Importance of Islamic Banking in Trade - Overview by Mazhar Ali Bokhari

1. بسم الله الرحمن الرحيم Starting in the Name of Allah, The Most Beneficent, The Most Merciful

2. MAZHAR ALI BOKHARI Head of International Operations & Strategic Planning Division GULF AFRICAN BANK LIMITED Nairobi, KENYA At AlHuda CIBE Awareness workshop B.Z University - Multan Phone Nos. +254 20 2740000 / +92 321 4402900 Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com

3. Honorable Guests, Participants, Ladies & Gentlemen. Thank you for giving me the honor of presenting an overview of Islamic Banking

4. Importance of Trade in Islam • Islam has given an immense importance to trade • The nobility of this profession is obvious from the fact that it was the chosen profession of prophet Muhammad (PBUH).

5. WHY ISLMIC BANKING Before explaining the concept “what is Islamic Banking” the elaboration of concept “why Islamic Banking” is very important. Islam is a complete code of life that provides guidance regarding each aspect of life.

6. WHY ISLAMIC BANKING • The primary objectives of Islamic Economic System are as under. • Equal Distribution of wealth • Social justice These objectives can never be achieved in Interest/Riba based economic systems.

7. WHAT IS ISLAMIC BANKING Now we come to our core question “Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the conventional good governance and risk management rules, by the principles laid down by Islamic Sharia’h”

8. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 1) Functions and operations are based on Sharia’h principles Conventional Banking 1)Functions and operations are based on fully man made principles

9. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 2) Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs) Conventional Banking 2) Investor is assured of pre-determined rate of interest

10. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 3) Aim at maximising profit but subject to Sharia'h restrictions Conventional Banking 3) Aim at maximising profit without any restrictions

11. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 4) Partners, investor and traders, buyer or seller relationship Conventional Banking 4) Creditor-Debtor relationship

12. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 5) Encourage asset-based financing and based on commodity trading Conventional Banking 5) Based on money trading. Money is a medium of exchange and not a commodity, its sale and purchase is prohibited in Islam.

13. DIFFERENCE BETWEEN ISLAIC AND CONVENTIOANL BANKING Islamic Banking 6) No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss. Conventional Banking 6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.

14. ISLAMIC BANKING PRODUCTS AND SERVICES • Currently available Islamic Banking Products and services are • Partnership based modes of financing • Musharaka Finance, Mudaraba Finance, • Trade based modes of financing • Murabaha Finance, Salam finance • Rental based modes of financing • Ijarah Finance, Diminishing Musharaka Finance

15. THANK YOU MAZHAR ALI BOKHARI Phone Nos. +254 20 2740000 / +92 321 4402900 Email: mazhar.bokhari@hotmail.com mazhar.bokhari@gulfafricanbank.com