Islamic banking

Islamic banking

Islamic banking is the kind of banks that built its strategy on the Quran and Sunnah, when you invest your money with the Islamic bank you will bring you closer to God's way, fighting against many social evils that have resulted from commercial banks, will also help the development of your country,

the social well-being of your company, protect your country from any foreign exploitation, show respect to your religion, the fight against the unknown forces that weighed neck onthe hand of all the peoples of the world.

Commercial banks or wear built its economy on usury, which is as old as human history. it was

practiced by some rich people who used to lend money at high interest. These people are now replaced by something called commercial banks, these banks do not differ at all from the previous lender. These exchanges in banks taking money from the low interest rates and give the great interest that the creation of so many economic, social and moral crises.

This is because of these crises that all revealed religions banned usury whish is considered a heinous sin of Islam; reading some sacred texts of Quran and Hadith reveals how heinous sin usury.

God says in the Holy Quran what means "Those who swallow usury can not rise to save as he ariseth that the devil was shot by (his) touch Because they say. Trade is like usury, while Allah forbids you permitteth negotiation and wear. He to whom a warning from his Lord cometh, and (he) refraineth (in obedience to), he must keep (the profits of ) what is past, and his case (below) is with Allah. As for those who do not return (to usury) Such are rightful owners of the Fire they will abide therein (Al-Baqarah: 275) ..

The state of the usurer in this life is just like a man who is touched by the devil, always in disorder, thought, deviated and completely absorbed in his business and its status in the hereafter is greater.

God says in the Holy Quran what means "O you who believe fear, God, and give up what remains of your demand for usury, if you are believers." Quran verse 2:278 (Chapter Al-Baqarah)

Verses like such ("... if you are believers.") Also highlights the seriousness of the offense by exhorting people to obey if they indeed believe that the Muslims.

Quran not only put an end to wear, but it also encourages leniency towards debt as a means of social elevation.

God says in the Holy Quran what means: "Allah will deprive usury of all blessing, but will give increase for deeds of charity: for he does not like ungrateful and the wicked (2/276).

Usury has penetrated into the very structure of our economies and financial institutions. The difficulties became collective.Prophet Muhammad (pbuh) spoke of the coming of a certain age as a sign of the coming of the last day. Mohummed Prophet said "There will come an age when everybody eats usury and those who will be affected by the dust."

The Prophet (peace and blessings be upon him) said: "If adultery and usury spread in a village, the people of this village are demanding the punishment of Allah." The Prophet (peace and blessings be upon him) cursed usury, those who take it, write the contract and those who witness such a contract.

The effects of wear is so broad and non-countable, it has consequences in the long term;

Economic: Dependence on interest discourages people from working / business to make money and the value of labor / trade is reduced. These people will not bother to take the trouble to run a business or risking money in trade / industry. For most readers this statement does not make sense (or will not be able to tell), because they are themselves the class of workers or traders (and not money lenders).

Moral: Acceptance of wear discourages people from doing good to each other and lend goodwill. A society that promotes the interest on loans will require those in need to pay more than he borrowed, which is often a source of enormous burden.

Social: If interest is allowed, the rich (who are most likely to be lender) will exploit the poor (the borrower). Consequently, the rich get richer and the poor are getting poorer. This generates envy and hatred among the poor to the rich, causing social unrest, conflicts and revolutions and movements of both races.

Islamic banking solution makes the rules relating to Islamic finance are quite simple and can be summarized as follows.:

a) Any predetermined payment beyond the actual amount of capital is prohibited.

Islam allows only one type of loan that is qard-el-Hassan (literally good loan) where the lender does not charge any interest or additional amount with respect to money lent. Traditional Muslim jurists have construed this principle so strictly that, according to one commentator "this prohibition applies to any benefit or benefits that the lender could obtain on the qard (loan) such as riding the borrower's mule, eating at his table, or even enjoying the shade of his wall. "The principle derived from the quotation emphasizes that associated or indirect benefits is prohibited.

b) The lender must share the profits or losses from the company for which the money was loaned.

Islam encourages Muslims to invest their money and become partners to share the benefits and risks in the business instead of becoming creditors. As defined in the Shariah, or Islamic law, Islamic finance is based on the belief that the provider of capital and capital utilization should also share the risk of business ventures, whether those industries, farms, service companies or simple trade deals. Translated into banking terms, the depositor, the bank and the borrower should all share the risks and rewards of commercial financing. This is unlike the system based on the interest of commercial banks, where all the pressure is on the borrower: he must repay the loan with the agreed interest, regardless of the success or failure of his business .

The principle that emerges from this is that Islam encourages investments in order that the community can benefit. However, it is not willing to allow a loophole to exist for those who do not wish to invest and take risks but rather content with hoarding money or depositing money in a bank exchange for receiving an increase in these funds safely (other than the bank becomes insolvent).Accordingly, under Islam, either people invest with risk or suffer loss through devaluation by inflation by keeping their money idle.Islam encourages the notion of higher risks and higher returns and promotes it by leaving no other avenue available to investors.The aim is that high risk investments provide a stimulus to the economy and encourage entrepreneurs to maximize their efforts.

c) Making money from money is not Islamically acceptable.

Money is a medium of exchange, a way of defining the value of a thing, it has no value in itself, and therefore should not be allowed to lead to more money , via fixed interest payments, simply by being placed in a bank or lent to someone else. The human effort, initiative and risk involved in a production company are more important than the money used to finance it. Muslim jurists consider money as potential capital rather than capital, meaning that money becomes capital only when it is invested in the business. Accordingly, money advanced to a business as a loan is considered a business debt, not capital and, as such, she is not entitled to a return (ie interest). Muslims are encouraged to purchase and are discouraged from keeping money idle so that, for example, hoarding is considered unacceptable. In Islam, money represents purchasing power which is considered the only proper use of money. This purchasing power (money) can not be used for purchasing power (money) without undergoing the intermediate step of it being used for the purchase of goods and services.

d) Gharar (uncertainty, risk or speculation) is also prohibited.Under this prohibition any transaction entered into should be free of uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values ​​to be exchanged as a result of their operations. In addition, the parties can not predetermine a guaranteed profit. This is based on the principle of 'uncertain gains' which, on a strict interpretation, does not even allow a customer commitment to repay the borrowed principal plus an amount to take inflation into account. The reasoning behind the prohibition is the wish to protect the weak against exploitation. Therefore, options and futures contracts are considered un-Islamic and are forward foreign exchange transactions because rates are determined by interest differentials.

A number of Islamic scholars disapprove the indexation of debt inflation and explain this prohibition within qard-el-Hassan.According to these researchers, the progress of creditors ready to win the blessings of Allah and expects to obtain the reward from Allah alone. A number of transactions are treated as exceptions to the principle of gharar: sales with advanced payment (bai 'Bithaman AJIL) contract to manufacture (Istisna) and Lease (Ijara). However, there are legal requirements for entering into these contracts to be organized in a way that minimizes risk.

e) Investments should only support practices or products that are not prohibited or even discouraged by Islam. Trade in alcohol, for example would not be funded by an Islamic bank, a mortgage could not be made for the construction of a casino, and the bank could not lend money to other banks interest.