Islamic Banking Meaning And Definition Finance Essay

I will compose about Islamic banking refers to a system of banking activity.That is consistent with the rules of Islamic jurisprudence ( Sharee’ah ) . The Islamic banking practical application through the development of Islamic economics.Sharia prohibits the payment or credence of involvement fees for the loaning and accepting of money respectively.While these rules were used as the footing for a booming economic system in earilier times, it is merely in the late twentieth century that a figure of Islamic Bankss.

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History of Islamic Banking:

Classical Islamic Banking:

During the Islamic Golden Age, early from of proto-capitalism and free markets were present in the Capliphate, whree an early market economic system and as early from of mercantile system were developed between the 8-12 centuries, which some refer to as ” Islamic capitalist economy ” . Vigorous pecuniary economic system was created on the footing of the spread outing degrees of circulation of a stable, high value currency ( dinar ) and the integrating of pecuniary countries that were antecedently independent. A figure of invention constructs & A ; techniques were applide in early Islamic banking, including measures of exchange, the first signifiers of partnership such as limited partnerships & A ; the earliest signifiers of capital ( al mal ) , capital accretion ( name al mal ) , checks, promissory notes, trusts ( see Waqf ) startup companies, transactional histories, lending and assignments.Organizational endeavors similar to corporations independent from the province besides existed in the medieval Islamic universe, while the bureau establishment was besides introduced during that time.Many of these early capitalist constructs were adopted and further advanced in mediaeval Europe from the 13 century onwads.

Riba: Is average extra addition or add-on, which right interpreted harmonizing to Shariah nomenclature, implies any extra compensation without due consideration.the definition of riba in classical Islamic law was ” excess value without opposite number ” .Currencies that were based on guaratees by a authorities to honour the declared value or based on other stuffs such as paper or based metals were allowed to hold intealu remainder applied to them. When based metal currencies were foremost introduced in the Islamic universe, on legal expert of all time thought that “ paying a dept in a higher figure of units of this fiat money was riba ”

Modern Islamic Banking:

Interest free banking seem to be of really recent origin.the earilest refernces to the organisation of banking on the footing of net income sharing instead than involvement are found in Anwar Qureshi ( 1946 ) , Naime Siddiqi ) 1948 ) and Mahmud Ahmad ( 1952 ) in the late mid-fortiess, followed by a more luxuriant expounding by mawadudi in ( 1950 ) .

The first modern experiment with Islamic banking was undertaken in Egypt under screen without projecting an Islamic image for fright of being seen as a manifestation of Islamic fundamentalism that was anathema to the political government. Islamic Banking is turning at a rate 15 % per twelvemonth and with marks of consistent future growing. It have more than 300 establishments spread over 51 states, including the United States through companies such as the Michigan based University Bank every bit good as an extra 250 common financess that comply with Islamic rules.

ADIB. wiki/Islamic_banking on 02/10/2012

Largest Muslim Banks:

Shariah compliant assetareached about $ 400 billion throughout the universe in 2009, harmonizing to criterion & A ; Poors Ratings Services and the possible market is $ 4 trillion.Iran, Saudi Arabia and Malaysia have the biggest Islamic law compliant assets. In 2009 Persian Bankss accounted for about 40 per centum of entire assets of the universe ‘s top 100 Muslim Bankss.

Islamic Financial Transaction Terminology:

Bai ‘ al-inah ( sale and buy-back understanding ) the moneyman sells an plus to the client on a deferred payment footing and so plus is instantly repurchased by moneyman for hard currency at a discount.The purchasing back understanding allows the bank to presume ownership over the plus in order to protect against default without explicitly bear downing involvement in the event of late payment.

Bai ‘ bithaman ajil ( deferred payment sale ) this refers to the sale of goods on deferred payment footing at a monetary value, which includes a net income border agreed to by both parties

Bai Muajjal ( recognition sale ) means a recognition sale. It ‘s a funding technique adopted by Islamic Bankss that takes from of murabaha muajjal. It is a contract in which the bank earns a net income border on the purchase monetary value and allows the purchaser to pay the monetary value of the trade good at a hereafter day of the month in a ball amount or in installments.

Musharakah ( joint venture with capital ) is an agreement or understanding between two or more spouses, whereby each spouse provides financess to be used in a venture.Profits made are shared between the spouses harmonizing to the invested capital.

