“Studies at AIMS sets a very good knowledge and understanding for anyone willing to join the corporate world. Bankers who are employed by institutions that abide by Islamic banking are entrusted with not deviating from the fundamental principles of the Qur'an while they are conducting business. Contemporary Islamic finance is based on a number of prohibitions that are not always illegal in the countries where Islamic financial institutions are operating: The Islamic laws are known as Sharia that means clear path. The mark-up in murabahah is part of the sale price, it is … Islamic Banking and Sharia Law . These programs are offered by institute of Islamic banking and finance at AIMS. Islam has set values and goals that meet all the economic and social requirements of the human life. Some conventional banks have windows or sections that provide designated Islamic banking services to their customers. One of the primary differences between conventional banking systems and Islamic banking is that Islamic banking prohibits usury and speculation. Islamic banking, also referred to as Islamic finance or shariah-compliant finance, refers to finance or banking activities that adhere to shariah (Islamic law). Islamic Banking stands apart from conventional banking in four key areas: a strict prohibition on charging and receivinginterest, adherence to ethical standards in investments, a focus on investments with moral or social values at their core, and a structure of shared risk. So it will improve the economic activity of the state. In the economic transactions, the risk sharing is promoted by the Islamic banking. Any predetermined payment over and above the actual amount of principal is prohibited. Islamic Banking in Nigeria: Problems, Principles & Prospects. Islamic finance strictly complies with Sharia law. Two fundamental standards behind Islamic banking concepts are the sharing of benefit and misfortune. While an Islamic bank is one that is entirely operated using Islamic principles, an Islamic window refers to services that are based on Islamic principles that are provided by a conventional bank. The main source of Sharia law is the al Quran, which prohibits any money that is far above the principle amount in the lending business by terming it haram and hence illegal. It can be regarded as the prohibition of interest: According to the Islamic finance principles, Muslims are not allowed to participate in the ambiguous and uncertain transactions. As discussed earlier, the Qur'an provides basic guidelines for different aspects of life. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. For the early proponents of modern Islamic banking and finance, mudarabah, along with musharakah that you will learn in the next section, was to become the main vehicle for business transactions replacing interest. There will be no guarantee on the rate of the returns that the Muslims will play the part of a partner and not a creditor. Islam is a religion that not only focuses on the success of the afterlife but also organza the life of a person perfectly. There is a property tax included in the rules of Islam that it known as Zakat, which allows the balanced distribution of wealth. The practices of Islamic banking are usually traced back to businesspeople in the Middle East who started engaging in financial transactions with businesspeople in Europe during the Medieval era. At first, businesspeople in the Middle East used the same financial principles as the Europeans. PRINCIPLES OF ISLAMIC BANKING The Islamic banking system follows certain, yet simple, rules set by the Qur’an and the Shari’ah (Islamic law), which if deviated from the system becomes un-Islamic. As a result, they typically avoid business that could be associated with economic bubbles. In addition, national interest-free banking systems have been developed by the governments of Iran, Sudan, and (to a lesser extent) Pakistan. If the business defaults or does not earn a profit, then the bank also does not benefit. Price includes a known profit or mark-up. Two fundamental principles of Islamic banking are the sharing of profit and loss, and the prohibition of the collection and payment of interest by lenders and investors. In the present is banking system is against the principles of Islamic banking. Principles of Islamic finance are discussed in more details during Certified Islamic Finance Expert (CIFE) a well known Islamic finance certification and diploma in Islamic banking , where you study Islamic banking courses. They include: According to the Islamic finance principles, you are not allowed to invest in such industries. In Islamic banking it has become a term for both a marked-up price and deferred payment — a way of financing a good (home, car, business supplies, etc.) When Mit Ghamr loaned money to businesses, it did so on a profit-sharing model. The principles of Islamic banking are derived from the Qur'an–the central religious text of Islam. 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