CURRENT PRACTICES OF ISLAMIC BANKING SYSTEM



Generally speaking all interest free banks agree on the basic principles. However, individual bank differ in their appreciation. These differences are due to several reasons including the laws of the country, objectives of the different banks individual differences and banks circumstance and experiences etc.
THE SALIENT FEATURES COMMON TO ALL BANKS
Deposit Account: All the Islamic banks have three kinds of deposit account current, saving and investment.

·     Current or demand deposit accounts are virtually the same as in all commercial banks. Deposit is guaranteed.
·     Saving deposit accounts operate in different ways. In some banks, the  depositors allow the banks to sue their money but they obtain a guarantee of getting the full amount back from the bank. Bank adopt several methods of inducing their client to deposit with them but no profit is promised. In others savings account are treated as an investment account but with less stringent conditions as to withdrawal and minimum balance.
·     Investment account: Investment deposit are accepted for a fixed or unlimited period of time and the investors agree in advance to share the profit or loss in a given proportion with the bank. Capital is not guaranteed

ISLAMIC ECONOMIC ORDER
Islamic banking is an instrument for the development of an Islamic economic order. Some of the salient features of this order may be summed up as:
1.      While permitting the individual the right to seek economic well being, Islam makes a clear distinction between what is halal (lawful) and what is haram (forbidden or unlawful) in pursuit of such economic activity.
2.      While acknowledging the individuals right to ownership of health legitimately acquired Islam makes it obligatory on the individual to hoard it, kept it idle or to surrender it.
3.      While allowing an individual to retain any surplus wealth, Islam seeks to reduce the margin of the surplus for the well being of the community as a while in particular the destitute and deprived section of society by participating in the process of Zakat ( a tax on wealth that is distributed to the needy.
Viewed as a whole, the economic system envisaged by Islam aims at social justice without inhibiting individual enterprise beyond  the point where it becomes not only collectively injurious but also individually self destructive.
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