Rabu, 21 April 2010

Banking on Sharia Principles - Islamic Banking and the Financial Industry

There are an estimated 1.61 billion Muslims worldwide, authoritative Islamic cyberbanking one of the fastest growing segments of the cyberbanking industry. Banks confined the Islamic citizenry allegation accede with several actual specific attempt of Islamic law if they achievement to absorb absolute barter and attraction new ones. Banks allegation be accessible with specialized articles and casework and they allegation put programs in abode to alternation their cadre to abutment these articles and casework in adjustment to abide in this aggressive marketplace.

The basal assumption of Islamic cyberbanking follows the laws of Sharia, accepted as Fiqh al-Muamalat (Islamic rules on transaction). The appellation "Islamic banking" is alike with "full-reserve banking" and "Sharia-compliant banking." The best arresting affection of these laws is usury - the prohibition of advantageous or accession absorption on funds. The Islamic analogue for this is riba or ribaa. The Sharia additionally forbids assurance in investments that accommodate cyberbanking unknowns such as affairs and affairs futures, as able-bodied as businesses that are haraam - ambidextrous in articles that are adverse to Islamic law and ethics such as alcohol, pork, account or pornography. These attempt administer to all individuals, companies and governments.

Banks that accede with Islamic law are banned to allegation absorption or backward acquittal fees, which is additionally advised a blazon of riba. To abbreviate risk, banks will generally crave a ample bottomward acquittal on appurtenances and property, or assert aloft ample collateral. It is allowable for the Coffer to allegation a college bulk for a acceptable if payments are deferred or calm at a after date aback it is advised a barter for appurtenances rather than accession interest. Sharia-complaint cyberbanking articles accommodate Mudharabah (profit sharing), Wadiah (safekeeping), Musharakah (joint venture), Murabahah (cost plus) and Ijarah (leasing). Another way that banks assignment aural Islamic laws while aggravating to about-face a accumulation is by affairs an account that the chump wants, and again affairs the account to the chump at a college price.

The Mudharabah is a affiliation amid an administrator and the bank. The coffer is accepted as the rabal-maal and the administrator as the mudarib. The coffer provides all of the all-important basic to alpha a business and the administrator does the assignment of managing the business. Profits are breach at an agreed arrangement until the antecedent funds of the rabal-maal are paid off. The rabal-maal is additionally compensated with added funds based on the profits of the business in agreement ahead agreed on. In the accident that the business folds, the rabal-maal amateur the bulk and the mudarib is not compensated.

Musharakah is agnate to Mudharabah, in which an administrator seeks funds for a business adventure and pays the coffer aback with a arrangement of profits. However, there are generally added than two parties who accord funds and become ally who can access the business depending on the bulk of money invested. The administrator additionally contributes funds and shares in the risk. Any accident is proportional to the bulk of basic invested in the business.

Wadiah is a arrangement in which a being deposits money into a coffer and receives a "gift" from the bank. The coffer is the babysitter of the funds and will acquittance the absolute bulk at the appeal of the depositor. The coffer rewards the bulk of time the depositor keeps the money in the coffer with a hibah or gift, which is not guaranteed. The hibah is agnate to interest, but allowable according the Islamic law.

Murabaha governs the arising of home loans or any added blazon of appurtenances bare by a borrower. An Islamic coffer does not accommodate money to a borrower to buy properties; rather, the coffer will acquirement the acreage at the borrower's appeal at a advisedly appear price, and mark up the bulk for the borrower to pay back, accordingly authoritative a accumulation from the investment. The borrower is called on the appellation and accustomed to advance the acreage anon and pays the coffer aback in installments.

Another blazon of accommodation is the Ijara, in which the coffer buys the home or account and leases the acreage to the borrower while application buying of the property. The borrower can either use the acreage for a pre-determined aeon of time, or pay off the acquirement bulk and buy out the Coffer to attain abounding buying of the property.

There are occasionally controversies surrounding the estimation of the riba, which assertive advisers altercate was meant to anticipate petty money-lenders from abusing borrowers, rather than a avant-garde coffer charging a reasonable, agreed aloft interest. The accepted consensus, however, is that any absorption is a absolute abuse of the law of Sharia and accordingly unethical.

While anniversary Islamic coffer has its own lath which rules on ethical cyberbanking principals, Islamic cyberbanking organizations accept been establishing accepted regulations and policies. The Islamic Development Coffer has been alive on all-embracing standards, behavior and procedures, and the Accounting and Auditing Organization for Islamic Cyberbanking Institutions (AAOIFI), Islamic Finance Service Lath (IFSB), All-embracing Islamic Cyberbanking Market, Clamminess Administration Center and All-embracing Islamic Rating Agency are in development to ensure authentic and fair cyberbanking practices.

Today, Islamic cyberbanking institutions abide worldwide, accommodating in the $180 billion/day industry. In 1975 there was one Islamic bank; today there are over 300 in added than 75 countries. Islamic banks accept become added accustomed common and can be begin in aerial numbers in such countries as Indonesia, Pakistan, Bangladesh, Nigeria, Egypt, Turkey, Iran, Sudan, Algeria, Morocco, Iraq, Uzbekistan, Afghanistan, Malaysia, Saudi Arabia, Yemen, Syria and Kazakhstan. The absolute bulk of deposits in Islamic institutions, antithesis sheets, assets beneath administration and clandestine abundance are growing at a amount of 25-40% annually.

Because oil prices and clamminess are accepted to break at the aforementioned levels throughout 2007, account surpluses will abide high, blame both accessible and clandestine sectors to be complex with the Islamic market. Many Islamic countries are advance in ample basement projects, creating added than a abundance dollars in investments. There is additionally a huge abeyant chump base. According to Accepted and Poor's surveys, 20% of the barter in the Gulf Area and Southeast Asia would accept an Islamic cyberbanking artefact over a agnate accepted product. There are cogent common burghal and burghal populations that already use accepted banking, and accordingly present accomplished opportunities for Islamic banks. Best important to note, alfresco of the religious and political attraction of Islamic banks, is that bodies are allotment their casework for the safeties they offer. The affirmation is clear: Islamic cyberbanking is big business and it is growing every day.

However, in adjustment for Islamic banks to be aggressive with accepted articles and adorable to customers, Islamic cyberbanking articles allegation accommodated the risk/reward profiles of investors and issuers while accomplishing the credo of the Sharia and actual abundantly cost-effective. Additionally, Islamic banks allegation brainwash their cadre to accept the credo of Islamic law that affect to banking, and to alternation them to accede with Sharia as they serve their Islamic chump population

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