islamic banking

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Transcript of islamic banking

  • 1. Presentation onIslamic Banking
    • Presented by : Ramesh Sharma (B-28)
  • Rohit Mishra (B-39)
  • Prabhat Mani Tripathi (A-20)

2. History of Islamic finance

  • 1500 years of development.
  • During Classical period, commerce flourished under Islamic commercial law.
  • Development languished under impact of colonialism and huge Western firms.
  • Revival began in 1960s.

3. Inception of Islamic Banking

  • Dubai Islamic Bank - 1975
  • modest beginnings
  • Initiated by businessmen who did not want to deal with interest based system
  • Hostile environment

4. History of Islamic finance

  • Increasing rapid growth and sophistication.
  • Challenged by conventional banking system
  • Lack of public awareness

5. Success Story

  • 300 + Islamic financial institutions
  • $ 500 - 800 bn in funds
  • Islamic banking by major academic institutions

6. Success Story

  • Important database system (HIFIP)
  • Standards for the Industry (AAOIFI)
  • Recognition by IMF, World Bank and Basel Committee

7. Important Reasons for Global Interest in Islamic Banking

  • Good opportunity for investment
  • Challenge to the conventional interest-based Capitalistic System
  • Demand of Muslim population in many countries outside the Muslim world.

8. 9. Islamic Finance Today

  • Widely used and flexible tool in international finance.
  • Devout Muslims have been locked out of many individual financial vehicles.
  • Many personal alternatives now available

10. Religious/Ethical/Legal

  • In the West, Religion/Ethics/Legal only loosely overlap.
  • IslamicShariaaencompasses all three.
  • Shariaais the body of islamic principles with respect to lifes activities.

11. Religious/Ethical/Legal

  • Derived from three sources:
      • Quran , revelations from God.
      • Sunnah , authenticated sayings and actions of the Prophet (Peace be upon him) .
      • Fiqh, collection of interpretations / rulings / precepts based on the Quran and Sunnah.

12. Difference between Islamic and Conventional Modes of Finance Bank Client moneymoney + money (interest) Conventional 13. Difference between Islamic and Conventional Modes of Finance Bank Client Islamic Goods & Services money 14. Structure of Hierarchy 15. Major Contracts Used in Islamic Banking

  • Buying & Selling
  • Mudaraba:Investment management
  • Musharaka:Partnership
  • Ijarah : Leasing
  • Wakalah : Agency
  • Istisna:Contract of works

16. Objective Of Islamic Banking: Banking WithoutRiba 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 17. Principles Governing Islam Aqidah (Faith and Belief) Shariah (Practices and Activities) Akhlaq (Moralities and Ethics) 18. Shariah Requirements

  • Avoidance of prohibitions
  • Ensuring that the contract have all their essentialelements with their necessary conditions

19. Shariah Requirements

  • The prohibitions are:
      • Producing and trading of impure materials,
      • Producing and trading of materials which are of no use,
      • Gharar,
      • Riba ands
      • Involvement of gambling

20. Strategies

  • Financial services are growing fast in the world.
  • Year 1998 the finance institution and insurance represented 7.98% from GDP of UAE
  • Year 2001 the finance sector had grown to reach 11%, which shows the level of financial services in the country.
  • This presentation includes information about thePESTAnalysis

21. Focus Areas 22. Worldwide Statistics 23. 24. Market Performance 25. Strategic Difference 26.

  • Principles & values
    • Known and trusted for our high standards of corporate responsibility, we are committed to building a sustainable business through social inclusion, environmental protection and good governance.

27. PEST Analysis

  • Political Factors
  • Economic Factors
  • Socio culture factors
  • Technical Factors

28. Five Forces Model

  • Threat of New entrants
  • Rivalry among Existing firms
  • Bargaining power of buyers
  • Bargaining power of suppliers
  • Threat of Substitute products or services

29. Threat of New entrants

  • Economy of Scale
  • Product Differentiation
  • Legal Barriers

30. Rivalry among Existing firms

  • Equally balanced
  • Competitors
  • Lack of differentiation
  • Diverse Competitors

31. Bargaining power of buyers

  • Size of buyers
  • Differentiation
  • The buyer has full
  • information

32. Bargaining power of suppliers

  • Concentration or Size of Suppliers
  • Differentiation
  • Switching costs
  • Threat of Substitute products or services

33. 34. 35. Thank you..