Intro To Islamic Banking Products

Al- Sadiq (A.S) Institute of Islamic Banking, Finance & Takaful

By: Jawaid Iqbal Rajab 8, 1429 Saturday July 12, 2008

Banking System In Pakistan • Conventional Banks • Islamic Banks • Conventional Banks – Islamic Branches/Windows

Major Operations Sides of Banks Assets Side Operations

Liability Side Operations

Advancing Loans

Taking Deposits

Major Operations Sides of Banks Assets Side Operations

Liability Side Operations

Advances: Running Finance Demand Finance Export Re-Finance Letter of Credit Letter of Guarantee Consumer Finance

Deposits: Demand Savings Term deposit

Major Operations Sides of Banks Assets Side Operations

Advances: Murabaha Musharika Mudaraba Ijarah Salam Istisna

Islamic Banking

Liability Side Operations Deposits: Current A/c Investment A/c (Mudaraba / Musharika)

Bank Accounts Conventional Banking

Current Account

Islamic Banking

Savings Account

Current Account

Investment Account

Both Current Accounts are same in Conventional & Islamic banking

Bank Accounts Conventional Banking

Current Account

Islamic Banking

Savings Account

Nature DEBT

Current Account Nature DEBT

Investment Account Nature PARTNERSHIP

Liability Side - Comparison Current Accounts  Conventional Current Accounts primarily offers two benefits  Safety & Withdrawal facility  Extra Services linked to the balance in the account. 

In Islamic Banking Current Accounts are also accepted on the concept of Qard/loan.

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Repayment of funds can be guaranteed by the bank. However, extra benefits linked to the balance cannot be offered. Bank may use the funds at its own discretion.

Liability Side - Comparison Saving / Term Deposit / COII  Conventional Saving & Term Deposit Accounts primarily offers two benefits Guaranteed Investment Regular Interest Payments 

In Islamic Bank, the Investment accounts can be based on: ◦ Musharika ◦ Mudaraba

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Many Islamic banks have successfully launched such schemes based on the above modes.

Islamic Banking

Debt

Current Account

Partnership

Musharika

Modarabah

Sale

Service

Mixed

Ijarah

Juala

Present/Spot

Future/ Forward

Murabaha

Musawama

Courtesy: Brother

Istisna

Salam

Ali Abbas Abidi