Islamic Banking

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Islamic Banking

A system of banking that only offers products that conform to the sharia, or Islamic law. For example, in Islamic banking, checking and savings deposits do not accrue interest. They either lie dormant until withdrawal or are invested. Because this involves higher risk than conventional banking services, various highly technical products have been developed to mitigate risk and generally imitate "regular" banks as much as possible while still complying with Islamic law. Considerable debate exists as to whether these Islamic banking products are in fact sharia-compliant.
References in periodicals archive ?
The deal included arrangement of PKR 6 billion under Musharakah (Shirkat ul Milk) Finance Facility with a consortium of local banks and a foreign debt component of USD 134 million being provided under Ijarah Finance Facility by Asian Development Bank ("ADB") and Islamic Development Bank ("IDB") whereas NBP has acted as Inter-creditor Agent for both local and foreign lending group.
Musharakah is mainly used in projects where the customer can finance their projects partially.
6 billion ($980 million) Musharakah Syndicated Facility for Emaar Malls.
The outlook for the Islamic banking industry in South Africa is bright, given various measures undertaken by the regulators to develop the industry - (1) South Africa is currently in the process of introducing tax neutrality laws for Mudharabah, Murabahah and diminishing Musharakah, and (2) The National Treasury envisages South Africa being a central hub for Islamic product development and ensuring the rollout of such products into African markets.
The Islamic concepts of Musharakah and Mudarabah, for example, target value creation and are good ways of managing risk.
Products include Wadiah - where the bank acts as the safe-keeper of deposits but may provide returns to the depositors as a gift; Murabahah, or partnership and equity financing; Ijarah - leasing; Musharakah - partnership and Bay' Bithaman al-Ajil - sale by deferred payment.
They include financial instruments and products such as mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (benevolence/welfare loans), and istisna (progressive payments).
John Sfakianakis, chief economist at Banque Saudi Fransi, said pri- vate securities investment included Musharakah, an Islamic financing under which a bank provides capital to a joint-venture and gets a share of profit.
John Sfakianakis, chief economist at Banque Saudi Fransi, said private securities investment included Musharakah, an Islamic financing under which a bank provides capital to a joint-venture and gets a share of profit.
Ijarah, Murabahah and Musharakah have been the main types of structures, accounting for almost 80% of the total issuance.
There are two bonds available to cater to this need--the sukuk (Malaysia) and the musharakah mutanaqisah, both of which are being discussed and reviewed by Shariah scholars.
Maheran Mohd Jaffar, with Shaharir Mohamad Zain and Abdul Aziz Jemain, "Perkembangan Model Matematik Pelaburan Islam Berkonsep Musyarakah," = "Developing a Mathematical Model of Islamic Investment based on the Concept of Musharakah," presented by Maheran M.