Commercial Banking Case Study
COMPRATIVE STUDY OF ISLAMIC AND COMMERCIAL BANKING CHAPTER-01 Introduction
There are two banking systems that be present in Pakistan namely Islamic banking and commercial banking. The Islamic bank (IB) and commercial bank (CB) is differentiated on the base of objectives, Riba and risk distribution practice. Islamic bank follows ethics of Sharia’h specified by Allah Almighty while Commercial bank follows artificial Standard operating procedures Islamic bank generates income as profits that is changeable while Commercial bank earn from the interest that is fixed; threat is shared along with lender, borrower and bank in Islamic bank while Commercial bank transfers the
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Commercial banks also allow for a mixture of deposit accounts, such as checking, savings, and time deposit. These institutions are run to create a profit and owned by a group of persons, however a few may be members of the Federal Reserve System. function of Commercial banks the general function of commercial banks is to give financial services to general public and business, ensure economic and social strength and sustainable increase of the economy. While permission a loan to a customer, they do not give cash to the borrower. in its place, they open a deposit account from which the borrower can take out. . A Primary Function
• Commercial banks allow various types of deposits from public mainly from its clients, with saving account deposits, recurring account deposits, and fixed deposits. These deposit are return when the client demands it or later than a sure time period.
• Commercial banks give loans and advances of different forms, with an overdraft facility, cash credit, bill discount, money at call etc. They also provide demand and term loans to all types of customers against accurate
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The mainly essential feature of Islamic banking is the distribution of risk amongst the investors, the bank and the borrowers. Islamic banking focus on equality and free will as a centrally controlled and separately managed system according to the commands of Allah Almighty. The being of two bank streams i.e. commercial banks and Islamic banks requires a study to investigate service quality, customers ' satisfaction and bank performance in Pakistan. Commercial banks depend on artificial precepts and concentrate on maximization of earnings. The necessary function of commercial banking is lending money and re-embrace with high interest including profit. Commercial banks are in surplus than Islamic banks that don’t share profit and loss with
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