Government takes steps to spread Islamic banking

[FaujHistorian]

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Difference is of operations .....
.??

Minor correction.

Difference is of labels.

One is labeled Halal bank
and

the other is perceived by Islamists as
labeled to be haram bank.


Both use the same formulas to come up with short term vs. long term mark up aka interest.


The problem with Islamists is that they confuse usury with interest.

The two are different.

However every halal bank takes interest in the name of mark up fee.


peace

 

[Armstrong]

OK forget Islamic Bank for a moment ..... & suppose Mr. A is a trustworthy person, people are used to give their money to him to do business and agreed to share the profit at pre determine rate ...... Same is the case of Mr. B

Mr. A is in the business of purchase and sales of Asset ....
Mr. B is in the business of Landing money on interest ....

Due to market condition both earn the same rate of profit ..... and distribute it in their investors at agreed rate .....

Now my dear which business is permissible ..... ??

Both of them earned same profit & paid the same rate of profit to their investors ..... then what is the difference b/w them ..... other then operational activities or the mode of business which they adopted to earn profit and Interest respectively .....

There is no comparison of Mr.A & Mr.B because they're both doing two different things !

Whereas an Islamic Bank & a Conventional Bank are essentially doing the same thing.

You go to a Conventional Bank to get Lease Financing for your car; they pay the Car Manufacturer whatever is the List Price of the Car & in return they give you a Lease Payment Schedule where Rentals & Principle amounts are calculated with reference to the Inter-Bank-Operating-Rate hence Interest !

Likewise you go to an Islamic Bank to get Lease Financing for your car; they pay the Car Manufacturer whatever is the List Price of the Car & in return they give you a Lease Payment Schedule where Rentals & Principle amounts are calculated with reference to the Inter-Bank-Operating-Rate hence Interest.

Whats the difference between the two ?

One calls it Interest whilst the other calls it Mark Up !

One calls the Lease - a Finance Lease whilst the other calls it an Ijara-wa-iqtina (or something similar I've forgotten the correct name).

So other than making a fool out of people by changing 'names' - What else is different ?

 

[HRK]

There is no comparison of Mr.A & Mr.B because they're both doing two different things !

Whereas an Islamic Bank & a Conventional Bank are essentially doing the same thing.

You go to a Conventional Bank to get Lease Financing for your car; they pay the Car Manufacturer whatever is the List Price of the Car & in return they give you a Lease Payment Schedule where Rentals & Principle amounts are calculated with reference to the Inter-Bank-Operating-Rate hence Interest !

Likewise you go to an Islamic Bank to get Lease Financing for your car; they pay the Car Manufacturer whatever is the List Price of the Car & in return they give you a Lease Payment Schedule where Rentals & Principle amounts are calculated with reference to the Inter-Bank-Operating-Rate hence Interest.

Whats the difference between the two ?

One calls it Interest whilst the other calls it Mark Up !

One calls the Lease - a Finance Lease whilst the other calls it an Ijara-wa-iqtina (or something similar I've forgotten the correct name).

So other than making a fool out of people by changing 'names' - What else is different ?

kindly read Islamic Financial Accounting Standard -2 in comparison with IAS-17

 

[livingdead]

@HRK do you have retail banking and do you take deposit from ordinary people?
I presume you wont pay interest on deposit, but do you pay anything to them, like dividend from your profit proportionate to deposit amount?

 

[Armstrong]

kindly read Islamic Financial Accounting Standard -2 in comparison with IAS-17

Huzooor what has Financial Reporting got to do with it ?

Financial Reporting/Accounting deals with how you're supposed to recognize it !

We're talking about 'Finance' or more so 'Financial Management' here - What they really are as Sources of Finance !

More or less you're doing the same thing in either case - Interest vs Mark Up - Bohaaat furrk haii ?

 

[livingdead]

Huzooor what has Financial Reporting got to do with it ?

Financial Reporting/Accounting deals with how you're supposed to recognize it !

We're talking about 'Finance' or more so 'Financial Management' here - What they really are as Sources of Finance !

More or less you're doing the same thing in either case - Interest vs Mark Up - Bohaaat furrk haii ?

you are just jealous that you did not get the job @HRK got...

 

[HRK]

Huzooor what has Financial Reporting got to do with it ?

Financial Reporting/Accounting deals with how you're supposed to recognize it !

We're talking about 'Finance' or more so 'Financial Management' here - What they really are as Sources of Finance !

More or less you're doing the same thing in either case - Interest vs Mark Up - Bohaaat furrk haii ?

Dear treatment ..... of Ijara & Lease as per your example .....

yara in conventional lease bank makes customers to mark HP over ownership documents .....while in Ijara ownership will remain with the bank .....

@HRK do you have retail banking and do you take deposit from ordinary people?
I presume you wont pay interest on deposit, but do you pay anything to them, like dividend from your profit proportionate to deposit amount?

on saving accounts depositors do get profit ..... but in this case Bank act as a 'fund manager' and share the profit with customers, like my bank share it with the ratio of 60:40 (60% bank, 40% customer)

 

[FaujHistorian]

yara in conventional lease bank makes customers to mark HP over ownership documents .....while in Ijara ownership will remain with the bank .....

Please do not spread misinformation aka lies. you are representing halal banks, so you must not make haram statements and you must speak truth.

Haram bank too retain the ownership of leased stuff.

....

More or less you're doing the same thing in either case - Interest vs Mark Up - Bohaaat furrk haii ?

When I buy halal chicken, I know that chicken was slaughtered in Islamic way.

But these Islamic banks sell the same chicken $hit interest and just stamp it halal.

