CRITICAL ANALYSIS

Critical Analysis “How Islamic is Islamic banking?”



How Islamic is Islamic Banking?

In this paper the author has mainly focused and based his study on the criticism of the Islamic banks as being Islamic just by name and otherwise following the patterns that are almost similar to that of the conventional banks. Many comparisons have been given to show that there are not many differences in the functions and systems of an Islamic bank and a conventional bank .

For most large Islamic banks, however, at least three-quarters of dormitories - in some cases, almost all - trade name only Islam, according to a study. In fact, they resemble the traditional bank products, are forbidden to devout belief in limited membership. "If you are satisfied that 'tags' instead of 'interest'-If this is you care about - this is Islam, Faisal, said Khan, one in Hobart and William Smith College economics professor in upstate New York. "If you care about the substance, this is not Islam. "

Islamic Banking focuses on sharing of loss and profits with investors based on their share in investment pool. Islamic banking principles disregard the concept of interest and confirmed return to investor. It emphasize on directly taking the risk through equity participation and does not ensure confirm guarantee of return, therefore, returns for shareholder change subsequently based on returns derived from investment.

Islamic banking in practice emphasize on adopting the sharia principles to run the financial matters of banking system. It disregards the concept of confirmed return on investment and therefore focuses on return on pool. Investor may take several forms in Islamic financing mode. He is not required to be involved in the financial management activities. He is only required to share his capital, for which skills, and resource of other person will be sued to ...