What Is Islamic Banking-Islamic Banks In UAE-List

What Is Islamic Banking-Islamic Banks In UAE-List

Islamic banking unlike conventional banking is interest-free, fee-free and the banking activities are consistent with Islamic law or Shari’ah principles. Islamic banking is also called as ‘Shari’ah Compliant Finance‘.

According to an article featured on The Economist, Ernst & Young, a multinational professional services firm estimates the Islamic Finance to grow at an average rate of 19.7% a year to 2018.

The Shari’ah-compliant products came into existence only in mid-1970s even though principles guiding Islamic finance are very old; as old as Islam religion. Iran holds the lion’s share of Islamic banking assets accounting to 43%, followed by Saudi Arabia -12% and 10% by Malaysia in 2012.

The Shari’ah-compliant products can take any form but they should be interest-free (neither charged nor paid) and investments in commodities and activities like alcohol, gambling, pork, pornography etc are forbidden by Islam religion.

Products and Terms in Islamic Finance:

#1. Sukuk:

Sukuk is a Shari’ah-compliant Islamic financial product or certificate equivalent to bonds.

According to AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), Sukuks are defined as,

securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.

Even though these are bonds by nature, no interest is involved but a tangible asset. Since profiting by rent is allowed in Islam, the bond owner may get partial ownership of property underlying the asset. Once the Sukuk expires, the rent also stops.

The first sovereign sukuk was issued by Bahrain’s central bank in 2001.

#2. Islamic Investment Funds:

These can take the form of investment in equity shares for example. Equity shares dealings is acceptable in Shari’ah law if the company whose shares are dealt in are not in violation of Shari’ah. That means under Shari’ah principles, one cannot deal with shares of financial services companies which earn revenue through interest. This includes conventional banking firms, insurance companies etc.  Again under Shari’ah rule, it is not permissible to deal in shares of a company which sells or manufactures liquors, pork, haram meat or companies involved in activities like gambling, night clubs or pornography.

#3. Takaful:

Takaful is an insurance compliant with Islamic principles or Shari’ah principles. In case of a loss, the concerned party is compensated out of a fund to which they will have contributed regularly. The reimbursements and repayments as based on mutual co-operation.

Principles Governing Islamic Banking:

#1. Transactions are interest-free

#2. Risks are shared

#3. Underlying investments are backed by assets and services

#4. Contractual certainty

Dow Jones Islamic Market Index

DJIM was launched in 1999 in Bahrain. This index was specially created for investors seeking Shari’ah compliant investments.

Islamic Banks in UAE:

#1. Abu Dhabi Islamic Bank 

#2. Al Hilal Bank 

#3. Dubai Islamic Bank 

#4. Emirates Islamic Bank 

#5. Sharjah Islamic Bank 

#6. Noor Islamic Bank PJSC 

Banks in UAE Which offer Shari’ah Compliant Products and Islamic Banking Services:

#1. Abu Dhabi Commercial Bank-ADCB

#2. Citi Bank 

#3. Commercial Bank Of Dubai 

#4. First Gulf Bank-FGB

#5. Habib Bank Limited-HBL 

#6. Mashreq Bank 

#7. National Bank of Abu Dhabi-NBAD 

#8. National Bank of Fujairah-NBF 

#9. National Bank of RAK 

#10. Standard Chartered Bank 

#11. Union National Bank-UNB 

#12. United Arab Bank-UAB 

#13. United Bank Limited-UBL 

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