(Zukri Samat, nd). Islamic Bank has offered an alternative to conventional banking products and services, such as providing various credit facilities, trade finance, deposit taking, providing secure and maintain facilities and funds transfer based on Shariah or Islamic principles. For a 10 years period of time, Bank Islam Malaysia Berhad (BIMB) can operate without competition. This means that the Islamic bank is a bank that is allowed to offer Islamic banking products. (Ruzina Markon, 2009).
Introduction: Nowadays we cannot imagine our life without banks because they fulfill the needs of the economy in fund sharing between creditors and investors. But conventional banking systems are not satisfying the Muslim population which is very large and the reason is that conventional system is not shariaa compliant and it doesn’t fit with Islamic law. So Islamic banks are very important nowadays. The reason of creating Islamic banking system is to provide financial products that are shariaa complied in Islamic countries but after that it has been recognized by all of the world as an international system. More than 57 countries provide the Islamic banking services (Hamedian, 2013).
They should educate customers by public seminars and discussions regarding the benefits that Islamic Banking system in some aspects provides better value and serves as an alternative financial approach that is not limited for Muslims but any religion. With these approaches, Islamic Financial institutions in Malaysia can gain more popularity and further enhance the system to a better financial market place. Dr Amat Taap Manshor proposed that the scarcity of human resources in Islamic Finance ihttps://www.grammarly.com/?q=writing&utm_source=placement&utm_medium=cpc&utm_content=46860A.png&utm_term=paperraters an ongoing problem and there isn’t specific timeframe whether the issue can be resolved, thus continuous effort from all parties is needed. (The Star Online, 2015). Malaysia should seeks to become a centre of talent developer and supplier instead of just acquiring them.
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’.
The operation of Islamic bank is based on the principle of syariah, as well as using the appropriate products and devices according to syariah. Meanwhile conventional banks are not based on Islamic law, but based on positive law. Below are the operating system of Islamic bank and conventional bank: 1. The principle of deposit (Al-Wadi’ah) In Islamic bank, Al-wadi'ah interpreted as pure deposit of one party to the other party, either individually or with a legal entity. This deposit must be kept and will be returned at the time of the peer wants.
Islamic Credit Cards is a plastic money which involves the buy first and pay later option but it is strictly conducted on the basis of Shariah values, principles and objectives (Hanudin, 2012). An Islamic Credit Card is different with conventional credit card where it have no compounding interest, not allowed to make payment on non-Halal transaction (such as buying liquors, gambling and uses in entertainment club), and also do not charge interest rate but used profit rates to generate fee-based income. These kind of activities are practicing in conventional credit card (Shafinar et al., 2013). In order to market Islamic credit card effectively, the marketer of financial institution need to differentiate the concept of Islamic credit card and conventional credit card. The marketers also can offer the Islamic credit card by differentiating the importance of credit card’s characteristics (Hanudin,
Profit-sharing; In Islamic microfinance, the financial institution is no longer a sole financier but becomes a co-owner of the business with a strong interest in its success. 3. Fixed repayment rate; In line with the sharia, which prohibits any rate of return on financial transactions, Islamic microfinance products have a fixed repayment rate with no possibility of making profit through interest. 4. Transparency: Islamic microfinance stipulates contracts with a fixed liability that is known to the customer upfront.
And the differences are more importantly related to the special reserve requirements and interest rate ceilings to which banks are subject. Any other financial institutions subject to the same kind of regulations would behave in much the same way. Thus, commercial banks are different because they are controlled and not the other way around. Commercial banks do not possess, either individually or
The Holy Quran and the Sunnah do not consist of a specific verdict on commercial insurance contracts. Therefore, the decision lies solely with Muslim scholars. Much less numerous are those who unconditionally acquire conventional insurance as compliant with the principles of Islamic law. On the other hand, the majority of scholars believe that Shariah prohibits any type of commercial insurance. The resolution on insurance and re-insurance of the Islamic Fiqh Academy, which appear as the entire Muslim world, summarized these views.
According to Bashir (2003), inflation exerts positive impact on bank performance if only a large portion of the Islamic banks‟ profits are generated from direct investment and other trading activities (Murabahah). Karim et al. (2010) study the bank-specific, industry-specific and macroeconomic determinants of African Islamic Bank’s Profitability over the period of 1999 to 2009 and expected a strong relationship between inflation and the profitability of Islamic banks. Izhar and Asutay (2007) which study the profitability of Islamic banking from Bank Muamalat Indonesia from 1996 to 2001 showed that inflation is related with higher interest margins and higher profitability. As inflation occurs, more transactions will be involved and more branch networks will be extended, therefore enable the bank to generate higher income (Izhar & Asutay, 2007).