Islamic banking system

Islamic banking system 

1. History of Islamic banking system 
2. History of Islamic banking system in Nigeria 
3. Definition of Islamic banking system 
4. Characteristics of Islamic banking system 
5. Features of Islamic banking system 
6. Objectives of Islamic banking system 
7. Advantages of Islamic banking system 
8. Disadvantages of Islamic banking system 
9. Limitations of Islamic banking system 
10. List of countries that practice Islamic banking system 

History of Islamic banking system    

The first instance of Islamic banking came into picture in Egypt in 1963. The pioneering efforts by ahmed EL Najjar brought this bank into existence whos key principle was profit sharing (non interest based philosophy of shariah) by the end of 1976 there were 9 of such nbank in the country. This bank either charge nor pay interest but their activities were mostly limited to trade and industries were this bank invested directly or as partners of depositors. Hence, functionally those banks wereworking more as financial institutions rather commercial banks. In 1971, nazir social banks is known to be the first commercial bank in Egypt, through its charter never made references to shariah. The first bank explicitly based on shariah principles was established by the organisation of Islamic countries (OIC) in 1974 called Islamic development bank (IDB). The bank was primarily engaged in intergovernmental activities for providing funds for development project running into member countries. Its business model involved fees for financial services and profit staring financial assistant for projects. With time, during the 1970s several Islamic banks came into existence, including the Dubai Islamic bank (first Islamic private commercial bank 1975). The faisal Islamic bank of sudan (1977) and the Bahrain Islamic bank (1979) others from the asia pacific region include the Philippine amanah bank (PAB) formulated under presidential decree. Pakistan also had an established Islamic banking system  at the time which unfortunately didn’t survive. Within a decade of the first private bank coming into existence in dubai the global industry had more than 50 such bank in the same country most banks were a result of private initiatives, whereas the first concrete government initiative was taken by the Iranian government, when in 1985no bank was permitted to give or take interest. Interest was replaced with service charge of 4 – 8% and guaranteed minimum profit. Since then, Islamic finance is spreading all over the world at a tremendous pace from virtual anonymity to becoming a powerful competitive force in the world today.