^{Islamic Banking} Understanding Islamic Banking

What’s the difference between Islamic and conventional banking?

At first glance, it may seem there is little difference between Islamic and conventional banking. Both systems accept deposits from consumers and commercial entities and offer financing solutions to them. However, specific considerations have been taken to separate the two and ensure Islamic banking meets Shariah principles.

What is Islamic Banking?

Islamic Banking is based on an interest-free financial system that reflects the ideology of Islamic Shariah. This banking system adheres to Islam's high ethos and moral values, and is governed by the principles laid down by Islamic Shariah.

Islamic scholars have approved specific financial contracts, conforming to Islamic principles, to be used in financial transactions. Every transaction Islamic banks engage in is based on one or more of these contracts. This system discourages all unethical practices and plays a crucial role in establishing a transparent economic system. The prohibition of risk-free return and the permission of trading are the foremost ideas behind Islamic banking and finance.

Who oversees Shariah standards and principles?

Islamic banks are overseen by an Internal Shariah Supervision Committee (ISSC). These committees comprise Islamic scholars responsible for ensuring all operations of that bank comply with Shariah standards and principles.