Islamic banking product

As a result of that, Jaiz bank became the first and the only full-fledged Islamic banking in Nigeria. Islamic banking is based on the principles of profit and loss sharing. Aliyu Abdullahi is an Abuja-based businessman who is into real estate and importing and selling of inverter generators. He is a beneficiary of Jaiz bank loan called contract financing.

Islamic banking product

Principles[ edit ] To be consistent with the principles of Islamic law Shariah and guided by Islamic economics, the contemporary movement of Islamic banking and finance prohibits a variety of activities: Paying or charging interest.

Islamic banking product

Investing in businesses involved in activities that are forbidden haraam. These include things such as selling alcohol or porkor producing media such as gossip columns or pornography.

Islamic banking on the rise, according to the 2018 Islamic banking Index by Emirates Islamic

This is usually translated as "gambling" but used to mean "speculation" Islamic banking product Islamic finance. Gharar is usually translated as "uncertainty" or "ambiguity".

Bans on both maisir and gharar tend to rule out derivatives, options and futures. Lewis and Latifa M. Algaoud believe these involve excessive risk and may foster uncertainty and fraudulent behaviour such as are found in derivative instruments used by conventional banking.

All transactions must be "directly linked to a real underlying economic transaction", which generally excludes "options and most other derivatives". Benefits that will follow from banning interest and obeying "divine injunctions" [32] include an Islamic economy free of "imbalances" Taqi Usmani [32] —concentration of "wealth in the hands of the few", or monopolies which paralyze or hinder market forces, etc.

Nizam Yaquby, for example declares that the "guiding principles" for Islamic finance include: Risk-sharing is lacking because profit and loss sharing modes are so infrequently used. Underlying material transactions are also missing in such transactions as "tawarruq, commodity murabahas, Malaysian Islamic private debt securities, and Islamic short-sales".

Banking products are often classified in one of three broad categories, [44] [45] two of which are "investment accounts": Other services include leasing, equity markets, investment funds, insurance takafuland microfinance.

Profit and loss sharing While the original Islamic banking proponents hoped profit-loss sharing PLS would be the primary mode of finance replacing interest-based loans, [56] long-term financing with profit-and-loss-sharing mechanisms is "far riskier and costlier" than the long term or medium-term lending of the conventional banks, according to critics such as economist Tarik M.

The "sleeping" rabb-ul-mal party provides percent of the capital. The mudarib party provides its expertise and management. If there is a loss, the first partner "rabb-ul-mal" will lose his capital, and the other party "mudarib" will lose the time and effort invested in the project.

The structure of mudaraba is very similar to that of venture capital where the venture capitalist finances the entrepreneur who provides management and labor, so that both profit and risk are shared.

Sharia Compliant Personal, Business & Corporate Banking | Emirates Islamic

And that this would result in a balanced distribution of income and prevent financiers from dominating the economy. Unlike mudarabah, there may be more than two partners and all the providers of capital are entitled but not required to participate in management.

Like mudarabah, the profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner in proportion to respective capital contributions.

Islamic banking product

Musharakah may be "permanent" often used in business partnerships or "diminishing" often used in financing major purchases, see below. In Musharaka business transactions, Islamic banks may lend their money to companies by issuing "floating rate interest" loans, where the floating rate is pegged to the company's individual rate of return, so that the bank's profit on the loan is equal to a certain percentage of the company's profits.For Islamic banks this product is an ideal for Agriculture financing but can also be used to finance the working capital needs to the business customer.

QIB sprearheads innovation in Islamic banking products

It is one of the most popular Islamic Modes of finance used by banks in Islamic countries to promote riba . Islamic Banking Products and Challenges in Nigeria In January , the Central Bank of Nigeria granted Jaiz Bank an approval in principle to operate as a regional interest-free bank in northern.

•Social Media Marketing of Islamic Banking on Facebook (Islamic Finance Today, Journal of Islamic Banking and Finance) Training • Conducting in-house training for MBL employees in the area Islamic Finance such as: 1.

Ijarah Product Manager at Alizz Islamic Bank. A select few constituents of the Islamic banking industry have recently come to be considered equal and even superior at certain aspects to their conventional banking counterparts, due to a more expansive range of products and services. By Mohammed Waseem Musharakah is a partnership-based contract or an investment product with a partnership structure for sharing profits and losses, which is based on the Islamic Sharee’ah.

Islamic financial companies have developed many different products to meet customer needs and provide sharia-compliant alternatives to widely available conventional options. In this article, you discover some common categories of Islamic financial products.

In practice, a product can be developed to serve many purposes — not only to satisfy social justice demands.

Islamic Banking Products – Islamic Banking Information