Many people get greatly confused when it comes to Islamic Banking VS Conventional banking. They don’t know how to differentiate between the two though it is as easy as said! Simply put Conventional banking is based on different laws pertaining to business while Islamic banking is only based on four core concepts of Islam. These core values are Usury prohibition, Ethical investment, Gambling prohibition and Speculation prohibition.
However, in order to clearly understand the differences we can consider conventional banking through the following :
1. Money as a commodity
Money is used as valuable goods as an exchange for value and hence can be sold higher than its face value or can even be rented
2. Time is money
Time is the most valuable asset due to which any gain can be charged on its lapse
3. Interest is undeniable
Interest is charged when more time is consumed, it is even charged irrespective of the person/firm suffering a loss or profit.
4. Money is the only link
Monetary link is the only link you solidly maintain and it is used everywhere it possibly can be used.
On the other hand, Islamic banking has very positive traits that relate to the following:
1. Money is just another medium
Money is not a commodity at all, in fact it is never sold at a higher face value than its own. It maintains its original value.
2. Only profit is money
Profit is earned only though very just means where one has invested his due earned hard work.
3. Interest is non existing
There exists interest-free zone where profit is only accustomed when a person/firm gains profit for themselves.
4. Development is the only link
Economic links are a way of strategic helping in order to avoid inflation of any kind to maintain healthy links.
Now you know how to debate over Islamic Banking VS Conventional Banking. Islamic banking is the basic goal to ethical dealings while conventional banking is the way only to making the rich richer and poor poorer by some limited time facilitation. There is no interest in Islamic banking when in comes to finance, be it a loan or a lease. One is not liable to pay any amount if he has suffered any fraud or loss or anything whatsoever since the loss requires nothing from you to be given to your financing bank.
In a nutshell, you get to be worry free even if things do not go your way if you are dealing with Islamic Banking, hence Islamic Banking enjoys favor throughout to be celebrated in actual.