Mudarabah: is a particular sort of partnership where one spouse gives money to another for puting it in a commerical endeavor. The investing comes from the first spouse who is called rabb ul mal, while the direction and work is an sole duty of the other who is called mudarib

Murabahah: its sale of goods at a monetary value which includes a net income border agreed to by both parties. The purchase and merchandising monetary value, other costs and the net income border must be clearly stated at the clip of the sale agreement.the bank is compensated for the clip value of its money in the signifier of the net income border.

Bai Al Salam: this is a contract in which beforehand payment is made for good to be delivered subsequently on. The marketer undertakes to provide some specific goods to the purchaser at a hereafter day of the month in exchange of an beforehand monetary value to the full paid at the clip of contract.Its necessary that the quality of the trade good intended to be purchased is to the full specified go forthing no ambiguity taking to challenge.

Ijarah means lease rent or pay. Its selling the benefit of usage or service for a fixed monetary value or wage.Under this construct the bank makes available to the client the usage of service of assets/equipments such as works, office mechanization, motore vehicle for a fixed period and monetary value.

ADIB. Islamic Banking & A ; Finance, in South-East Asia. Writer: Angelo M. Venardos.

Musharakah: is a relationship between two parties or more of who contribute capital to a concern and split the net net income and loss pro rata. This is frequently used in investing undertakings, letters of recognition and the purchase or existent estate or property.The net income is distributed among the spouses in per a geed ratios, while the loss Idaho borne by each spouse purely in proportion to respective capital part.

Qard Al Hassan: This is a loan extended on a good will footing and the debitor is merely required to refund the sum borrowed. However, the debitor may, at his or her discretion wage an excess sum beyond the rule sum of the loan as a item of grasp to the creditor. In the instance that the debitor dose non pay an excess sum to the creditor this dealing is a true involvement free loan.

Sukuk ( Islamic bonds ) is the Arabic name for a fiscal certification but can be seen as an Islamic equivalent of bond.However, fixed income, involvement bearing bonds are non allowable in Islamic.Sukuk are sucurities that comply with the Islamic Law ( Shariah ) and its investing rules which prohibit the charging or paying of involvement.

Takaful ( Islamic insurance ) : Is an alternate from of screen that a Muslim can avail himself against the hazard of loss due to bad lucks. It ‘s based on the thought that what is unsure with regard to an individul may crase to be unsure with regard to really big figure of similar persons may discontinue to be many people enables each person to bask the advantage provided by the jurisprudence of big Numberss.

Muslim Derived functions:

With aid of Bahrain based International Islamic Financial Market and new York based International Swaps and Derivatives Association, planetary criterions for Islamic derived functions were set in 210. The fudging Master Agreement provides a construction under which establishments can merchandise derived functions such as net income rate and currency barters.

Islamic Torahs on Trading:

The Quran prohibits chancing and sing 1s wellness or belongings ( besides considered a game of chancce ) . The Hadith in add-on to forbiding chancing ( games of opportunity ) , besides prohibits bayu algharar ( trading in hazard, where the Arabic word gharar is taken to intend “ hazard ” or inordinate uncertainness ) .

Company profile & A ; Constitution:

Abu Dhabi Islamic bank was established in 1997 as a public Stock Company through the Amiri Decree No.9 / 1997. The Bank commenced commercial operations in 1998 and was officially inaugurated by Abdullah Bin Zayed Al Nahyan, UAE Minister of Information and Culture in 1999. All contracts, operations and minutess are carried out in conformity with Islamic Sharia rules.

Abu Dhabi Islamic Bank PJSC attracts sedimentations and offers consumer, corporate and investing Banking services.The Fundss in bank purchase of cars, existent estate and capital equipment, offers letters of recognition, patrons investing financess and offers belongings direction and development services. DIB lends money in conformity with Islamic jurisprudence.

ADIB. Islamic Banking & A ; Finance, in South-East Asia. Writer: Angelo M. Venardos.

Mission

A Islamic fiscal solutions for the planetary community.A

A Vision

A To be the top grade Islamic fiscal services group.

ADIB is intro

ducing a new trade name individuality as a symbol of a new promise.You told us that banking should be simple, reasonable and crystalline, doing everybody experience at place and respected. Over the last two old ages we ‘ve conducted extended research to place ways to better run into your demands.you believed a bank can present alone solutions because it is guided and inspired by the timeless regulations and rules of Shari’a.

We have been conveying ADIB closer to you by quickly spread outing our web to 60 subdivisions and ATM web to 256 and by widening subdivision gap hours in our in promenade subdivisions and even introduced a 24 hr subdivision at the Abu Dhabi Airport.We have merely launched an upgraded version of e-ADIB Internet banking to assist you bank with us online more safely and handily.

