Islamic Banking
Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics.
There is two ways of getting profit (1) which Islam permits (2) which Islam prohibits. Islam has forbidden earning from interests. And has counted as big sin and among the big sins there is no which forbidden in this manner; that notice a war from Allah and his messenger. Can human being defeat Allah and his messenger?
There are strict guidelines in Islam known as “Shariah Islamic Guidelines”. And according to these Guidelines, Investment in some kind of Investments is strictly prohibited.
The following are the Shariah Investment Guidelines -
Shariah Prohibited Companies
- liquor
- pork
- hotel
- casino
- gambling
- cinema
- music
- interest bearing financial institutions
- conventional insurance companies
Following Industries’ Stocks are Permitted -
- IT
- Automobile
- Oil & Gas
- Software
- Tele Communication
- Cement
- Pharmaceuticals
The Most of the Islamic Community still believe that, Investment is prohibited. But this is Myth. The Truth is that, Investment is prohibited in some kind of Companies only (As per above). Read here the detailed Guidelines of Investment.
(a)The company’s activities should not include liquor, pork, hotel, casino, gambling, cinema, music, interest bearing financial institutions, conventional insurance companies, etc.
(b) The total interest bearing debt of the company at any point in time should remain below one third of its average market capitalization during the last twelve months.
(c) Its aggregate of account receivables should remain below 45% of total assets.
(d) If company has any interest bearing income it should not be more than 10% in any condition.
I have posted several articles about Islamic investment and Shariah Compliance Investment Opportunities on this Blog. You can find a list of these articles at the end of this article as well as in the “Islamic Investment” Category of the Right Side Column bar of this Blog.
Shariah compliant finance is an important part of life for the faithful. Currently, Shariah-compliant financial products are available to both Muslims and non-Muslims around the globe. Hence, all consumers should have the opportunity to take up these products without facing undue regulatory barriers. Consequently, regulatory framework, including taxation, of Shariah compliant products should apply equally regardless of the faith of provider or consumer.
Any Investments that fulfill the above guidelines are the Shariah Compliance Investments and you can Invest in them.
Related Articles:-
- Shariah Compliant Stocks in India
- Shariah Compliant Mutual Funds
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