MANAGEMENT

Detailed explanation-1: -An Islamic bank cannot charge interest under Islamic law, but they can pay interest to depositors who are Muslim. As per the laws laid down in Quran(Holy book of the Muslims), Riba or Interest is Haraam (prohibited). Therefore an Islamic banks can neither pay interest not receive it even if the depositors are Muslim.

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: -Simply put, Islamic banking is banking that conforms to Shariah law. Islamic law prohibits charging interest as well as any usury (i.e., lending money at exorbitant or unlawful rates of interest). Therefore, interest cannot be charged on loans, nor can it be paid on savings.

Detailed explanation-4: -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: -It is commonly claimed and asserted that Islamic Shariah (or Islamic Fiqh, law, jurisprudence) is based on four foundation sources: the Qur’an, the Sunnah, Ijma (consensus) and Qiyas (analogical reasoning in keeping with the other three sources).