Islamic Banking Islamic banking , initially developed as a kind of financial intermediation for the Muslim community to do business according

to Islamic tenets . Today, Islamic banking has been widely accepted throughout the world among non-Muslim communities have become an important component of the global financial system . An important characteristic of Islamic banking is that it is without interest. Islamic banking started in Malaysia in 1983 with the establishment of the first Islamic bank , Bank Islam Malaysia Berhad , in the same year . A second Islamic bank dedicated , Bank Muamalat Malaysia Berhad was incorporated in 1999 . Currently, Malaysia has a comprehensive Islamic financial system including Islamic banking, takaful , Islamic capital market and money market . In addition, since 1993 , financial institutions in the country were allowed to offer Islamic banking products and services under the Islamic Banking Scheme . However, these institutions must keep separate funds for Islamic banking transactions and the other for conventional banking . All banks that offer Islamic banking products and services must display the logo of the Islamic banking and regulated by the Banking Act 1983 . This Act established by the Banking Act 1973 at the time but with the modification that the Islamic banks adhere to the principles of Islam . National Bank is increasing its efforts to ensure that the country achieved his goal to become a regional Islamic financial center by 2010 . In line with this , the Bank will issue up to three new Islamic banking licenses to foreign players who qualified . This will bring forward the liberalization of the Islamic banking industry to 2004 in relation to the issuance of new licenses , three years earlier than expected. What is Islamic Banking ? Islamic banking is a banking operation based on the principles of Sharia (Islamic rules on transactions ) and do not allow the payment and receipt of interest while encouraging the sharing of profits . It has the exact same purpose as conventional banking except that it operates under the rules of Sharia , Islamic law that covers every aspect of life based on the holy Quran . Banks and financial institutions that offer Islamic banking products required to establish a Shariah advisory committee to advise them on Shariah rules and ensure that they operate in accordance with Shariah principles . Shariah principles in Islamic Banking Products and Services Wadiah (Safekeeping ) In Wadiah , a bank is considered as the custodian and trustee of funds . You deposit your funds in the bank and the bank guarantees refund of the entire amount or any part of the amount when you demand it. Banks may also reward you with ' grant ' ( gift ) in appreciation for allowing banks to use the funds you have deposited. Under conventional banking , Wadiah can be used for savings and current accounts and grant the interest earned from these accounts .

Mudharabah (Profit Sharing ) Mudharabah is an agreement between you and the bank where the bank allows you to use the funds for your business activities . If there is any profit from the venture, it will be shared with the bank and any losses will be borne by you . Under conventional banking , Mudharabah can be used for savings, current and investment and financing instruments of deposits and shares and unit trusts . Musharakah ( Joint Venture ) Musharakah is a joint venture agreement between you and the bank where profits and losses are shared both by the conditions of consent. Under conventional banking , it is used to share or unit trusts and letters of credit . Murabahah (Cost ) Murabahah is a sale of goods at an agreed price and at an agreed profit margin between the bank and you . Under conventional banking , it is used for cash line facility , working capital financing , letters of credit and bills receivable . Bai 'Bithaman Ajil ( Deferred Payment Sale ) This is the sale of goods on deferred payment terms at a price that includes a profit margin agreed to by the bank and you . Under conventional banking , Bai 'Bithaman Ajil used for negotiable debt certificates , home or property financing , financing shares or unit trusts, Umrah (Muslim pilgrimage to Mecca) and the provision of funding . Wakalah (Agency) Wakalah is when you appoint a bank to conduct transactions on your behalf for you to act like a bank when issuing letters of credit in trade financing. Qardhul Hassan (Benevolent Loan ) Qardhul Hassan is when the bank gives you a loan based on goodwill and you are only required to repay the amount borrowed. However, you can be with your discretion to pay more to your bank sebagi appreciation. Ijarah Thumma Al Bai ' ( Hire Purchase) There are two principles of contract under these leases . The first is the Ijarah contract (leasing / renting ) when you sign an agreement with your bank to lease a rental car from the bank at an agreed time period . When the leasing period expires , the Bai ' ( sale) effect which allows you to purchase the car at an agreed price. Bai 'al - Inah ( Sale and Buy Back ) This principle for credit cards and your bank occurs when you sell an asset for deferred payment and then the asset is immediately repurchased by the bank for cash at a discount . Grants ( Gifts) A token is given in return for a loan received or benefits obtained .

Ijr ( Fi) All other banking services is based on the principle Ijr which is fee-based services such as stock broking , telegraphic transfers , traveler's checks , ATM and phone banking . Islamic Banking Rates For savings accounts , current and deposit grant ( gift ) to be paid at the discretion of the bank if there is any profit from the use of your deposited funds . In general , the approximate rate for savings and deposit accounts was 2.2 % while for the current account is 1 % . For fixed deposit accounts is between about 2.6 % for the month to about 4.2 % for 60 months. Financing rates would depend on whether yours is a new or finished, for new home financing rate of about 2.8 % in the first year to about 7.75 % after the fifth year . To complete the home financing rate of about 3.8 % in the first year to about 7.75 % after the fifth year .