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A.L.M Abdul Gafoor: Islamic Banking and Finance: Another Approach

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Sun, 2007/07/08 - 22:21 by Muslim Investor

The salient features of the proposed system are:1) There is no interest on deposits, but capital is guaranteed.2) Lending and investing are treated differently; loans are interest-free but carry a service charge, while investing is on a profit-and-loss-sharing (mudaraba) basis.Commercial banks will grant loans but they will not engage in investment-financing. Investment-financing will be done through investment banks and investment companies.3) Value erosion of capital due to inflation is compensated.

With these features the proposed system simply avoids the many problems faced by Islamic banking as practised today, including its inability to set up and operate interest-free banks in most countries of the world.The problem of inflation is not explicitly treated by any system of banking, but it is a general problem and is treated as such in the third book.The system can be considered as consisting of several independent modules.And, one or more could be implemented at a time, according to the requirements of a given situation.

A.L.M Abdul Gafoor: Islamic Banking and Finance: Another Approach.

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