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Fundamentals of Sharia Bank Loans

Fundamentals of Sharia Bank Loans and Islamic Finance

Under Islamic finance one keeps the money within moral principles of Islam. It includes things like borrowing money for buying home, saving, investing. Islamic finance in Australia works on the application of Sharia or Islamic law. Its history has been traced down back to about 1400 years but its recent history id dated to 1970s after United Arab Emirates and Saudi Arabia launched their Islamic banks. While most of these Islamic banks are found in Muslim countries, some of them are also opened in Western Europe.

Prohibitions in Islamic finance:

Charging and receiving interest is strictly prohibited. When charging interest on financing, it implies that the money is being used to make money.

Prohibition in made when Investing in businesses that deals with gambling, alcohol, pork, drugs, pornography or anything that is prohibited under Islamic law.

Anything which is uncertain or risky is also disallowed in Islamic finance.

Sharia bank loans refers to financing that adhere Islamic laws. Two basic principles of Islamic banking are disallowing of collection and payment of interest in any matter and sharing of profit and loss. There are 1700 mutual funds and 520 banks that work as per Islamic principles. Islamic financial assets extended from $1.7 trillion to $3.7 trillion between 2012 to 2019. This rise is because of the growing economies of Muslim countries.

All the beliefs of Islamic faith have been derived from Qur’an. Employees working in Islamic banks are entrusted to not to deviate from principles of Qur’an. The basic difference between a conventional bank and Islamic bank is that Islamic banks prohibit usury and speculation. Speculation or gambling or commonly referred as maisir is strictly prohibited. To earn money, these Islamic banks charge a part of profit in place of interest from the creditor. If the creditor suffers loss, then the bank will also suffer loss. This money-making tactic in known as Equity Participation. If you want sharia bank loans, visit the website.