In Sharia Islamic law, making money from money, for example charging interest, is usury and therefore not permitted. Wealth must be generated only through legitimate trade and investment in assets. However investment in companies involved with alcohol, gambling, tobacco and pornography is strictly off limits.
No. Islamic banking is for all persons in spite of-of their religious beliefs.
The most significant difference between Islamic and conventional banking is the exclusion of interest in Islamic banking. Islamic banking activity is based on the trading belief of buying and selling of assets. For example, in financing of a home purchase, the selling price (including the bank's profit margin) is set from the very beginning.
Anyone can obtain Islamic banking products and services in every bank that carry the Islamic banking.
Every Islamic bank are required to set up Shariah advisory committees to advise them and make sure that the operations and activities of the bank comply with Shariah principles. Each products and services offered by Islamic banks must be approved by their respective Shariah Committees.
On a customer's request, an Islamic bank may transfer funds from an Islamic account to a conventional account. But, transfer of funds from a conventional account to an Islamic account can only involve the principal amount. No element of interest is allowed to be transferred.
If customers are not pleased with the services provided by the Islamic banks they may lodge a formal complaint to the management of the respective banks.
For Islamic banks, if customers are still not fulfilled with the reply given by the management of the bank, they can forward the complaint to the Financial Mediation Bureau (FMB), a sovereign body to address complaints on financial institutions.
The principle of Islamic finance is that all kinds of interest are prohibited; the Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on predetermined terms, and distribute any profits between them. The main categories in Islamic finance are: Ijara, Ijara-wa-iqtina, Mudaraba, Murabaha and Musharaka, Ijara is a leasing contract whereby the bank buys a item for a customer and then leases it back over a particular period. Ijara-wa-Iqtina is a related arrangement; apart from that, the customer is able to buy the item at the end of the contract.
Mudaraba offers expert investment by a financial expert in which the bank and the customer shares several profits.
Customer’s risks losing their money if the investment is unsuccessful, even though the bank will not charge a handling fee unless it turns a profit. Murabaha is a type of credit which enables customers to make a perchase without having to take out an interest bearing loan. The bank buys an item and then sells it on to the customer on a deferred basis. Musharaka is an investment partnership in which profit sharing terms are agreed previously, and losses are pegged to the amount invested.
Almost all the traditional retail banking services expected from established High Street banks are available in a Sharia compliant format.
The Islamic Bank offers a Sharia compliant current account, mortgage and personal loan and Islamic current account and mortgage.
A handful of other banks including a few of the biggest international banks also offer financial products modified for Muslims.
Banks are hoping to attract business from two million Muslims, a lot of whom do not use established banking services because they are in conflict with Sharia.
Islamic Bank has pioneered a broad range of flexible banking products and services compliant with Shari’a principles.
Personal Finance from Islamic Bank allows to manage expenditure and finance the acquire goods and services using Ijara and Murabaha structuring with peace of mind and no hidden costs.
Murabaha literally means a sale on mutually agreed profit, strictly, it is a contract of sale in which the seller declares his cost and profit and therefore it is different from a conventional loan.
Islamic law (Shariah) does not need that the seller of a product be Muslim, or that its other services be Shariah compliant as well, as long as the product offering is Shariah compliant, the provider can be a bank loyal to providing a full array of banking services.
Yes. Funds deposited in this account are used only in a Shariah compliant method as per the guidelines of SCB's Shariah Supervisory Committee.
Islamic Savings & Term Account function on a well known Islamic financing mode of Mudaraba, under these products the Customers provides funds to the Bank for placement in Shariah compliant assets, here the Customer acts as the investor while SCB acts as the working partner in the Mudaraba. The profit from the portfolio of Assets is shared among the parties as per an agreed ratio. The agreed ratio for every month is communicated to Branches and Priority Units by the Liabilities team on a monthly basis.
Profit from the pool of Islamic assets is calculated at the end of each month. SCB keeps a share of the profit as per a settled ratio, the settled ratio for each month is communicated to Branches and Priority Units by the Liabilities team on a monthly basis, in damages for its services as the working partner in the Mudaraba. The balance profit is distributed among various categories of Customers (such as Savings Account, 1 month, etc.) as per predetermined weights. The profit amount for each category is used to calculate the Profit rates for all categories of Customers, which are announced at the end of each month.
In line with the principles of Mudaraba if there is a failure in the overall portfolio of Islamic assets, the same will be passed on to the Customers in the correct ratio of their investment in the portfolio. Though, it must be noted that SCB takes utmost care in extending financing to Customers and every transaction included in the portfolio of Islamic assets go through a rigorous credit and risk screening process.
Yes. The Bank has to get rid of the charges which are not Shariah compliant.
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