Banking

Thanks for the question. Jajhakalloh. In summary, Conventional banks usually lends money and take back extra money as interest from the borrower of money, which is Riba in Shariah. Usually, bank as money lender has no interest in the use of the money it just lent to the borrower. On the other hand, Islamic banks can lend money to a borrower for any specific economic activity, and bank ensures that the economic activity (product/service) has taken place. In this way, the money of millions of depositors are confirmed used for the growth of values and in return borrower repay extra to the Bank. In short, conventional bank treat money as a commodity which it lends and charge interest for that. Other party Islamic bank treat money as a currency which is used for a value growth and charge profit for providing value to borrower. Another important aspect for Islamic bank is that, It cant use/extend money for any unethical shariah prohibited purposes, e.g. Gambling, Pork, Tobacco etc.. Allah Knows best.

Islamic banks operate under Shariah law, so they don’t deal with interest (riba). Instead, they use profit-sharing and ethical investment models. Conventional banks charge and pay interest and have no religious restrictions on investments.

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