Starting in the Name of Allah, The Most Beneficent, The Most Merciful

MAZHAR ALI BOKHARI

Head of International Operations & Strategic Planning DivisionGULF AFRICAN BANK LIMITEDNairobi, KENYAAt AlHuda CIBE Awareness workshop B.Z University - Multan Phone Nos. +254 20 2740000 / +92 321 4402900Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com

Honorable Guests, Participants, Ladies & Gentlemen.Thank you for giving me the honor of presenting an overview of Islamic Banking

Islam has given an immense importance to trade

The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH).

Importance of Trade in Islam

Before explaining the concept what is Islamic Banking the elaboration of concept why Islamic Banking is very important.Islam is a complete code of life that provides guidance regarding each aspect of life.

WHY ISLAMIC BANKINGThe primary objectives of Islamic Economic System are as under.Equal Distribution of wealthSocial justiceThese objectives can never be achieved in Interest/Riba based economic systems.

WHAT IS ISLAMIC BANKINGNow we come to our core question Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the principles laid down by Islamic Shariah

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking1) Functions and operations are based on Shariah principlesConventional Banking1)Functions and operations are based on fully man made principles

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking2) Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs)

Conventional Banking2) Investor is assured of pre-determined rate of interest

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking3) Aim at maximising profit but subject to Sharia'h restrictionsConventional Banking3) Aim at maximising profit without any restrictions

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking4) Partners, investor and traders, buyer or seller relationshipConventional Banking4) Creditor-Debtor relationship

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking5) Encourage asset-based financing and based on commodity tradingConventional Banking5) Based on money trading. Money is a medium of exchange and not a commodity, its sale and purchase is prohibited in Islam.

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKINGIslamic Banking6) No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss.Conventional Banking6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.

ISLAMIC BANKING PRODUCTS AND SERVICESCurrently available Islamic Banking Products and services arePartnership based modes of financingMusharaka Finance, Mudaraba Finance, Trade based modes of financingMurabaha Finance, Salam finance Rental based modes of financingIjarah Finance, Diminishing Musharaka Finance

MAZHAR ALI BOKHARI

Phone Nos. +254 20 2740000 / +92 321 4402900Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com