Principles of Islamic banking and finance/PIBF201/Rationale for Islamic finance/Video signpost
In this video, Dr.Shamim Siddiqui from Hamdan Bin Mohamed Smart University, provides an overview of the rationale for Islamic banking and financeand contextual background of Islamic banking and finance.
We invite learners to share their thoughts on this video by posting a WeNote comment below, for example:
- The most important message of this video is ....
- I think that ...
- I didn't realise that ...
Note: Your comment will be displayed in the course feed.
Video transcript
Financial institutions developed in the capitalist system often involve elements that are questionable from an Islamic perspective. For example, in conventional banking, guaranteeing the principal amounts as well as interest accrued on them by commercial banks is a fundamental requirement. Islamic banking on the other hand requires that amount deposited in banks for the purpose of income generation should be treated as investible funds that are prudently invested by banks in Islamically permissible ways and any profits (or loss) accrued are shared fairly. Similarly, the current rules of the game in other capitalist institutions such as markets for shares, futures and options have some elements of mysir and / or gharar that could be questionable from an Islamic perspective. Financial institutions and practices under an Islamic economic system would either create new institutions or change the rules and practices of existing institutions of the capitalist system to make them compatible with its overall goals. In this regard, Islamic religious scholars, Muslim academics and practitioners are continuously evaluating existing theories and practices and working of different institutions. This section will provide detail discussion on the rationale for the establishment of the Islamic banking and financing industry.
