1. ISLAMIC
BANKING

2. Definition of Bank
Bank is an financial institution which takes deposits
from SSUs , give advances to SDUs and renders
different services to its customers.
ISLAMIC banking
Islamic banking is banking based on Islamic law
(Shariah).It follows the Shariah,called fiqh
muamalat(Islamic rules on transactions). The
rules and practices of fiqh muamalat came from
the Quran and the Sunnah,and other secondary
sources of Islamic law such as opinions
collectively agreed among Shariah scholars
(ijma’), analogy (qiyas)and personal reasoning
(ijtihad).

3. ECONOMIC SYSTEM
An economic system is the system of producing and
distributing of goods and services and allocating
resources in a society.
• Definition: Economics
• Economics is the study of how societies use scarce
resources to produce valuable commodities and
distribute them among different people.
• the study of how society manages its scarce resources
Types of economic system
1-Market economy: in which individuals own and operate
different factions of production & distribution.
Examples: Free Enterprise & Capitalism

4. Cont…………..
2- Command economy: An economic system in
which government owns and operates all factions
of production & distribution. Examples: Socialism
&Communism
3)Traditional Economy – An economic system based
on culture and tradition. Economy is based on
agriculture and hunting. Examples: NonIndustrialized agrarian societies.
4) Mixed Economy - An economic system where
both command and market systems are featured.
All these economic systems are interest based.
among all the above systems, capitalism is mostly
practiced in whole world. In that system

5. Cont…………………….
There are normally two participants in such
transactions.
1-Investor
2- Manager
ISLAMIC ECONOMIC SYSTEM
The Riba free economic system is called islamic
economic system.

6. Cont……………………….
Islam does not deny the market forces and
market economy. Even the profit motive is
acceptable to a reasonable extent. Private
ownership is not totally negated. Yet, the basic
difference between capitalist and Islamic
economy is that in secular capitalism, the
profit motive or private ownership are given
unbridled power to make economic decisions.

7. Cont………………………
According to materialistic economics:
"Livelihood is the fundamental problem of man
and economic developments are the ultimate
end of human life”
While according to Islamic economics:
“Livelihood may be necessary and
indispensable, but cannot be the true purpose
of human life”

8. Cont……………….
Islam admits the right to private property but does
not consider it to be an absolute and
unconditional right that is bound to cause
"disorder on the earth”.
Islamic perspective of distribution of wealth
Distribution of wealth is guided from the Holy
Qur'an, the Sunnah and the writings of the
islamic “Thinkers". There are some principles
which distinguish islamic way of distribution of
wealth from non islamic way. These are

9. Cont………………….
1. The importance of the economic goals
In Islamic point of view "economic activity” to
be the basic problem of man, nor does it
view economic progress as the be-all and
end-all of human life.
According to the Quranic view, all the means of
livelihood are no more than just stages on
man's journey, and his final destination lies
beyond them.

10. 2. The real nature of wealth and property
The other fundamental principle, which can help
to solve the problem of the distribution of
wealth, is the concept of “wealth” in Islam.
According to the illustration of the Holy Quran
“wealth” in all its possible forms is a thing
created by Allah, and is, in principle His
"property". Allah delegates the right of
property over a thing, which accrues to man,
to Him. The Holy Quran explicitly says:

11. "Give to them from the property of Allah which
He has bestowed Upon you." (24:33).
So we can say that "wealth", no matter what its
form, is in principle ”the property of Allah”,
and it is He who has bestowed upon man the
right to exploit it. So Allah has the right to
demand that man should subordinate his
exploitation of this wealth to the
commandments of Allah.

12. Conclusion
(1) Whatever wealth man does possess has been
received from Allah.
(2) Man has to use it in such a way that his
ultimate purpose should be the other world
(3) Since wealth has been received from Allah,
its exploitation by man must necessarily be
subject to the commandment of Allah.
(4) Now, the Divine Commandment has taken
two forms:-

13. a) Allah may command man to convey a specified
production of "Wealth" to another man. This
Commandment must be obeyed, because Allah
has done good to you, so He may command you
to do good to others - "do good as Allah has
done good to you".
b) He may forbid you to use this “wealth” in a
specified way. He has every right to do so
because He cannot allow you to use “wealth” in
a way which is likely to produce collective ills or
to spread disorder on the earth.