About Islamic Banking
Islamic Banking (Non-Interest Banking) is a profitable growing global phenomenon practiced in nearly 70 countries across the world including the United Kingdom, Canada, the United States of America, the United Arab Emirate, Malaysia, China, Singapore, South Africa, Kenya etc. Global Banks like HSBC, Citibank, Barclays Bank etc. also have windows for it. It is an alternative financial service offering which is open to all irrespective of race or religion.
It is based on the ethical principles of fairness, transparency and integrity. Non-Interest Banking offers almost all the services of conventional banks. The difference is that non-interest Islamic Banks do not give or receive interest, nor finance anything that is harmful to society like alcohol, tobacco, gambling etc. They also seek to avoid gharar – excessive speculation, uncertainty in contract and lack of transparency.
Currently, many Nigerians are craving for such Non-Interest Banking services. These people are desirous of ethical banking services which provide for socially responsible investment outlets. In a nutshell, Non-Interest Banking is a financing arrangement through sales on mark-up, leasing and profit and loss sharing partnership.
Islamic banking is gaining popularity in emerging markets after helping some financial institutions avoid the worst of the economic meltdown. Islamic Banks have been less affected than many Conventional Banks in the current global recession. This is mainly because unlike Conventional Banks, the Islamic Banks have not been exposed to losses from investment in toxic assets nor have they been dependent on exotic derivative instruments since these practices are not in accordance with the principles set out in the Sharia Law.
Moreover, experiences of recent years have already indicated that the interest of people in Islamic Banking goes beyond only Islamic investors. The UK is said to be the hub of Islamic Banking in the world, yet only 5% of its population are Muslims. In view of this, governments and regulators in a variety of countries Nigeria inclusive, have already recognized the importance of Islamic Banking as a feasible alternative to Conventional Banking.