Presented by : Padmakar Tapal (B- )

Rupesh Nagwekar (C-30)

Nitin Pathade (C-31)

Amey Parab (A- )

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) . Sharia prohibits, (Riba, usury) . i.e, interest free business

The main objective of an Islamic Bank is to prohibit Muslims

from dealing with interest or usury (Riba) which has been

strictly prohibited by Allah, and to protect them from one of

the biggest sins

Dubai Islamic Bank Statement

Shari’ah Islamic law

Riba Interest

Hiba profit

Ta'widh Compensation

Ujrah Payment in exchange for services, benefits and privileges offered to the customers

Sukuk the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds

'Islamic banking opens job options' - Times Of India - 31 Jul 2012

Tweak laws to allow Islamic banking: RBI - The Times of India - 4 Oct 2012

'Islamic banking not feasible in India' - Indian Express - 27 Mar 2012

Islamic banking in India: Will it open a Pandora's box? Video: NDTV - 8 Jun 2012

Bank Client

money

money + money (interest)

Conventional

.

Bank ClientGoods & Services

money

Islamic

DIFFERENCE IN CONVENTIONAL BANKING BALANCE SHEET AND

ISLAMIC BANKING BALANCE SHEET

Assets LiabilitiesLoans and advances to customers Customers’ deposits

Cash and cash balances with other banks

Due to banks and other financial institutions

Investments in associates, subsidiaries andjoint ventures

Other liabilities

Financial assets held for trading Sundry creditors

Cash and cash balances with the central bank

Equity and reserves

Application of funding Sources of funding

Cash balances Demand deposits (amanah)

Financing assets (murabaha, salam, ijara,istisna)

Investment accounts (mudarabah)

Investment assets (mudarabah,musharakah)

Special investment accounts (mudarabah,musharakah)

Fee-based services (ju’ala, kafala, and soforth)

Reserves

Non-banking assets (property) Equity Capital

Shari’ah Islamic law

Riba Interest

Hiba profit

Ta'widh Compensation

Ujrah Payment in exchange for services, benefits and privileges offered to the customers

Sukuk the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds

Deposits available

• Riba as interest (differences among Muslims)

• Interest in all forms prohibited

• All interest-based transactions should be avoided

• Interest-based transactions are seen as ‘unjust’: risk on the borrower

Basic Framework:Prohibition of Riba

Islamic banks can give inclusive growth along with control over inflation.

Equity finance is extended by lower cost of credit.

It provides equitable share of profit.

It provides small amount of loans

EnglandHSBC, Lloyds TSB

Malaysia, Cambodia, SingaporeCIMB

CanadaRoyal Bank of Canada

Banks with Islamic Portfolios

Islamic banking being a young concept can help development of poor economy.

Though having few draw backs it has its own advantages to stand on.