Difference Between Islamic Banking And Conventional Banking In Pakistan


It is going to share as per the requirement analysis that can make association with Difference Between Islamic Banking And Conventional Banking In Pakistan.

Islamic Banking:

Islamic Banking is that banking system in Pakistan which is run under the principles of Islamic Laws. There are two main or basic principles on which Islamic banking is based that are the prohibition of collection and payments of interests by lenders and investors and sharing of profit and loss.  The principle of Islamic Banking is based on Islamic Law or Shariah which is truly based on Quran and Hadith. There are so many Islamic Banks are present in Pakistan. Here below we are going to discuss in detail the Islamic Banking And Conventional Banking In Pakistan.

Conventional Banking:

Conventional Banking is totally different from Islamic Banking. In conventional banking, money is primarily used as a medium of exchange, store of value and also able to sell at more than the face value our rented out more than it’s worth. Conventional banking use money as a commodity which leads to the inflation. Due to conventional banking, there is a decrease in real GDP, the net exports amount becomes negative which leads to foreign debts and the local currency become weaker. For further difference must read the key Difference Between Islamic Banking And Conventional Banking In Pakistan.

 

Difference Between Islamic Banking And Conventional Banking In Pakistan

Difference Between Islamic Banking And Conventional Banking In Pakistan

Following are the major key points from which we can easily distinguish or get Difference Between Islamic Banking And Conventional Banking In Pakistan.

  • Islamic Banking is followed by the principle of Islamic Law whereas the Conventional banking not followed the principles of Islamic laws.
  • In Islamic Banking money is not used as commodity but used as a medium of exchange and store of value so therefore, money cannot be sold at more than its face value or rented out whereas in conventional banking money is used as commodity, medium of exchange, store of value and can be able to sold at more than its face value or rented out.
  • Islamic banking is based on profit and loss sharing used Musharikah and Mudarabah whereas the Conventional banking is not based on profit and loss sharing
  • In Islamic Banking Profit on the exchange of goods and services is the basis for earning profit whereas in conventional banking Time value is the basis for charging interest on capital.
  • Due to Islamic banking, there is increase rise in real GDP, the net exports amount becomes positive, this reduces foreign debts burden and local currency become stronger whereas due to conventional banking there is a decrease in real GDP, the net exports amount becomes negative which leads to foreign debts and the local currency become weaker.
  • Due to Islamic Banking no expansion of money takes place and thus no inflation is rises whereas due to conventional banking, expansion of money takes place due to which inflation is created.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Close

Adblock Detected

Please consider supporting us by disabling your ad blocker