Islamic Banking: A Study of the Relevant Operating Modes in Current Financial Scenario

Abstract

Islamic Banking and finance has been an upbeat trend since 1963. It emerged within the sphere of Islamic economics and is guided by Shari'ah . The relevant themes of Quran and Ahadith were explored by Muslim jurists to search the possibilities for legitimate merchandise. Fiqh al-Maamala,t therefore, is the field that resulted in shaping of the Islamic Banking and finance. Till 1975 there were a few Islamic financial institutions especially in Egypt, Gulf States, and Malaysia governed by the Shariah Advisory Boards, but due to wider dimensions of the subject and deliberations of Islamic Fiqh Academy in 2nd Summit of OIC in Feb. 1988 at Jeddah, Saudi Arabia, a world-wide coerce of promoting Riba -free institutions became a solemn concern in Muslim States. Currently around 315 Islamic Banks are operating in some Muslim as well as Western countries. International Monetary Fund in 2005-09 calculated the growth of Islamic Equity institutions to set new standards for the commercial banking. The present paper attempts to study and highlight its character and relevance of the operating modes in the current financial scenario.

Keywords: - PLS scheme, Equity, Shariah, Partnership based contract