Islamic banking is a type of banking is based on the principles of Islamic rules and laws. This type of banking does not adhere to the same practices as traditional banks and only seeks out business transactions that are in conjunction with the guidance of the Koran. 


With Islamic banking, earning interest is forbidden. They prefer to interest as "riba" which means that someone is receiving something without providing anything to the other party. They look at this as unnecessary and they do not pay interest on savings accounts or charge interest on most types of loans. 


Islamic banking also utilizes specific rules when it comes to choosing businesses to invest in. With this system, banks will only invest in companies that are promoting the greater good. If a company operates in opposition to Islamic principles, the bank will not be able to provide a loan to that business. 


Many banks have been started using Islamic principles and this form of banking is becoming more popular across the world. While it is very popular in the Middle East, it has started to expand into the Western Hemisphere as well. Many of these banks are private or semi-private organizations. 

Check your 3 Credit Scores here for Free.

blog comments powered by Disqus