What is Islamic banking? Islamic banking services are a form of modern banking services based on Islamic legal concepts (Sharia) that were developed and laid down in the early centuries of Islam. These services are based on the principle of "risk sharing" as a main approach, and on excluding financing in exchange for a fixed, predetermined return. Unlike the interest-based system of commercial banking, where all the pressure is on the borrower who must repay the loan with the agreed interest, regardless of the success or failure of his project, Islamic banking believes in the principle of sharing profits and risks in the business rather than becoming creditors. . In Islamic banking the 'depositor', the 'bank' and the 'borrower' become partners in shares of risk and reward in financing business ventures. The most famous feature of Islamic banking is the prohibition of interest, known as "usury". This feature encourages the concept of "greater risks and higher returns", which means that high-risk investments are a stimulus to the economy and give greater encouragement to businessmen to exert maximum efforts. Islam encourages investments in order to benefit society. Shareholders and depositors must simultaneously share all the risks and rewards of financing business ventures. This is unlike the interest-based commercial banking system, where all pressure is on the borrower to repay his loan with agreed interest, regardless of the success or failure of his project. Islamic banking helps to contribute to a more equitable distribution of income and wealth, and also to increase fair participation in the share capital of the economy.