Over the following few months we ‘ll be establishing many new merchandises and services. What wo n’t alter is our chief precedence: your satisfaction. In 2009 we were named one of the Top three Bankss in the UAE with the fastest bettering client service. And bettering client satisfaction scores show you ‘re profiting from the consequences of our attempts.

The Logo:

Our logo speaks about our hereafter every bit good as our proud heritage- the foundation of your trust upon which we are constructing the new ADIB. It features a 3D component to synmbolize a renewed focal point on the quality of our service.

Board of managers:

Chief executive officer: H.E. Tirad Mahmoud

Chairman: H.E. Majed Salem Khalifa Al Romaithi

Deputy Chairman: H.E. Khaled Abdullah Neamat Khouri

Pull offing Director: Ahmed Darwish Al Marar

Board Member: H.E. Juma Khamis Al Khaili

Board Member: H.E. Abdul Rahman Mohammed Al Jasmi

Board Member: Ragheed Najeeb Shanti

Capital:

ADIB commenced its operations with a paid up capital of One Billion Dirhams divided into hundred million portions, the value of each portion being ten dirhams.The portions are quoted on the Abu Dhabi Securities Market.

ADIB, www.adib.ae on 15/10/2012

Laminitiss:

The laminitiss of Abu Dhabi Islamic Bank keep 29 % of its equity while the staying 71 % is held by about 100,000 stockholders.

The establishing stockholders of ADIB are:

Members of the Ruling Family.

The Abu Dhabi Investment Authority ADIB

Outstanding UAE Nationals.

Abu Dhabi Islamic Bank PJSC Launches First Islamic Telecom Card in Partnership with Emirates Telecommunications Corporation and Visa International Limited:

Sep26.12

Abu Dhabi Islamic Bank PJSC announced the launch of the UAE ‘s First Islamic Telecom Card in partnership with Emirates Telecommunications Corporation and Visa International Limited. The ADIB-Etisalat Card, available in Classic, Gold and Platinum versions, enables clients to gain free talk clip for every Dirham spent on their Card, in add-on to the best-in-market sign-up points. Upon subscribing up for the new co-branded covered Card, ADIB Etisalat Cardholders will have up to 70,000 ‘MORE reward Points ‘ which is tantamount to 2000 proceedingss of free talk-time within the UAE. Cardholders will besides gain up to 4 % hard currency back as ‘More reward Points ‘ for every dirham whilst utilizing their Card for purchases anyplace in the universe. Customers will besides be able to bask alone privileges such as entree to ADIB ‘s Travel Desk, and particular price reductions from national and international merchandisers every bit good as within the Etisalat spouse web. Taging the launch of this partnership with Etisalat, ADIB will offer its clients the opportunity to win up to 5 Million ‘MORE wages Points ‘ every month on every AED 250 spent on the card. Until December 31 2012, 150 lucky victors will be selected to win a portion of 8000 hours of free talk clip. Customers can deliver ‘MORE Reward Points ‘ earned on ADIB-Etisalat Card games to have free talk clip, facilitate measure payments with Etisalat, earn verifiers redeemable at a host of spouse mercantile establishments. Cardholders will profit from the bing characteristics of ADIB covered cards including free SMS dealing qui vive service, 100 % hard currency backdown, balance transportation installations and a 55-day grace period on refunds. Monthly card refunds by non-account holders can be made handily via ADIB ‘s web of 73 subdivisions, over 400 ATMs, every bit good as at UAE Exchange, Al-Ansari and Al Fardan Exchange offices throughout the UAE.

Abu Dhabi Islamic Bank PJSC Announces Launch of ADIB Instant Finance

Aug 7 12

Abu Dhabi Islamic Bank PJSC announced the launch of ADIB Instant Finance, a installation that adds finance installations on to the ADIB EMV ( bit ) -enabled Debit and Covered card. A cardinal characteristic of ADIB Instant Finance is the speedy turnaround clip that allows a dealing to be completed in a affair of proceedingss compared to the minimal three yearss required to O.K. regular funding installations.

ADIB, www.adib.ae on 15/10/2012

IT in Abu Dhabi Islamic Bank:

A In 2010, ADIB had introduced its new trade name individuality as a symbol of a new promise. For two old ages, we ‘ve conducted extended research to place ways to better run into your demands. The bank want to be a simple, reasonable and crystalline, doing everybody experience at place and respected. You wanted a bank that would be on your side, one that worked as if your success was the beginning of its ain success.

