Journal
| Title | A Comparison of Islamic Banking and Conventional Banking System in India: A Conceptual Approach | |
| Author's Name | Anoop Mohanty and Amarjit Saini | |
| ISSN | 0974-7281 | |
| Page(s) | 1-8 | |
| Volume No. | 6 | |
| Issue Month | January 2014 | |
| Keywords | Ijarah, Musharakah, Mudarabah, Riba, Wakalah. | |
| Abstract | In the medieval period Islamic merchants were indispensable middlemen for trading and business activities. Not only the presence of Islamic merchants, even Islamic banking has concepts, techniques, and instruments since very long back but full fledged system came into existence recently in 1980s. In fact, all the previous references of mercantile activities were in context of “interest-free” regime. The Muslim population is expected to be over 2.6 billion or over 26% of the projected world population of 10 billion by the year 2050, thus every fourth person of 21st century would be Muslim. This paper aspires to explore the potential of economic system in line with Islamic Shariah laws where interest (Riba) is prohibited. The present study emphasizes the implementation of Islamic Banking in Indian context as prevalent in other non Muslim regions worldwide. An attempt has been made to study the similarities and divergence between the operational aspects of conventional banking versus Islamic banking. The study identifies that the principles and practices of Islamic banking promotes the concept of entrepreneurship and eliminates the credit default risk. In Islamic Banking entrepreneurs are being nurtured by mutual relationship of risk sharing, financial support and care. It leads to better performance of entrepreneurs. Islamic banks are expected to be more ethical and restrictive, reason being investment avenue selection is subjected to the prohibitions of Shariah laws. A perfect structure of Islamic bank in Indian scenario can be promoted through an independent financial institution with strict initial surveillance. Islamic banking seems to be a better manager for inflation control in India. The study has made suggestions for various essential components like feasible structures, financial instruments, the expert panel or advisory board along with the key players. |
<< Go Back to the List
