Starting in the Name of Allah, The Most Beneficent, The Most Merciful

MAZHAR ALI BOKHARI

Head of International Operations & Strategic Planning Division

GULF AFRICAN BANK LIMITED

Nairobi, KENYA At AlHuda CIBE Awareness workshop B.Z University - Multan Phone Nos. +254 20 2740000 / +92 321 4402900 Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com

Honorable Guests, Participants, Ladies & Gentlemen.

Thank you for giving me the honor of

presenting an overview of Islamic Banking

Importance of Trade in Islam

Islam has given an immense importance to trade The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH).

Before explaining the concept what is Islamic Banking the elaboration of concept why Islamic Banking is very important. Islam is a complete code of life that provides guidance regarding each aspect of life.

WHY ISLAMIC BANKING

The primary objectives of Islamic Economic System are as under. Equal Distribution of wealth

Social justice
These objectives can never be achieved in Interest/Riba based economic systems.

WHAT IS ISLAMIC BANKING

Now we come to our core question

Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the principles laid down by Islamic Shariah

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

1) Functions and operations are based on Shariah principles

1)Functions and operations are based on fully man made principles

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

2) Investor is assured of presharing between provider of capital determined rate of (investor) and user interest of funds (entrepreneurs)

2) Promote risk-

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

3) Aim at maximising profit but subject to Sharia'h restrictions

3) Aim at

maximising profit without any restrictions

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

4) Creditor-Debtor 4) Partners, relationship investor and traders, buyer or seller relationship

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

5) Based on money 5) Encourage trading. Money is a asset-based medium of financing and exchange and not a based on commodity, its sale commodity trading and purchase is
prohibited in Islam.

Islamic Banking

DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING

Conventional Banking

6) No right of profit 6) It is almost risk

if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss. free banking and depositor has no risk of losing its money because interest is guaranteed.

ISLAMIC BANKING PRODUCTS AND SERVICES

Currently available Islamic Banking Products and services are

a) Partnership based modes of financing

Musharaka Finance, Mudaraba Finance,

b) Trade based modes of financing

Murabaha Finance, Salam finance

c) Rental based modes of financing

Ijarah Finance, Diminishing Musharaka Finance

MAZHAR ALI BOKHARI

Phone Nos. +254 20 2740000 / +92 321 4402900 Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com