Saturday, 23 March 2013
Islamic Banking vs. Conventional Banking
Islamic Banking is based upon Shariah foundation. So, all the dealings, transaction and responsibilities are derived from the Shariah law. Islamic Banking lacks interest-based (riba) transactions and it promotes risk sharing between investors and entrepreneurs. It gives key importance to public and aims to ensure growth with justice.
But conventional banking is based upon fully man made principles. Its primary function is to lend money and to get back it with compound interest. Conventional banks give importance to client’s trust-worthiness and it maintains creditor and debtor’s relationship with the clients. Most of the conventional banks make use of money which leads to inflation.