What is Islamic Banking?

What is Islamic Banking?

Islamic banking is a system of conducting trade and banking activities in line with the principles of Islamic ShariƔh while avoiding all the prohibited activities such as interest or Riba, Gharar (uncertainty), financing of haram trade and businesses. It is not banking which is based on pricing money and earning interest as conventional interest-based banks do but it is a system of trade where goods and services are sold and capital is invested by taking risk to earn halal profits. It is also not just change of name as misunderstood by many people, but it is based on the Quranic injunction of 'Allah has permitted trade and forbidden Riba'. Interest free banking is a subset of Islamic banking concept.
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