ALLANA MANAGEMENT JOURNAL OF RESEARCH, PUNE - Volume 3, Issue 1, January 2013- June 2013

Pages: 123-133
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ISLAMIC BANKING AN ALTERNATE REVENUE MODEL - REVIEW OF CURRENT AND CLASSICAL LITERATURE

Author: Rana Taranum Shaikh , Sayeda Ameerunnisa Rahila , Murtaza M. Junaid Farooque

Category: General Management

Abstract:

Islam, prohibits interest as it leads to inflation and it increases difference amongst the rich and poor. Islamic finance and banking system is a system where all the financial activities are consistent with the principles of Sharia (Islamic Law) and guided by Islamic economics which is against the collection or payment of interest.

The importance of Islamic finance has been already realized by some big corporates in India for e. g., Reliance launched Sharia-compliant portfolio management scheme, the Tata Mutual Fund started Tata Select Equity Fund the closest Shariah-compliant investment , etc.

In Sudan and Iran, the entire banking system is currently based on Islamic finance principles. Islamic banks are concentrated in the Middle East and Southeast Asia, but they are also present as niche players in Europe and the United States.

With a population of 156million Muslims India stands to gain tremendous advantages, and can also attract around ?1trillionUS in Islamic investment funds from Gulf countries. This would help the national current account and keep the fiscal deficit in check, however, the idea of Islamic banking, having approached from a purely religious perspective and there is a need to study the impact of Islamic banking on Indian communities regardless of their religious faith. Islamic banking has to be positioned as professional banking and not religion-based banking.

In this paper an attempt has been made to review classical and modern literature available on the subject of Islamic banking and finance.

KEYWORDS

Religion, Sharia, Fiscal deficit, Banking