You are seeking a bank that can present alone solutions because it is guided and inspired by the timeless regulations and rules of Shari’a. These are the nucleus pillars of the banking we want to present to you: Banking as it should be.

We have worked difficult to implement these simple but powerful promises in the manner we do concern. We have introduced a figure of new offerings and betterments already. We simplified a figure of procedures – from the manner we unfastened histories to the manner we deliver financing solutions. We have brought ADIB closer to you by quickly spread outing our web to 70 subdivisions and 460 ATMs. We have extended subdivision opening hours in our in-mall subdivisions and introduced a 24-hour subdivision at the Abu Dhabi Airport. We have launched an upgraded version of e-ADIB Internet Banking that is safer and more convenient. We have launched legion merchandises and services. But what wo n’t alter is our precedence, which remains your satisfaction.

In 2011, we were named the figure one bank in the UAE in client service and the most improved bank in client service, a measure up from our 3rd place in 2010. Our improved client satisfaction scores show you ‘re profiting from our attempts.

Services IN Abu Dhabi Islamic Bank

ADIB Etihad Guest Covered Card games

ADIB has partnered with Etihad Airways to convey you the most rewarding Shari’a compliant air hose card in the UAE. You ‘ll be rewarded with up to 50,000 Etihad Guest Miles when you apply, and gain more stat mis every clip you use your card. The new co-brand cards were launched in Summer 2010. Earlier this twelvemonth, it was named “ Best Islamic Card in the Middle East ” at the Banker Middle East Product Awards 2012.

A *161 # BankingA

ADIB is the first bank in UAEto bring you*161 # Banking, Mobile banking could n’t be simpler with no downloads, no fees and entree from any Etisalat Mobile phone a new nomadic banking service that allows you to execute about all banking minutess, from look intoing your history balance to purchasing recognition for a nomadic phone and Salik account top ups.You are welcome to seek it now and see why we are the UAE ‘s top-tier Islamic fiscal services establishment and an industry leader in new engineering enterprises. Simply dial *161 # and log in utilizing your ADIB phone banking PIN.

A Chip and PINA

ADIB Covered and Debit Cards now come with Chip and PIN engineering for enhanced security and peace of head. In add-on, the cards Covered characteristic Pay moving ridge engineering, which enables contactless payments. Merely beckon your card over the scanner in take parting mercantile establishments and payment is made.

ADIB, www.adib.ae on 15/10/2012

Dana Women ‘s Banking

This service, Dana, offers a new suite of merchandises, services and particular life manner benefits. It is designed to give our female clients the attending they deserve. It prides itself on its uniquely designed women-only countries and subdivisions to extremely skilled female relationship directors. Dana Women ‘s Banking allows our lady clients to have particular attending by people who genuinely understand their demands.

Teshjee’a

To function the cause of Emiratization, ADIB launched its Teshjee’a enterprise to promote its spouses, providers and stakeholders to increase their committedness to community development and Emiratisation. The inaugural seeks to advance community edifice among all companies and entities that the bank trades with. ADIB employees contribute to raising consciousness of societal duty activities among the people they deal with from outside the bank.

HRD Award

ADIB is an industry leader in Emiratisation enterprise and it has been recognized for its continued committedness to Emiratization. Emirates Institute of Banking and Financial Studies ( EIBFS ) has presented ADIB the Human Resource Development Award in the first class twice, foremost in 2009 and so in 2011. The Bank besides received an grasp missive for accomplishing the highest Emiratization rate in the banking sector in 2011 when it crossed 48 % .

Scholarship Fund

ADIB signed an understanding with the American University of Sharjah ( AUS ) to set up the “ ADIB Scholarship Fund ” with an gift of AED 5 million. Students from all AUS modules, with distinguished academic public presentation, can profit from the fund.

ADIB Gold

The Gold is precedence banking bundle that offers a broad scope of sole merchandises and services designed to assist you do the most of your wealth. With the aid of a dedicated Relationship Manager, you will be able to take from a broad scope of investings, nest eggs, and fiscal solutions.

ADIB, www.adib.ae on 15/10/2012

Decision:

The theory and constructs sing Islamic funding system sent a ripper down the bing fiscal system base on capitalist values. Peoples used the bing fiscal system thought that system fiscal establishments based on a No involvement government could non last. A Financial of the system based on moralss and human values was tantamount to woolgather who were immersed in values capitalist economic system.

Some people easy paying more importance to moral values, moralss and believes in society has hit the go outing fiscal system which is based on capitalistic method.Forceully busying premises if loans are non paid of defaulters are being seen as on the incorrect side of Law.

