BSc BA ADP FSc ICS FA ICom English Essay Interest Free Banking With Outline & Quotations Essay Notes Online Taleem Ilmi Hub
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Outline
1. Introduction
- What is banking system?
- Supplies the necessary credit and loans
2. Concept of banks
- The banks accept deposits in form of savings
- Profit in the Quranic sense
3. Interest free banking according to Islamic Teaching
- The return on direct and normal business transactions is called profit (Baei)
- The Quran prohibits Interest or Riba
4. Interest free banking has been part of the Islamization Process
- People and the government appear to be non-serious
- Hardly 5% people live by honest earnings
5. Conclusion
Essay:
Banking system is the barometer of economic progress in the country. Pakistan has a well-organized and well-knit banking system. It supplies the necessary credit and loans to the businessmen and industrialists on certain rate of interest. The banks accept deposits in form of savings and then invest the money in productive channels. The depositors get interest on the deposits at a fixed rate. They funnily call it profit. In fact interest has been the main impetus for the depositors. The whole banking system works on earning in form of interest. It can be called profit in the Quranic sense.
According to Islamic teachings, the return on direct and normal business transactions is called profit (Baei). It is a direct income from acts of buying and selling. There is no such activity involved in interest (Raia). The Quran prohibits Interest or Riba. The basic tenet of Islam is elimination of interest. It is to be taken as axiom, a law that forbids interest. Interest is un-Islamic or Haram (forbidden). Only, profit is considered correct return and remuneration. Earning from bank deposits and savings come under dishonest earning.
According to Islamic system there are only three factors of production – capital, land, and labour. Capital and entrepreneur become one and the same. Their share is profit and not interest. This is the basis of interest – free banking. Condemnation of interest and justification for normal business and profit has been recognized as correct remuneration. Interest is not a correct and justifiable payment in Islam. So interest has been substituted by the institution of ‘profit’ and ‘loss’ sharing known as interest-free banking. It is a partnership between capital and enterprise. This is in accordance with the tenets of Islam.
Interest free banking has been part of Islamization Process in Pakistan, started after 1977. It was the first stop towards Islamization of our economic system. It was started in 1979 and completed in 1985. The sold system has been replaced by PLS Banking system. The system can succeed, only when we sincerely practice Islam in all the walks of life, private and national. But our people and the government appear to non-serious about it.
All earnings and money earned through dishonest and foul means like bribery, smuggling and hoarding high profiteering are prohibited in Islam. Hardly 5% people live be honest earnings. How can the new system work and succeed? It is rather impossible without fear of God and belief in Reward and Punishment. Islamization has become a farce. By prohibiting interest, Islam has eliminated many evils of capitalistic economy and closes the doors for importation of tyrannical and unnatural economic system of socialism.
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