Nurul islam deputy managing director islami bank bangladesh limited. His book, 100% money, was an attempt to win support among academics and. Islamic finance, then, is a financial system that operates according to sharia. The success of the latter led to the establishment of a series of similar banks, including faisal islamic bank sudan and kuwait finance house kuwaitboth in 1977. Just like conventional financial systems, islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies.
Nurul islam deputy managing director islami bank bangladesh limited slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Concept of islamic finance has been considered as a financial system in consonance with the. Islamic banking and finance islamic bankers resource centre. One of the main principles of the islamic finance system is the prohibition of the payment and the receipt of riba interest in a financial transaction. Today, the islamic financial services industry has expanded globally with more than 550 islamic financial institutions and operates in over 75 countries. The islamic financial system is not much different from the products and services in the. Islamic banking, also known as noninterest banking, is a system based on the principles of islamic or sharia law and guided by islamic economics. Shariah and law in relation to islamic banking and finance. Islamic finance is a term that reflects financial business that is not contradictory to the principles of the shariah. Prohibition of riba, a term literally meaning an excess and interpreted as any unjustifiable increase of capital whether in loans or sales is the central tenet of the system. Hopefully the book will present fundamental principles of islamic finance. Each organ in the islamic financial system has distinct clear roles for which.
Islamic finance is a financial system that operates according to islamic law which is called sharia and is, therefore, shariacompliant. Islamic finance is emerging as a rapidly growing part of the financial sector in the islamic world and is not restricted to islamic countries, but is spreading wherever there is a sizable muslim community. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Islamic financial systems international monetary fund. The concept of fisim for islamic banks parallels that of conventional banks. This closes the door to the concept of interest and precludes the use of.
Keywords islamic banking, system of national accounts, fisim, monetary statistics. Islamic banks make a profit through equity participation which requires a borrower to give the bank a share in their profits rather than paying interest. The meaning of risk and its underlying principles 369. The present book is a revised collection of my different articles that aimed at providing basic information about the principles and precepts of islamic finance, with special reference to the modes of financing used by the islamic banks and nonbanking financial institutions. Having given a brief definition of the first source of islamic economics let us now. Nonmotor takaful ranges from fire, personal accident, marine.
The term islamic finance is used to refer to financial activities conforming to islamic law sharia. Current issues and concerns pertinent to islamic banking and. The book presents new and compelling evidence that private capital flows have. As early as the late 1970s, steps were taken in pakistan for making the financial system compliant with shariah principles. The basic principles of an islamic financial system can be summarized as follows. Organization for islamic financial institu tions aaiofi definition of investment sukuk. The islamic financial services industry has developed from the early theoretical writings on interestfree finance in the 1940s1960s into the growing global establishment of islamic financial.