BANKING AFFAIRS

Detailed explanation-1: -Islamic banking or Islamic finance is a form of Sharia (Islamic law)-compliant finance. Here, the banking and financial practices strictly adhere to Islamic legal practices. It incorporates cultural and ethical components into finance.

Detailed explanation-2: -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-3: -The five major goals of the Sharia are the protection of sound religious practice, life, sanity, the family, and personal and communal wealth. The acknowledgement of sound local customs throughout the world is one of the five basic maxims of the Sharia according to all Islamic schools of law.

Detailed explanation-4: -What is Islamic Banking? Islamic banking is an interest free banking system and is governed by the principles laid down by Islamic Sharia’h. Commonly Islamic modes used for saving deposits is Mudharaba and Qarz for current deposits while Murabaha, Ijarah, Diminishing Musharakah and other modes used for financing.

Detailed explanation-5: -Under Islamic law, a Muslim is prohibited from paying and accepting interest on a predetermined rate. As per Islamic banking, money can only be parked in a bank without interest and cannot be used for speculative trading, gambling, or trading in prohibited commodities such as alcohol or pork.