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Islamic Bank |
| Islamic Banks follow a particular set of norms and regulations that adhere to the Islamic rules of economics and thereby cater to a wide section of the society. People who follow the Islamic norms when it comes to money matters find it convenient to apply for loans as well as avail of the other services in the Islamic banks. With this article of ours, we strive to hold forth the most significant features of the Islamic banks and their banking regulations. |
History of Islamic Banks:
The history of Islamic banks dates back to 1963 when the first Islamic bank was established in an Egyptian town. This bank was mostly set up under cover and remained that way till about 4 years later when 9 other such banks were set up throughout the country. The Islamic Banks although had numerous features and services that were common to the modern banking system, nevertheless strongly followed the Islamic principles of sharing of profit and loss and also the prevention of accepting interest popularly called as the 'Riba'.
Features of Islamic banks
Some of the popular features fitted with Islamic banks are:
- Islamic Banks in most cases will sell a particular item to the borrower, at a price higher than the market value and accept payment in installments at no interest
- There are no penalties or fines levied against late payments as it strongly opposes the accepting of interest. However, it definitely demands for strict collateral.
- Islamic banks follow the principles of floating interest. Thus the companies' profit margin coincides with the profit for the bank as well. However, with the final payment of the principle amount the profit sharing pact comes to an end.
- Ethical investing is truly endorsed and the prohibition of investing in unlawful business like pornography, and selling of alcohol etc is strictly followed as well.
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