The Islamic banking and finance sector is increasing its valuable market share day by day in the Global Finance Industry. Today, over 300 Islamic banks and finance organizations are successfully running their businesses from Dubai, Las Angles, London and world-wide. Total assets of all these are now reaching a mile-stone of 400 billions dollars.
There is always a misconception among general public, that there is no difference except the name between Islamic and traditional banking, whereas, the differences between these banking systems are both moral as well as technical. The moral difference is the concept of the real owner of wealth. According of Islamic faith, the real owner of wealth is always The God and human are only allow to just utilize it for the benefits of its own, its family and the whole humanity.
Islamic banking is derived from the main philosophy of the distribution of wealth in Islam, in simple words; it is an interest free banking system. You can also judge the difference between these two banking with an example. For assume, for the purchasing of a car, you borrowed a loan from a traditional bank. As soon as you signed the loan document, the period of returning loan would be fixed and you will be liable to pay the loan installments instantly. It is no matter, whether the car has been handed over to you or not at that time. You will be charged if you not pay the installment on regularly, despite of the fact that the car is still in the process of delivery. In traditional banking system, the bank plays a role of bridge between you and the car dealer. It purchases the car on your behalf from the dealer. Compare these to Islamic banking, where bank directly purchases the car from the dealer on its own behalf, thus you will not be liable to pay any dime on the name of any installment or late payment, till the delivery of the car. It is no matter whether you already signed on the agreement for a car. After purchasing the car, the Islamic bank wills handover its car to you, not on installment but on rent. As soon as, the amount of rent reaches the fixed price of the car, then the ownership of the car would be transferred to you. This is just an example of Islamic banking. You can find many more advantages of Islamic banking over traditional banking. Just search on Google with the key-words "Islamic banking" or Islamic finance".
The Islamic banking system is very popular even in non-Islamic countries, especially in Singapore where its market share is rapidly growing as compare to other countries. Leading Islamic banks are expanding their network from their native countries to their region and world-wide. In this regard, Islamic banks of Middle East countries are very prominent in Africa, Central Asian region and in Australian Financial market due to their unique and popular products and services for Muslims and non-Muslims as well. In today Islamic world, there are more than 1200 Islamic banks are working in Malaysian finance market alone. They are currently enjoying of 12.2% of total deposits assets of Malaysian banking sector and market expectations are indicating that it will be increased by 20% in 2010. Indonesia and India are also sharing in the Islamic banking sector.
Pakistan is one of the leading and pioneer country in the filed of Islamic banking. With the total assets of 135 billions rupees, there are 170 branches of 6 Islamic and 13 traditional banks are providing Islamic banking products and services to their customers in Pakistan. The numbers of Islamic banks"s borrowers are just 23 thousands as compare to 5 million of traditional banks. The numbers of their branches are increasing day by day in urban and rural areas of Pakistan. There is a huge potential is available for the growth of Islamic banking in the vast rural areas of Pakistan.
The foreign direct investment in Islamic banking sector of Pakistan has now reached over 20 billions rupees. The Islamic banking sector in the country will be further enhanced by a direct investment of 35 billions rupees due to schedule in the next six to eight month period from the investors of Persian Gulf countries. They are very pleased and optimistic from the performance of the Islamic banking sector of Pakistan. "Dubai Bank", "Qatar International Islamic Bank", Saudi Economic and Development Bank" and "National Bank of Dubai" are just few names.
Today, the ratio of Islamic banking sector in Global market is just over 3% but its annual growth rate of 15% will certainly boost its share in next up-coming years.