Talk about spreading a lie while claiming to be proponents of Islam.

Sadly.

These days pakka Muslims and Mullahs lie through their teeth and teet, while waiving the green kalima flag vigorously.


hypocrisy at its best.

 

[Armstrong]

Dear treatment ..... of Ijara & Lease as per your example .....

As per my example, as sources of finance, they aren't much different from each other !

Accounting for them is a different matter, for example if an Ijara Leased Asset is depreciated on its Contract Term whilst a common Leased Asset is depreciated on the Lower of Lease Term & Useful Life - then that hardly makes any difference in terms of what they are....all it means is that you're depreciating it on two different time scales !

That doesn't change their nature as Source of Finance where one is charging an Interest & the other is charging a Mark Up which is effectively an Interest !

yara in conventional lease bank makes customers to mark HP over ownership documents .....while in Ijara ownership will remain with the bank .....

Of course the Ownership remains with the Bank because its a normal Ijara & like an Operating Lease (as in Conventional Finance) the ownership remains with the Lessor (the Bank) & just like a Finance Lease in an Ijara-wa-iqtina, the ownership is transferred to the Lessee (customer) at the end of the Lease Term - Sounds the same to me !

Besides the required rate of return the bank would be using to determine their Mark Up is based on the KIBOR which in turn is the Inflation Adjusted Interest Rate - Kiyaa farqq reh giyaaa ?

 

[FaujHistorian]

As per my example, as sources of finance, they aren't much different from each other !

Accounting for them is a different matter, for example if an Ijara Leased Asset is depreciated on its Contract Term whilst a common Leased Asset is depreciated on the Lower of Lease Term & Useful Life - then that hardly makes any difference in terms of what they are....all it means is that you're depreciating it on two different time scales !

That doesn't change their nature as Source of Finance where one is charging an Interest & the other is charging a Mark Up which is effectively an Interest !



Of course the Ownership remains with the Bank because its a normal Ijara & like an Operating Lease (as in Conventional Finance) the ownership remains with the Lessor (the Bank) & just like a Finance Lease in an Ijara-wa-iqtina, the ownership is transferred to the Lessee (customer) at the end of the Lease Term - Sounds the same to me !

Besides the required rate of return the bank would be using to determine their Mark Up is based on the KIBOR which in turn is the Inflation Adjusted Interest Rate - Kiyaa farqq reh giyaaa ?

Well said.


unfortunately we'll continue to be deceived as long as we as a nation believe in Islamist financing mumbo jumbo jumping jack rabbit. hahahahaahahah

 

[HRK]

Please do not spread misinformation aka lies. you are representing halal banks, so you must not make haram statements and you must speak truth.

Haram bank too retain the ownership of leased stuff.
hypocrisy at its best.

Dear I think you should mind your language here ...... any debate with in gentlemen sprit is welcome but the way of argument which you adopted is not welcomed at all .....

I think you have missed the point of my post HP (Hire Purchase) marking indicate a sort of joint ownership ..... while in Ijarah Bank remain the sole owner .....

 

[FaujHistorian]

Dear I think you should mind your language here ...... any debate with in gentlemen sprit is welcome but the way of argument which you adopted is not welcomed at all .....

I think you have missed the point of my post HP (Hire Purchase) marking indicate a sort of joint ownership ..... while in Ijarah Bank remain the sole owner .....

HP or non HP

if you borrow money from halal bank or Haram bank to buy/lease something,

both haram and halal bank will keep the ownership as a collateral.


So we should not deceive people by calling the same thing with different names.

And

if I point out the deception, you should not get offended if you make a mistake. Just accept it.

That's what gentlemen are supposed to do.


peace

 

[HRK]

HP or non HP

if you borrow money from halal bank or Haram bank to buy/lease something,

both haram and halal bank will keep the ownership as a collateral.

Dear do you understand what difference HP marking can cause ..... ??

In Ijarah Bank as sole owner and lessor bear all "Risk & Rewards" associated with the ownership of the asset ....... which mean in case of 'total loss of asset' only Bank will suffer .... not the lessee .... and you are saying that Islamic banks are deceiving .....

dear please study basic literature first before blaming someone .....

 

[Armstrong]

Dear do you understand what difference HP marking can cause ..... ??

In Ijarah Bank as sole owner and lessor bear all "Risk & Rewards" associated with the ownership of the asset ....... which mean in case of 'total loss of asset' only Bank will suffer .... not the lessee .... and you are saying that Islamic banks are deceiving .....

dear please study basic literature first before blaming someone .....

HRK Bhai, but in an Operating Lease - the Lessor (the Bank or the Leasing Firm) too is responsible for any maintenance or insurance of the asset hence incurring the risks of ownership !

 

[HRK]

HRK Bhai, but in an Operating Lease - the Lessor (the Bank or the Leasing Firm) too is responsible for any maintenance or insurance of the asset hence incurring the risks of ownership !

Dear in conventional lease its lessee who pays for insurance, conventional institutions just make arrangements of insurance like form which company and at which terms & conditions & rates asset will be insured, in Ijarah bank pay for insurance

and the maintenance of machinery due operation/ use is responsibility of lessee in both cases .....

now the difference is in Ijarah ownership does not get transferred to the lessee upon the completion of Ijarah term..... to transfer the ownership a sales agreement is needed to be made b/w both parties ..... and at this stage all conditions of Murahabaha will be applied ..... this is 'Ijarah wal iqtina' which is a form of Ijarah and 'new concept' in its basic ......

One need to understand Ijarah is not a mode of sales but due to market need this concept/ tool is adopted to conclude sales .....