Critique Of Islamic Banking Essay

Critique on Islamic Banking
In the last two decades, Islamic Banking has expand and grown globally after gaining support and agreement from the oil-rich Gulf States such as Bahrain, Qatar, Iraq, Saudi Arabia, Oman and the United Arab Emirates (UAE). It became a successful global phenomena not only in majority Muslim countries but also in non-majority Muslim countries. In addition, both Islamic and non-Islamic banks provide this Islamic banking system. This successful happen because of the desire of Muslim to invest and save their money in ways they recognize compatible with their religious belief and cultural values. The multinational and conventional banks also began providing ‘Islamic Product’ and ‘Islamic Windows’. Citibank was the first western bank to open its Islamic bank subsidiary in Bahrain. Then, follow by other American, British, Swiss banks, and French such as HSBC and American Express which followed in providing Islamic products through their branches in West. They also open an Islamic Banking subsidiaries in Pakistan, Bahrain and other Islamic countries.
Contemporary Islamic Banking prohibit interest even in theory, at the core of its activities

In the International Organizations of Islamic Banks it was been report that less than 20% of Islamic Banking operations adopt PLS techniques. This also include the largest intergovernmental Islamic Bank (the Islamic Development Bank). Almost all Islamic Banking operations are based on mark-up (combining the features of deferred payment sale and a mark-up on price) rather than PLS. These interest-bearing products are marketed and passed as Islamic by Sharia Supervisory Boards (SSB). AAOIFI’s standard contribute to legitimizing them as Islamic to the Muslim public (Kuran, 2004, El-Gamal, 2006). The role of the SSBs as trusted Muslim scholars in Islamic societies are very important in marketing Islamic Banks