what they will receive from the other party. Therefore, no uncertainty, risk, or speculation are allowed into the transaction. A guaranteed future profit on the basis of uncertain gains is also prohibited. Also, no additional amount on and over the principal amount can be charged on the basis of inflation. The rationale behind the prohibitions is the wish to protect the weak from exploitation. This directly states that investment derivatives such as options and futures are considered as un-Islamic and so are forward foreign exchange transactions because of the predetermined future benefits and gains.5. Investments should be utilized only in practices or products that are not forbidden, or even discouraged, by Islam:Money supplied under the Islamic system cannot be used to trade in alcohol, for example. Also, a loan cannot be used to finance the construction of a nightclub, casino, etc. The modern practice of inter-banking lending at a predetermined rate is also prohibited. CURRENT PRACTICES OF ISLAMIC BANKSGenerally speaking, all interest-free banks agree on the basic principles of Islamic banking. However, individual banks differ in their internal characteristics, functions, and services. These differences arise as a result of the country’s laws, the citizens needs, and the individual bank’s objectives and experiences. Despite this, Islamic banks have the following aspects in common: - Deposit Accounts:All Islamic banks have 3 types of deposit accounts: current, savings and investment.While the number of current accounts has steadily declined, savings and investment accounts have proliferated. The reason for this is due to the increasing confidence of savers and investors in Islamic banking.Although the current accounts are the same as in conventional banks, the savings account operates in a different manner. In some banks, the depositors allow the banks to use their money but the obtain a guarantee of getting the ...
