Islami Banking is a new type of banking that operates on principles adhering to the Quranic norms forbidding usury and transactions, including granting of loans or credits for interest. The economic rationale for eliminating riba (interest) and establishing the Islamic banking system is based on values of justice, efficiency, stability and growth. It is assumed that under the system of Islamic banking, the industrial and/or commercial risk is shared more equitably between the entrepreneur and the capital owner and the returns on investment are shared among the investors on the basis of their proportionate capital. The conventional banks tend to serve the most creditworthy borrowers, while the Islamic banking system presumably looks for the most productive and profitable projects. The Islamic banking approach theoretically opposes the idea of discrimination in offering banking services to people of different social standings and provides for social cohesion between different classes.
The origins of
Islamic banking can be traced back to the practice of mudaraba by the Prophet Muhammad (Sm) himself.
The Prophet (Sm) was mudarib (agent) for his wife, who entrusted
her capital or merchandise to him for trading and got back the principal plus
an agreed share of the profit. As a reward for his labour (and
entrepreneurship), the Prophet (mudarib) received his share of the same. The
mudarib, however, was not liable for losses resulting from the exigencies of
travel or from an unsuccessful business venture. This form of partnership is
called mudaraba. There is another form of partnership called musharaka, in which the musharik(agent) has a contribution
to the capital and can therefore, claim a higher percentage of profit..
Islamic banking
started in Bangladesh through establishment of the islami bank bangladesh Ltd. (IBBL), which is considered to be
the first interest-free bank in Southeast Asia. It was incorporated on 13 March
1983 as a public limited company under the companies act 1913. al baraka bank Ltd, often called the second Islamic
bank of Bangladesh, commenced banking business on 20 May 1997 There are many
other islami banks in our country, like- Al-Arafah islami bank ltd., Shahjalal
Islami Bank Ltd., Exim Bank, Prime Bank, Social Islami Bank, First Security
Islami Bank etc.