Islamic banking refers to a banking system that is based on Islamic laws (Sharia'h) and principles. Islamic law bans usury or interest, the collection and payment of interest, also commonly called riba. Islamic finance system has been gaining reputation on global scale for the last 30 years. There are lots of Islamic banks started to work in many countries of the world not only in Islamic countries as well as in non Muslim countries also. It is very amazing that Islamic banking system is sought by both non-Muslims and Muslims because of the profit they got from it.
It was learnt that Islamic banking industry size is currently estimated at more than $400 billion, with projected growth of 15% per year. Financial companies around the world are trying to keep rapidity with the growing demand for Sharia'h compliant products and services.
If we explore the history we would find Dubai Islamic Bank, the first interest free bank of history which was set up in 1975 by group of Muslim businessmen. In 1977 Faisal Islamic Bank came into existence.
In Pakistan first Islamic bank was tried in late fifties but that time this idea was not succeeded. In 1962 the government of Malaysia set up the "Pilgrim's Management Fund" to help future pilgrims to save and profit. These ideas of saving banks were very much famous in Muslim countries.
In the ten years since the establishment of the first private commercial bank in Dubai, more than 50 interest-free banks have come into being. Though nearly all of them are in Muslim countries, there are some in Western Europe as in Denmark, Luxembourg, Switzerland and the UK. Many banks were established in 1983 and 1984.
In most countries the establishment of interest-free banking had been by private initiative and was confined to that bank. In Iran and Pakistan, however, it was by government initiative and covered all banks in the country. The governments in both these countries took steps in 1981 to introduce interest-free banking. In Pakistan, effective 1 January 1981 all domestic commercial banks were permitted to accept deposits on the basis of profit-and-loss sharing (PLS). New steps were introduced on 1 January 1985 to formally transform the banking system over the next six months to one based on no interest. From 1 July 1985 no banks could accept any interest bearing deposits, and all existing deposits became subject to PLS rules. Yet some operations were still allowed to continue on the old basis.
Now the concept of Islamic banking is nourishing in Pakistan and all over the world. There are lots of conferences and seminars conducted regarding Islamic banking and finance in the whole world. In next month a seminar was going to held in Islamabad where Islamic scholars of banking and finance would deliver lecture on different modes of Islamic banking and finance and also guide the Pakistani economists how they can take benefits of Islamic banking and finance system in Pakistan. Every one can participate in this conference just you have to register first. You can register online ( Click here to register ) at the official website of the event.
University Of Management And Technology Umt Lahore
Punjab University PU Lahore
Punjab University College Of Information Technology Lahore
Allama Iqbal Open University (Aiou) Islamabad