ISLAMIC BANKING

VS
CONVENTIONAL BANKING

DISANTHI D/O SILVATAMILAN

23DIB13F2005

AIN FATEHA BT ROSLI 23DIB13F2014

MUHAMMAD AFIQ BIN ZULKIFLI 23DIB13F2022
NUR SHAHIRA BT ABDUL RAHIM 23DIB13F2043
HAKAMAH BT DURAJAK 23DIB13F2033

WHAT IS ISLAMIC BANKING ???

Refers to money management based on syariah law

Islamic banking activities are based on business contracts allowed in Islam

such as :
~ al-Mudharabah (Profit sharing)
~ al-Musharakah (Share capital)
~ al-Baibithaman ajil (Sale price retained)
~ al-Ijarah (Lease)
~ Bai Salam (Salam sale)
~ Bai alistisna

WHAT IS CONVENTIONAL BANKING ???

Conventional bank transactions based on common practice

Set interest as price, both for products such as savings deposits, term
deposits nor loan given product based on certain interest rate

DIFFERENCE
=> Business Policy
Islamic Banking

Conventional Banking

Prohibit the granting of interest or riba

Follow Islamic shariah principles as well as the concept of sharing

profit and loss together

Based on the provision of interest (riba) in all transactions both in

loans, overdrafts, leasing, hire purchase, savings and credit cards

=> Rules and Regulations

Islamic Banking

Conventional Banking

Transact business according to Banking Act 1983

This act empowers the Central Bank of Malaysia to regulate and

oversee the conduct of Islamic banking that does not conflict with
shariah

Conduct it affairs according to Banking And Financial Institutions Act

1989 (BAFIA)

=> Investment
Islamic Banking

Conventional Banking

All investments are free from the element of uncertainty (gharar)

Every investment according to Islamic law and ensure it does not
engage in activities that have been banned as gambling, speculation,
sales of alcoholic beverages, non-halal food and etc.

Freedom to invest to maximize profits and not in conflict with the law

=> Adviser
Islamic Banking

Consists of scholars, academicians and experts of Islamic banking

Conventional Banking

Consists of experts in banking only to ensure that the bank achieve

maximum profit

=> Profit
Islamic Banking

Gain profit in a way that does not conflict with Islam

Conventional Banking

Profit to various ways without regard to whether it complies with

Islamic law or otherwise

=> Islamic Missionary

Islamic Banking

Conventional Banking

Involved in the movement of the Islamic missionary to society

For example, provide awareness to the community about the
prohibition of riba, forums and research on Islamic Muamalat and
deliver a sermon Friday

Does not concerned about activities of the Islamic missionary

=> Aqad
Islamic Banking

Islamic financial system based on the contract that was agreed upon
by Islamic law as Bai Bithaman Ajil, wadiah, mudarabah,
musyarakah and so on.

Conventional Banking

Mainly involved in the loan system based on riba

Advantages !!!
Islamic Banking

Conventional Banking

Based on profit

Based on interest and revenue

Profit and al-Falah oriented

Profit oriented

Relationship with customers in the form Relationship with customer in the form
of partnerships
of creditor-debtor relationship
Users of real funds

Creator of money supply

Carry out the lawful sale only

Carry out lawful and unlawful sale

Delivery and distributions of funds must There is no shariah regulatory bodies

comply with shariah monitored by
shariah regulatory bodies

The Banking System !!!

CONVENTIONAL BANKING
Practicing Capitalism
Seeks to profit
Savers and Borrowers of money granted interest

ISLAMIC BANKING
Based on Islamic law and Shariah
Based on social justice and social welfare
Ban elements of gharar (uncertainty), riba (interest) and maisir (gambling)