Thursday 16 September 2010

Islamic Banking - Frequently Asked Questions

Islamic Banking

Q: Is Islamic banking meant for Muslims only?
A: No. Islamic banking is for all individuals regardless of their religious beliefs.

Q: What are the differences between Islamic and conventional banking?
A: The most important difference between Islamic and conventional banking is that Islamic
banking must follow the Shariah. Islamic banking must also avoid activities such as riba’ or
gharar (excessive uncertainty). For example, instead of charging interest on financing given
out, Islamic banks give financing based on musyarakah and will share any profit and loss.

Q: How do Islamic banks and IBS banks reward their depositors since payment of interest
is not allowed?
A: In Shariah, there are many ways to share profit or returns between a bank and its
customers. For example, in a deposit product, profits from a deposit arrangement will be
shared between a bank and its depositors based on an agreed ratio and paid as dividends.
Shariah also allows a bank to give hibah (gift) to its depositors as it deems fit.


Q: Where can I get Islamic banking products and services?
A: Islamic banking products and services are offered at any bank that offers shariah services, i.e HSBC, Islamic Bank of Britain.


Q: Where can I make a complaint if I am not satisfied with the services provided by an Islamic
bank or an IBS bank?
A: You should contact your bank if you have any complaints. All Islamic banks and IBS banks have
set up a Complaint Unit to deal with customers’ complaints. You can get the information on
the contact person, telephone number and email address of a bank’s Complaint Unit


Glossary


Gharar - An unknown fact or condition. An element which must be avoided in Islamic banking
dealings as excessive gharar may make the contract null and void.

Riba’ - The amount paid or received over and above the principal in a loan contract.

Shariah - The Islamic law which came from various sources – the Quran, the Hadith, the Sunnah,
ijma’ (views collectively agreed by Muslim scholars), qiyas (analogy) and ijtihad (personal
reasoning) of the Muslim jurists.