Quote:
Originally Posted by cyraaa
what are the differences between islamic banking and commercial banking conceptually and operationally ...other then interest ?
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On liability side Islamic Banking mobilizes funds on the basis of Mudarabah or Wakalah (agent) contract rather than on the basis of markup as done in conventional banking. On the assets side, it advances funds on a profit-and–loss sharing or a debt-creating basis in accordance with the principles of the Sharīah. Islamic banks play the role of an investment manager for the owners of time deposits, usually called investment deposits. An Islamic bank shares its net earnings with its depositors in a way that depends on the size and date-to-maturity of each deposit. Mobilization of funds and Profit and Loss sharing is the key in Islamic Banking.