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History of Islamic banking

Classical Islamic banking

Main article: Islamic economics in the world

Further information: Early reforms under Islam

During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the Caliphate,[1] where an early market economy and an early form of mercantilism were developed between the 8th-12th centuries, which some refer to as "Islamic capitalism".[2] A vigorous monetary economy was created on the basis of the expanding levels of circulation of a stable high-value currency (the dinar) and the integration of monetary areas that were previously independent.

A number of innovative concepts and techniques were introduced in early Islamic banking, including bills of exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation (nama al-mal),[3] cheques, promissory notes,[4] trusts (see Waqf), startup companies,[5], transactional accounts, loaning, ledgers and assignments.[6] Organizational enterprises similar to corporations independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced.[7][8] Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.[3]

Riba

The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." or "to ensure equivalency in real value" and that "numerical value was immaterial." During this period, gold and silver currencies were the benchmark metals that defined the value of all other materials being traded. Applying interest to the benchmark itself (ex natura sua) made no logical sense as its value remained constant relative to all other materials: these metals could be added to but not created (from nothing).

Applying interest was acceptable under some circumstances. Currencies that were based on guarantees by a government to honor the stated value (i.e. fiat currency) or based on other materials such as paper or base metals were allowed to have interest applied to them.[9] When base metal currencies were first introduced in the Islamic world, no jurist ever thought that "paying a debt in a higher number of units of this fiat money was riba" as they were concerned with the real value of money (determined by weight only) rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of equal aggregate weight (i.e., the value in terms of weight had to be same because all makes of coins did not carry exactly similar weight).

Modern Islamic banking

The first modern experiment with Islamic banking was undertaken in Egypt under cover without projecting an Islamic image—for fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the political regime. The pioneering effort, led by Ahmad Elnaggar, took the form of a savings bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready 1981), by which time there were nine such banks in the country.[10]

Islamic Banking: Introduction

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the payment of fees for the renting of money (Riba, usury) for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles (Haraam, forbidden). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.

The World Islamic Banking Conference held annually in Bahrain since 1994 is the unique platform internationally recognized as the largest and most significant gathering of Islamic banking and finance leaders in the world.

from Wikipedia

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The square represents the customers and it is inside the circle to show that they are the center of Al Hilal's activities.  The circle represents al hilal and it shows the board of activities and products and services of Al Hilal.

Islamic Banking

Islamic Banking concept can be summarized in:

• Usury is forbidden. Trading is permitted and encouraged

• Worldly resources are owned by Allah and given on man's disposal in trust

• Man is accountable before Allah for all of his deeds

• Wealth should not merely make a circuit among wealthy people rather to be distributed fairly

• Speculation and wasteful use of funds are considered unlawful

• One's gain on other's loss is prohibited

• Justice, honesty, transparency and moderation flourish the equal opportunities in the society

• Greed and yearning lead to putting down the fellow human being's rights.
  

Please check al hilal's website for more information about islamic banking.

Al Hilal

Al Hilal Bank is the bright orange bank that's all about the customer. Everything from their services and products to their logo of a square inside a circle; puts the customer firmly in the heart of everything they do.

Al Hilal offers Corporate banking, personal banking and Takafol and is one of the leading banks in UAE.

The dream of the founders was to create a different experience of banking: fresher, smarter and more exciting. With a 4 bn AED authorized capital, it started in Abu Dhabi then expanded and opened 4 branches across the UAE. Visit the new website of Al Hilal.