Islamic banking is that in which the principles and laws are framed and transition is done within Islamic laws of Shariyat. As interest of any kind or form is prohibited in Islam nor its transactions or any specific interest of floating or fixed tenure is permissible in Islam. Islamic banking has the same aim and purpose as other banking except that it works and operates and transacts in accordance with the rules of Shariyat under the guidance of Islamic principles. The principle aim of Islamic banking is to develop the Islamic laws and economies remains the prime factor. Many of the laws of such banking is welcomed and accepted by people around the world. In 1963, in Mit Ghamr in Egypt the first Islamic free interest bank came into existence. The people of this locality did not save money in any bank by knowing the fact that it would yield an interest, being religious minded they did not do any savings. In this their main aim was to respect the Islamic laws and Islamic values. They wanted to educate the people about interest free banks. So they thought of setting up of such a bank which would be interest free. They set up a bank and accepted accounts from the people which included savings accounts, Investments accounts and Zakat accounts. No interest was paid on saving accounts but with drawls could be more on demand. Small short term, interest free loans could be made. Funds in investment accounts were invested on the basis of profit sharing. The Zakat account attracted the people. The Mit Ghamr project was successful and increased in years to come.
A popular belief exist that banking is simply a structure that runs and depends on interest and how can a bank ever exist without taking any interest. But this principle was proved false by Islamic banking. Islamic economies is a complete system of social and economic justice. It deals with rights of the individual on basis on Islamic principles
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A teacher by profession