The Evolution of the Islamic Bank

Before the fall of Islam, Makah was the center of world trade and was considered a refuge for agents and businessmen who used merchant caravans to travel north and south. Poppy, summer and winter. It was obvious that the deposit system and the use of money would appear in the pre-Islamic Macah society. Most of the goods are traded on an exchange basis, with payments also made in dinars and dirhams. Dinar coins were gold and dirham coins were silver.

The Islamic banking sector is growing rapidly around the world, especially in Pakistan, while the banking sector is unexpectedly in countries that are defenders of capitalism and an interest based financial system.

Currently, developed countries are trying to control the financial crisis by manipulating interest rates and bringing them to near zero, without achieving the desired results. Dozens of age-old financial institutions have disappeared from the financial scene.

Mudarabah (profit sharing)

Mudarabah (profit sharing) was one of the first commercial forms used by pre-Arabs for their commercial activities.

Although mudarabah (profit sharing) has no basis in either the Qur’an or the Sunnah, early Muslims used it for trade. The term “mudarabah” (sharing of benefits) comes from the word “al-darb al-ard”, which means “travel on earth”. It was also approved by the Prophet Muhammad (SAW). Mudarabah (profit sharing)), mixing wheat and barley for home use, not for sale. Mudarabah (profit sharing) is also called a “quiet partnership” involving a financier (rabbulmal) who provides a certain amount and acts as a dormant or an inactive partner as well as an entrepreneur (mudarib) who acts as a trustee or custodian.

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Mudarib does not invest in the company any property other than his knowledge and skills. He also has no right to demand wages for running a business. Mudarabah (profit sharing) is one of the oldest forms of business used by pre-Arabs for their commercial activities. Literally, the word “mudarabah” (profit sharing) comes from the expression “ad-darbfi al-Ard”, which means to make a journey. The literal meaning of this partnership is that in the past contract it was required to include the parties involved in this contract by their business.

Ijara

Ijarah is also named because it is a transaction with a specified asset available for payment when the ownership of the asset is not transferred. The Iara agreement is essentially a lease agreement in installments. This is similar to a type of lease mortgage with no down payment requirements, such as a capital lease.

In Ijarah, fixed assets are leased. They can be returned to the landlord at the end of the lease. In this case, the lease has the characteristics of an introductory contract and, therefore, is only part of the depreciation of the leased asset. Valuable results. In the approach, the lessee can from the very beginning of the lease of the asset at the end of the period, and the lease is in the nature of a lease called Ijarah WA iqtina (literally, lease and ownership).

The term “ijarah” was defined as an agreement between two parties, the lessor and the lessee, whereby the lessee benefits from a specified service or benefits from a specified consideration or rent from the lessor’s assets. It is a contract whereby a lessor leases an asset to a lessee for a fixed rent or lease for a specified period. In the event of a delay in payment, a penalty may be charged from the tenant, but the amount collected must be the landlord for charitable purposes.

There cannot be two contracts in a contract. The “purpose” of a trading option option is very different from the purpose of transferring the usufruct to the asset. The inclusion of a call option clause is used for another contract. On the other hand, it also gives the tenant the right to buy the same rental property, which is not permitted by Sharia law. The leased asset must have a value at the end of the agreed lease period. From the moment of termination, the tenant does not pay the rent. Sale and leaseback is permitted, but only in two separate transactions.

Leasing differs from sale in that it does not transfer part or property that remains with the transferor. Sale and leaseback is permitted, but only in two separate transactions. Leasing differs from sale in that it does not transfer part or property that remains with the transferor. Sale and leaseback is permitted, but only in two separate transactions. Leasing differs from sale in that it does not transfer part or property that remains with the transferor.

Musharaka

Musharaka is an Arabic word that means to share. In business and commerce, this means a joint venture in which all partners share in the profit or loss of the joint venture. Musharaka is defined as a form of partnership in which two or more people pool their capital or work to share benefits and enjoy the same rights and responsibilities. This type of business can be registered as an unlimited company or as a limited liability company. The bank may consider co-financing the project after considering all the conditions required by the ATMs.

Two types of funding based on musharakah:

1. A joint venture or partnership based on a reciprocal account without a separate organization. The Musharakah financing agreement will be concluded between the Islamic financial institution and the client. The money is credited to the mutual account at a time or in stages. The joint account is registered in the name of the client and the account transactions are managed by the Islamic financial institution and the client.
2. Shares Musharakah, through a private private limited company, a big business Islamic financial institution. The process of managing a project by both parties in Musharak to represent their interests and responsibilities to the company. The Islamic Financial Institution will provide funding for the musharakah in a lump sum through the company’s additional paid-in capital.

Funding Musharaki is the most important method of influencing the economic in the Islamic economy. What does musharaki depositors, banks and investors in project finance and share in reward and risk include? As a result, this affects savings, investment and domestic resource scarcity. Compared to the interest rate, the implementation of musharak financing is considered more flexible than the interest rate, it includes three rates of return; the percentage of return of depositors in musharak, the percentage of return of the bank in musharak and the percentage of return in musharak from investors. The investor bears interest as a financing risk.

In addition, the mechanism of using the interest rate guarantees the participation of all parts at the same time; bank, depositor and investor in the Musharak trial. Thus, it is limited by the period of implementation of the Musharak process.

Murabaha

Murabaha is one of the most widely used financial instruments of Islamic banks. As a fixed income instrument, it bears obvious similarities to conventional loans, such as final debt, credit structure and collateral, and so on. Analysis of data, related documents and product structures showed that obvious similarities do not have real content and Murab’s strengths are obvious. The real problem lies in the problems associated with the implementation of the Islamic banks’ strategy, such as procurement methodology, the use of non-Islamic criteria, etc.