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Complete Information About Islamic Banking And Its Principles



DEFINITION OF BANK :
There are different kinds of banks performing various types of functions hence a general and comprehensive definition of a bank should have its own definition .

 ACCORDING TO DR HERBERT L . HART :
   "A banker includes a body of persons whether in corporate or not who carry on the business of banking ."


ISLAMIC BANKING :
The first modern Islamic bank established in Eygpt 1972. Islamic accounting , an essential tool for the success of Islamic banks , is to have been developed con-temporaneously at the University of Cairo. Islamic bank is also known as Non interest bank . 




Islamic banking is based on principles of  Islamic or Sharia law.Islamic banking operations are not limited to Arab soil , or Islamic countries but are spreading throughout the world . People are taking more interest towards Islamic banking . The reason may be the growing trend towards transecting national boundaries . Since Muslims are inclined to follow Islamic traditions , there is a tendency to establish an Islamic economic system in every Islamic nation and to restore Shariah Law as the basic source for legislation.
Principles of Islamic banking guide us to invest in an industry that will help us to achieve the financial and social objectives that have been determined by Islam .Interest free banking is a fundamental concept derived from the Islamic form of banking .
During the last decades , financial instruments used by Islamic banks have developed significantly both on assets and liability side.
Many instruments have been mobilize financial surpluses . 

 PRINCIPLES OF ISLAMIC BANKING :
There are 6 basic principles of Islamic banking :

  1. Profit and loss sharing 
  2. Shared risk 
  3. Riba
  4. Gharar
  5. Gambling
  6. Zakat 


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