Wednesday 16 April 2014

How Islamic Banking System Works

By John B. Berry


Islamic Banking systems are different from other conventional banking systems in ways that their products are free from 'Riba' consistent with Islamic concepts and guidelines. These banking systems operate uniquely keeping the preferences of customers in mind. Because of this, the money items must be handled with extra care considering the fact that the clients do not get hurt from religious point of view.

Characteristics of Islamic Banking Services

Islamic Banking Products are designed particularly for Muslims. There should be some exclusivity so that the consumers can think that there is nothing irrational in their transactions. Nature of the Islamic Banking system should inspire the customers to keep their money in these banks rather than ordinary banks. Similarly, people intrigued to take advance could rather strive for Islamic home loan instead of ordinary mortgages from the conventional banks.

Among Muslims, premium is known as "Riba" or usury or abnormal interest rate. Riba is completely illegal in Islam that implies there should not be any contribution of premium in installments or credits. The Islamic banking scheme perceives lending money in different way. Taking money from bank indicates an agreement between the bank and the customer. The borrower runs the business and the bank oversees. The revenue is divided between these 2 parties in a prefixed rate. In this way Islamic Banks avoid the term premium.

Some financing movement ideas were created throughout the unanticipated phases of Islamic Banking; these include diverse manifestations of organizations "mufawada" that is the first kind of relationship, "mudaraba" restricted manifestation of business and "al-mal" capital concepts. Many these money related ideas that were created in the Islamic managing an account stages are still in practice in conventional non-Islamic banks.

Tailored to belief

Many people with Islamic essence do not feel it comfortable to keep their money in savings accounts. But this money contributes a huge portion to a country's economy. Capital is the heart of all businesses. Banks survive on this money. This kind of savings money contributes to other forms of financial matters in banking system. So, banks always want to encourage customers to keep their money in savings accounts.

Islamic Banks should promote their products so that common folks can distinguish Islamic form non-Islamic products. Many Muslims are still using conventional banking systems. So appropriate advertising may assist to change their minds.

These items needs to be advertised in such a route, to the point that Muslims using the Western style of banking items might also movement towards the Islamic Products. There may be number of methods for the advancement of these items.

Online Banking

Almost every bank is now allowing clients to manage their accounts online. It is also known as web managing an account. This well-known option allows the user to make transactions at the comfort of home. It is very secure, fast and affordable method of banking. In emergency cases you may take advantage of your bank account from a long distance away.

OCBC is one top ranked Islamic Bank in this area. You may trust this Bank if you really want to manage your money as per "Shariah". They also offer you credit cards with stunning deals to provide you true Islamic Banking experience.




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