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The Rate Of Profit In Islamic Banks And The Rate Of Profit In The Traditional Banks Msc

1515 words - 7 pages

A comparison between the rate of profit in Islamic banks and the rate of profit in the traditional banks in the MURABAHA sale
Some people still question the actions of Islamic banks and claim that there is no difference between the treatment of the Islamic bank and the treatment of the riba-commercial bank. This is a clear and obvious betrayal of Islamic banking, ignorance or disregard of the fundamental principle of Islamic banks and the fundamental principle of the riba-commercial bank.
Islamic banking is based on legitimate transactions such as Mudarabah, Istisna'a, Musharaka, Murabaha, Ijara and other legal forms.
There is no doubt that Islamic banking, after forty years of existence, has achieved great growth, spread east and west, and is increasingly engaged with them, and Islamic banking offers alternative legal transactions for forbidden riba-based transactions.
It is necessary to clarify the difference between profit and interest - usury - because the basic idea on which Islamic banks are based is the distance from usury - interest - in all transactions, taking and giving, and their transactions are based on profit for shareholders and investors. While the most interest-riba-based banks are riba-interest-taking and giving.
Profit is the increase in capital due to the increase in commercial activity, or the excess of capital as a result of its dependence on legitimate investment activities such as trade, industry and others. Profit from jurists is produced by the interaction of the two main elements of production: labor and capital.
Interest is an increase due to the creditor on the amount of debt paid by the debtor against the retention of debt to full maturity. If we consider the definition of interest, we find it an increase in the exchange of money with money for the term, that means the interest is against the period of time.
Hence, profit is constant and does not increase, but interest - usury - is increasing.
To clarify the difference between Murabaha in the transactions of Islamic banks and the riba-based commercial banks, we mention the following:
1- The Islamic Bank bears any defect in the commodity before selling it, and any hidden defect appears in the commodity after its sale, while in the riba-based financing of commodities and real estate, the riba-based bank bears no defect because it has not sold, but only lent.
2- The amount to be paid by the murabh (price and profit) agreed at the time of signing the murabaha contract for the purchase order remains unchanged. In riba-based loans, the interest rate is variable and linked to the Libor index.
3- In the Murabaha contract for the purchase order, the Islamic bank buys the commodity and is seized by a real or judgmental fist, and it enters into his possession, and then sells it by installments at a known price and profit. The Islamic Bank does not sell a commodity until it has a valid contract. While in the riba-based financing of commodities and real estate, the...

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