is expected not only avoid interest-based transactions, prohibited in the Islamic Sharia, but also to avoid unethical practices, such as gambling, involving pork, alcohol, adult entertainment and etc. And participate in actively in achieving the goals and objectives of Islamic economy.

Modern banking system was introduced into Muslim countries at a time when they were politically and economically at the low point, in the late 19th century. The main banks in the home countries of the imperial powers established local branches in the capitals of of the subject countries and they catered mainly to the import export requirements of the foreign business. The banks were generally confined to their capital cities and the local population remained largely untouched by the banking system. The local tariding community avoded the “foreign” banks for both nationalistic and religious reasons. However, as time...