Difference Between Commercial Banking And Islamic Banking

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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 entire risk to others; Islamic bank is trade oriented unit as Commercial bank works as a clean financial intermediary to contract on the basis of interest.

Islamic Banking

State Bank of Pakistan defined Islamic banking as “banking in consonance with the culture and value system of Islam and govern, in accumulation to the commercial good governance and risk management system, by the ethics laid down by Islamic Sharia 'h”. Islam is defined as total submission to Allah Almighty without any situation. It is a entire code of life that consists upon the orders of Allah Almighty and the practices of the Holy Prophet Muhammad (Peace be upon him). Everyone in this world perform religious, societal and economic actions in one 's life. But

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