BANKING AFFAIRS

Detailed explanation-1: -Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the assurance of fairness for all and that transactions are based on an underlying business activity or asset.

Detailed explanation-2: -Islamic banking, also referred to as Islamic finance or Shariah-compliant finance, refers to financial activities that adhere to Shariah (Islamic law). Two fundamental principles of Islamic banking are the sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors.

Detailed explanation-3: -The Islamic financial system is founded on the absolute prohibition of the payment or receipt of any predetermined, guaran-teed rate of return. This closes the door to the concept of interest and precludes the use of debt-based instruments.