Islamic banking

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Islamic banking

Islamic banking

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Islam is a religion that follows principles and rules guided by the Koran under the Islamic laws (sharia laws). It should be noted that, these laws are also applicable in Islamic banking systems and activities. In this case, Islamic banking are consistent with the sharia laws and principles which states that; there should be no imbursement or receipt of interest fees in case of lending or acceptance of money correspondingly (Abdallah, 1987). A point worth noting is that, modern banking system was introduced in Islamic economies at the time when they were low in terms of political and economic matters. On this basis, most of the introduced banks did not serve the local people as they were restricted in the cities. As a result of nationalistic and religious reasons, foreign banks were avoided by the local trading community. Development in industrialization and civilization led to most of the traders engaging in utilization of commercial banks but strictly avoided borrowing from the banks and depositing their savings (Abdallah, 1987).