That said earning money is also a primary function of an islamic commercial bank. Islamic is a dummy variable that equals 1 for islamic banks and 0 for conventional banks.

The Curious Rise Of Islamic Banking In Bangladesh Islam Islamic

It is profit oriented and its purpose is to make money through interest.

Islamic and conventional banking. Conventional banks are profit making organizations that generally aren t based on religious principles. The basic purpose for establishing an islamic bank is to promote and encourage islamic principles. Islamic vs conventional banking.

Conventional banking having a comprehensive banking solution is a must to be able to run a universal banking business with innovative and the best in class technologies. For example you cannot take a loan for a wine shop. Islamic banking is an ethical banking system and its practices are based on islamic shariah laws.

Thanks to experience and product selection traditional banks are more advanced. On the other hand conventional banking systems are much longer than islamic banks. So the overall banking system can be called as a dual banking system where islamic and conventional banking is in operation side by side.

Many conventional banks such as askari bank bank alfalah etc are having separate islamic banking branches. This denotes that conventional banks trade money at higher prices and rent it out as well whilst islamic banks don t. Although islamic banking has many products similar to those offered by conventional banking the two entities differ conceptually.

On the other hand conventional banking is an un ethical banking system based on man made laws. Islamic banks is indeed less different from that of conventional banks than often propagated. Conventional banks use money as a commodity as well as a mode of exchange and a store of value whilst islamic banks only use money as a medium of exchange and a store of value not a commodity.

The conventional bank is based on a full fledged intermediary model that lends borrowers to suppliers and then loans to companies or individuals. In conventional banking fixed rate of interest being given to depositors. Our ics banks software provides you with a pleasant modular menu to choose from and create your own tasteful and favourite system.

In islamic banking leasing ownership remains with bank and risk and reward bear by the bank as owner of asset. It is asset based financing in which trade of elements prohibited by islam are not allowed. In islamic banking profit are distributed out of profit earning by bank for the month as per decided weightages.

This being one of the first bank level explorations of islamic banks two important caveats are in place. Interest in completely prohibited in islamic banking.