Islamic Banking

Islamic Banking is a banking system that was developed based on the sharia (law) Islam. Business establishment of this system is based on the prohibition in Islamic religion to pick up or borrow with interest or so-called ban on usury and investment for businesses classified as haram (ie business relating to the production of food / drink unlawful, efforts are un-Islamic media, etc. ), where this can not be guaranteed by the conventional banking system.

Islamic banking first appeared in Egypt without frills Islam, because of concerns that the ruling regime as it will see it as a fundamentalist movement. The leader of this pioneering effort Ahmad El Najjar, took the form of a savings bank based on profit sharing (profit sharing) in the town of Mit Ghamr in 1963. This experiment lasted until 1967, and then it was up 9 banks with a similar concept in Egypt. These banks, which does not collect or receive interest, mostly invested in businesses and industry trade directly in the form of partnership and share the profits with savers.

The principle is the rule of sharia Islamic law based on agreement between the bank and other parties for storage of funds and / or financing activities or other activities in accordance with sharia.

Some of the principles / laws adopted by the Islamic banking system, among others :

* Payment of loans with different value of the loan value with a predetermined value is not allowed.
* Giving money to contribute to share profits and losses as a result of institutional efforts to borrow funds.
* Islam does not allow the "make money from money". Money is only a medium of exchange and not a commodity that has no intrinsic value.
* Element gharar (uncertainty, speculation) is not allowed. Both parties must know very well the results they would get from a transaction.
* Investments should only be given to efforts that are not forbidden in Islam. Such liquor business should not be funded by Islamic banks.