The fiscal establishments are being harassed by human right member and new regulations profiting the clints.The Clients are reactant to cover with establishments which do non give importance to moral value and ethic.

The investing by fiscal establishments in unethical activities and activities detrimental to society are non received good by clients. Islamic banking has created a portal to put ethically and in a valuable manner to the society. The high rate of population growing in universe Islamic community has been supported by turning peculiarly across Asia.

Islamic Banking is go oning to turn quickly due to the importance that it gives to moral beliefs and society. The sharia law Law is driven by value and good for world, therefore deriving popularity non merely among Moslems but besides from non Muslim community. New investing theoretical accounts and concern tools are being development by Islamic fiscal exports which are non merely 100 per centum sharia law compliant but extremely profitable excessively this investing vehicles can be used both by Muslim and non Muslim.

Islamic finance has become a planetary concern crossing Asia, the Middle East, and the Western

World. Islamic banking is non limited merely to the Muslim nations the midlist but cover a huge country crossing USA, Europe, and the far E. Today more than four 100 and 50 plus Islamic bank are runing from China to USA, holding financess under direction greater than one trillion dollars.

Conventional foreign bank ( e.g. HSBC, Standard Chartered bank, Citibank, etc ) are covering in

Muslim merchandise through their Islamic units UK Germany, Switzerland, Luxembourg..etc.

Muslim financess are besides deriving popularity and impulse in Europe and USA.

Harmonizing to industry estimations, Islamic fiscal assets have already reached the $ 300 billion grade,

and are expected to make $ 1 trillion by 2010 as clients turn to Islamic finance as a socially-responsible banking option.

Performing the same fiscal intermediation as conventional Bankss, Islamic Bankss act in conformity with revenue- sharing rule, and construction dealing so as to avoid paying or having involvement.

Islamic banking service includes a wide scope of net income sharing, guardianship, and renting, cost-plus funding and joint venture understanding. Advanced new engineering solution has enabled Bankss to run into the increased demand for these service. Now virtually every merchandise and service offered by conventional fiscal establishments has a sharai’ah.compliant equivalent, from loans to common financess, and from electronic payment systems to stock indices.Inspired by our values, ADIB has been redesigned to do it easier to happen what you are looking for and to assist you make the right fiscal picks.

Index:

Development of Islamic Banking and Finance in Modern times:

Year

Landmark Event

Brief Description

Country/ Region

fortiess

Savingss and loan societies

A figure of involvement free salvaging and loan societies are reported to hold been established

Indian subcontinent

1963

Political Independence

Get downing with attaining of independency by Indonesia in 1945, by 1963, all Muslim bulk provinces had gained independency from Colonial regulation.

Muslim States

1963

Muslim Pilgrims Savings Corporation

Subsequently ( in 1969 ) , named as Lembaga Tabung Haji ( LTH ) or Pilgrims Fund Board, a nest eggs mechanism under which devout Malaysian Muslim set aside regular financess to cover the costs of executing the one-year pilgrim’s journey. These financess were in bend invested in productive sectors, aimed at giving riba-free return.

Malaya

1963

Mit Ghamr

A An under-cover nest eggs bank based on profit-sharing in the town of Mit Ghamr, led by Ahmad El Najjar

United arab republic

1963

The Phillipine Amanah Bank

To enable Muslims to run into some of their fiscal demands without affecting involvement.

Philippines

1963

Interest-free bank

Another experiment at get downing an Islamic banking system, established in Karachi by some persons, did non last for long.

Pakistan

1971

Nasir Social Bank

Declared an interest-free commercial bank, although its charter made no mention to Islam or Shariah

United arab republic

1973

Islamic Organization Conference

First conference of Finance Ministers of Islamic States that discussed constitution of Islamic Banking systems.

Jeddah, Saudi Arabia

1974

Islamic Development Bank

Formed by Organization of Islamic Conference ( OIC ) , an inter-governmental bank aimed at supplying financess for development undertakings in member states.

OIC, Saudi Arabia

1975

Dubai Islamic Bank

First Commercial Bank in the universe

UAE

1977

Faisal Islamic Bank

First officially established bank in Sudan, by the Faisal Islamic Bank Act.

Soudan

1977

Islamic Bank of Faisal

First officially established bank in Egypt.

United arab republic

1978

Islamic Bank of Faisal

Established along with Bank of Islamic Finance and Investment

Jordan

1978

Islamic Finance House

First known effort at Islamic banking in the West.

Luxemburg

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