Tag: Criticism on Islamic Banking

Is Conventional Mortgage Halal

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Conventional banks only provide loans no matter whether the loan amount is used for purchasing assets or not. As far as repayment of debt is considered in conventional finance lease or mortgage loans, the interest is due from the very first date of sanction of loan till the very last. If the asset remains unusable during the conventional finance lease, the instalments including interest and principal repayment will continue without any break. If interest amount is not paid on time, then interest has to be paid on accrued interest along with financial penalties. Compounded interest can multiply exponentially.

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Clarification of Some Misunderstandings about Islamic Banking

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Islamic Banking

When a common person tries to form an opinion about Islamic banking, he hears cliché sayings about Islamic banking, such as ‘Currently, Islamic banking and finance are not truly Islamic’, ‘It is only changing of conventional terms into Islamic terms’ and ‘Islamic banking is an oxymoron as banking cannot be Islamic’. This brief article discusses some points that will help in better understanding Islamic finance and Islamic banking in particular.

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Realist and the Idealist Schools of Thought in Islamic Banking

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Inclusivity, equitable distribution of resources and socio-economic mobility do not determine Shari’ah compliance or validity. However, these visionary goals are the aspirations of many people in academics and public at large. The realists contend that the visionary objectives of equitable distribution of income will be taken care of in the long run by Islamic social finance institutions, such as Zakat and Waqf. Islamic banks as one part of Islamic finance ecosystem will continue to serve the short term financing requirements of clients and for which debt based Islamic modes of financing are the suitable options.

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