Islamic banking: an ethical alternative to conventional banking



our iron bank is a Shriya compliance bank and that means that our banking products are compliant with Islam and the teachings of Islam so there is an Islamic financial model which means that we do not pay or do not receive interest on any of the products that we offer we are an ethical bank in such that we're very transparent we don't engage in any speculative banking transactions like conventional banks would we don't do any derivatives any futures any swaps any auctions or anything like that we invest our customers money deposits in asset backed transactions and also in commodities such as non precious metals we don't invest in any arms related any pornography related we don't invest in any gambling any tobacco or any alcohol related to the activities and we do not invest in any interest-bearing activities as well so this is fundamentally different to the way that conventional banks actually operates you go back to 2008 when you saw the world banking crisis those banks that base their work on Atlantic financial models very far better than conventional banks what happened in 2008 and 2009 is that people personally individually reviewed how they do their banking and a lot of people not all but enough people became tired with conventional banks in those times I remember a lot of non-muslim customers leaving the bank the branch you know that peds branch of aglet and idly coming to us saying we've been to this Bank so for so long but we looking for alternatives now tell us how you do it we appeal to both the Muslim market and an ombudsman market we appealed to Muslims because we are Shariah compliance we appeal to non-muslims partly because were ethical which has been a big growth within the UK and across Europe but also we appeal to non-muslims because we're extremely competitive seventy percent of customers that came to us last year via our online channels manometers we've got about 10 percent approximately non-muslim customer the rest of them are like 70 60 70 for some Arabic customers there are some of the largest local customers everybody who works for us obviously has a an understanding of the principles that should be a compliant finance and of the ethics of the bank but you know they could have any background face or or none at all we have two additional levels of supervision over and above all other British banks within the UK so we have we have standards all that risk compliance control functions and we also have shirai supervisory committee which is made up of eminent scholars and their role to ensure that what we do is truly compliant my role as a Syria advisor to many financial institution whether national or international is to Vic the concern condition and examine the fairness between customer and supplier and that if it does not contravene with any red line set by Syria the the spirit of Sharia for the finance is very very simple and human universal value that there should not be any duping there should not be any unfair treatment within customer and the supplier so the transparency fairness and absence of any unfair terms and conditions is there and according to you know divine instruction the interest is regarded as the unfair treatment between the parties so without interest there are other human ways of doing business which equally sharing profit and loss rather than shifting the risk from one party to another so Islamic finance is like more to do be humane spreading the risk sharing the risk and reward and being fair and transparent we don't actually work in just we work in a partnership so when you invest money with us we become partners we offer RS / x / t's and then customer invested money so we share the property the customer for instance you deposit funds with us long-term savings account ten thousand twenty thousand pound will give you indicative rate saying we're going to offer you one point two percent one point four percent profit rate as a profit rate indicative rate so we don't guarantee the profit sharing Allah is like a democratic law that if pragmatist win the mind and hearts of the consumer they prevail and those who are literalist they think in their exotic and romantic way of Syria some somewhere in the sky they they are always marginalized and that's the case in Islamic minor the Islamic financial institution really they cannot compete with the mainstream financial institution firstly economies of scale second the cost of funding third is really you know the regulation and the ethics governing differently so they are not competing and replacing the normal finance they are just providing for a niche population for niche services sometime that's why the cost of Islamic finance is little bit 10 to 15% higher than the conventional finance so those who put more value on compliance of Sharia they are prepared to bear those cost the bank is not is not a religious bank another religious institution all banks follow follow rules the rules we follow those lay down by the PRI and the FCI and also the Shia scholars detroyed compliant committee they also lay guidelines and rules and we follow those as well in the same way it doesn't make us a religious organization we have no quarrel with the conventional Sangha we say every community and every culture lives according to their own lifestyle and Muslims are entitled to have their own lifestyle and there should not be a humanistic culture one one for all there is no system which fits all humanity it's one person you

7 thoughts on “Islamic banking: an ethical alternative to conventional banking

  1. Islamic banks make rather vague statements about being ethical, but in fact secular regulators do the "heavy lifting" for ethics in financial markets, by ensuring truth in lending, fair disclosure, insuring small depositors and setting risk weights on assets for determining bank capital, client priority in trading, etc. Islamic economists' ideas about ethics turn rather quickly to discussions about why interest is unethical, with resulting bans on interest (riba), derivatives, and conventional insurance – ideas which make no sense in the context of modern finance and economics. The assertion that Islamic banks do not deal in interest is misleading to customers; they charge time dependent markups on loans and give "profit rates" on deposits.
    However, Islamic finance does have something useful to say about excessive financial leverage and debt.

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