Interesting Contents Of Islamic Banking
Recently, the international interest in Islamic Banking has been strongly rising all over the planet, probably also due to the current financial turndown. No wonder, as up to now too many cultural barriers had been erected, so that everything but the real values of this financial system had been absorbed by Western Countries.
Now that capitalism is showing its weak aspects, numerous international financial institutes, brokers and companies are approaching Islamic Banking principles, which could become a real surprise in terms of opportunities for the future.
The most general value which Islamic Banking is based on is perhaps the one about the responsibility in financial business that must be shared between/among the parts. This means that up to the end of a certain operation every part involved will take on its shoulders a part of responsibility, that is in proportion with one’s corresponding share.
Islamic investment
Let’s make a practical example: Hibah (free gift), is a very usual practice by means of which a person or a bank issues a loan and fixes together with the debtor the terms and conditions of refund, that can take place in several steps or just in a single instalment. What’s new? You would answer: Nothing, up to now! But, and here comes the amazing difference with capitalism, there are no interests to be repaid! Yes, it’s true, as interests are viewed as usury and consequently not permitted by Islamic Banking. On the contrary, a creditor can be given a free gift, (Hibah) that is selected by the debtor and can be of any kind. Not rarely can happen that the debtor is unable to offer his/her gift at the right time: he can delay Hibah or communicate that he/she has got some difficulties about it. No problem, he/she does not suffer any legal proceedings from the creditor, as nobody can be sure of getting Hibah.
Moreover, Islamic Banking rejects every form of business which it evaluates morally and socially prejudicial on the basis of its specific code of values.
Another firm concept in the “basic tissue” of Islamic Banking is wisdom: but how does this psychological aspect find a place in a financial system, where we have been steadily getting used to worry just about the best output by means of the least effort? Not in the case of Islamic Banking: here it comes to wisely administrating one’s possessions, which also means not to gather too much. Indeed, assets must circulate with a certain balance, i.e. charity is a fundamental obligation for Muslims, who, according to the Ku’ran, are to offer something periodically to the needy. Really, Islam tends to the benefit of the community by putting into practice
the Zakat (“charity to the poor”) process. Nevertheless it is possible to own one’s wealth, but one must manage it wisely.
This concept has a double aim: on one hand it targets at ensuring the community acceptable standards of life (thus fighting poverty) whereas, on the other hand, it strongly intends to avoid the excessive stockpiling of assets in the hands of a low number of individuals.
However, a number of precise technical examples of Islamic Banking’s regulations and their essential discrepancy in comparison with capitalism will be discussed in the following post.
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