Presented by :

Padmakar Tapal (B- )

Rupesh Nagwekar (C-30)

Nitin Pathade (C-31)

Amey Parab (A- )

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) . Sharia prohibits, (Riba, usury) . i.e, interest free business

The main objective of an Islamic Bank is to prohibit Muslims from dealing with interest or usury (Riba) which has been strictly prohibited by Allah, and to protect them from one of the biggest sins
Dubai Islamic Bank Statement

 Shariah Islamic law Riba Interest

Hiba profit

Ta'widh Compensation Ujrah Payment in exchange for services, benefits

and

privileges

offered

to

the

customers

Sukuk

the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds

 'Islamic banking opens job options' -

Times Of India - 31 Jul 2012 Tweak laws to allow Islamic banking: RBI The Times of India - 4 Oct 2012 'Islamic banking not feasible in India' Indian Express - 27 Mar 2012 Islamic banking in India: Will it open a Pandora's box? Video: NDTV - 8 Jun 2012

money Bank money + money (interest) Client

Conventional

Bank

Goods & Services money

Client

Islamic

DIFFERENCE IN CONVENTIONAL BANKING BALANCE SHEET AND ISLAMIC BANKING BALANCE SHEET

Assets
Loans and advances to customers Cash and cash balances with other banks Investments in associates, subsidiaries and joint ventures Financial assets held for trading

Liabilities
Customers deposits Due to banks and other financial institutions Other liabilities

Sundry creditors

Cash and cash balances with the central Equity and reserves bank

Application of funding
Cash balances

Sources of funding
Demand deposits (amanah)

Financing assets (murabaha, salam, Investment accounts (mudarabah) ijara, istisna) Investment assets (mudarabah, musharakah) Fee-based services (juala, kafala, and so forth) Special investment accounts (mudarabah, musharakah) Reserves

Non-banking assets (property)

Equity Capital

 Shariah Islamic law Riba Interest

Hiba profit

Ta'widh Compensation Ujrah Payment in exchange for services, benefits

and

privileges

offered

to

the

customers

Sukuk

the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds

Current Account

Deposits available

Savings Account

Investment Account

Investment Financing

Trade Financing

Lending

Other Financial Services

Basic Framework: Prohibition of Riba

Riba as interest (differences among Muslims)
Interest in all forms prohibited All interest-based transactions should be avoided

Interest-based transactions are seen as unjust: risk on the borrower

 Islamic banks can give

inclusive growth along with control over inflation. by lower cost of credit.
of profit. of loans

Equity finance is extended

It provides equitable share

It provides small amount

Banks with Islamic Portfolios

England
HSBC, Lloyds TSB

Malaysia, Cambodia, Singapore

CIMB

Canada
Royal Bank of Canada

 Islamic banking being a young concept can help

development of poor economy.

Though having few draw backs it has its own

advantages to stand on.