An explanation of Islamic Banking (muslims, charity, Article, convention)

[Djamila]

ISLAMIC BANKING


Turisk Ziraat Bank, Sarajevo, Bosnia

Banks in most Muslim countries, Bosnia included, offer what is called "Islamic Banking". In Sarajevo, you can open an Islamic Bank Account at numerous financial instutions, the most popular being the Central Bank of Bosnia and Herzegovina (CBBH), Bosnia Bank International (BBI), Vakuf Bank (VB), and Turkish Ziraat Bank (TZB).

Funds in an Islamic Bank Account can be stored in a Current Account, Savings Account, General Investment Account, Specific Investment Account, or Contracting Relations. Funds can be used for Shareholders' Financing, Term Financing, Trade Financing, or Investment.

The rules of Islamic Bank Accounts are very different. Banks are not allowed to charge fees for transactions and no one, for any reason, is allowed to charge or collect interest. Investments must be honorable - you can't invest in a company that makes cluster bumbs, or alcohol, and so on. Trading on the open market is also tightly controlled since it's considered a form of a gambling, which is not allowed.

Profits made are shared equally throughout all the Islamic Bank Accounts in that institution's system.

There are also special savings accounts to fund, for example, a pilgrimage to Mecca. These are heavily subsidized by various charities and other groups. For example BBI offers a rate of 3-1 - meaning for every dollar you put towards funding a pilgrimage to Mecca, three dollars will be added to your account - normally through charities, tourist guides, etc... that the bank has signed a contract with.

Lastly, 4% of everything in an Islamic Bank Account is taken and given to charity (often the same ones who subsidize special savings accounts) as a zakat (or charity) tax, which is required of all Muslims.

Overall, Islamic Bank Accounts are highly prized and - at least in Bosnia - non-Muslims tend to prefer them over convention accounts.

[Cordoba]

Parallels Between Islamic and Ethical Banking

Abstract: This article critically discusses the ‘ethical’ discourse of the Islamic Banks and examines the ‘ethical’ approach of a mainstream bank.

Parallels Between Islamic and Ethical Bank

[muslimphotos.net]

I believe the banks are allowed to surcharge fees. As the bank themselves also needs to pay their workers and fees to other parties in the transaction.
Or am I wrong?