SHARIA BANKING
SHARIA BANKING

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Sharia Banking gives you access to the Sharia Banking. Thanks to Shariabanking.com find the best banking services following the principle of islamic banking.

Sharia Banking has been experiencing extraordinary developments in several islamic countries and Europe. In some countries this sharia compliant banking system has been enjoying an average growth-rate of 40.2 percent per year from 2007 to 2015.

All over Europe Islamic banks are establishing branches, western banks are offering Sharia-compliant financial services, and European governments are trying to outcompete each other in welcoming them.

Sharia Banking, other than being in accordance with the principles of Islamic Shariah, because of its ethics offers great financial transparency due to the traceability of financial flows and a solid Islamic transaction structure. An Islamic financial transaction should always be based on an existing asset and not on any speculation that would create risks as conventional derivatives do.

Islamic law equates the interest rate with usury. Islam prohibits Riba, an Arabic word meaning both wear and interest. The prohibition of interest rates (Ribâ) in Islamic law was born in Arabia in the Middle Ages; it became the basis of Islamic finance, which will develop remarkably during the last century.

Islamic law applied in the finance sector is based on specific foundations. Four main criteria govern Islamic finance:

  • Principle of the absence of Riba or interest and wear.
  • Principle of the absence of Gharar and Maysir or uncertainty and speculation.
  • Principle of the absence of Haram or illicit products according to the Koranic law.
  • Principle of solidarity with the obligation to share profits and losses.

In Islamic finance following financial products are existing:

  • Islamic credit or loan, including the Islamic credit or payment card.
  • Current account and Islamic bank deposit.
  • Islamic savings and Islamic placement. .
  • Islamic insurance.
  • Financing of companies by Islamic bonds, called Sukuk.
  • Islamic participative financing or Islamic crowdfunding is beginning to be established as a means of financing by the public (crowd) and this on the basis of sharia. This new financing which tends to separate from the banks, is followed recently by a revolutionary instrument for bank transactions which is called blockchain (block chain) system infallible coded and which allows a better traceability within the framework of Islamic sharia.

Sharia Banking or Islamic Finance overarching principle is that all forms of interest are forbidden. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits between them. The main categories within Islamic finance are: Ijara, Ijara-wa-iqtina, Mudaraba, Murabaha and Musharaka.

TYPES OF SHARIA BANKING PRODUCTS

Murabaha or sale with profits: the borrower or the bank buys the goods or the product from the supplier following the order of a customer to sell them to the same customer with a profit margin fixed in advance. The repayment period depends on the income and varies between 6 and 24 months.

Ijara or commission is similar to leasing or leasing. The bank buys the goods (or equipment, real estate, vehicle). She then rents them to the client. The customer becomes the owner of these goods when he has finished repaying the amount that will be staggered over time and paid into a savings account. The customer pays a rental. Taajir, lease or lease means that the bank buys the material equipment and makes it available to a contractor against a fixed fee. The customer becomes the owner of the goods or vehicle at the end of the refund.

In the Bai Mouajjal or deferred sale means that the bank buys equipment / materials for resale in the long term to the co-contractor on the basis of a medium-term contract (two to five years). In export-import operations, the bank buys goods from an importer for resale to an exporter. Investment transactions concern medium and long-term loans.

Moucharaka is a participation of a bank in the capital of a project, each party receiving profits in proportion to its contribution.

The Mudaraba is a trust fund, it is a contribution to working capital. The bank participate in a project by a capital injection. The project proponent provides his work and can make a capital contribution. Profit sharing is agreed between the parties, and losses are borne by the provider of the funds, unless there is fault, negligence or breach of conditions accepted by the bank.

The Sukuk which corresponds to the Islamic placement in bonds. Compared with traditional bonds, the Sukuk gives the buyer access to a share of the assets and thus the profits he will receive instead of interest.

Musharaka is a investment partnership in which profit sharing terms are agreed in advance, and losses are pegged to the amount invested. Under the 'diminishing Musharaka' the Islamic version of a mortgage, the bank and the customer purchase the property together. The customer must make monthly payments to the bank and pay a monthly rental fee, both based on the portion of the purchase price the bank still owns.

SHARIA BANKING AND INDEBTEDNESS

In Muslim countries, and non-Muslim countries where large Islamic communities live, the phenomenon of indebtedness is growing.

Many Muslim borrowers fall into the trap of over-indebtedness caused by both the used RIba and an attitude of consumers who lose sight of their available budget.

Many Muslims with bad credit score then turn to Islamic finance to find a solution to their debt problems by asking for example for an islamic debt consolidation.

This form of Islamic refinancing could not be viable because of its contradiction even with the principles of Islamic finance that cannot afford to acquire debts whose origin is the use of Riba.

Shariabanking.com has selected a list of or islamic products and islamic banks allover the word offering sharia banking financial services.

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