Looking at increasing trend of interest free or islamic banking around the world, SNS System is providing technology edge to Islamic Banking institutions by its ERP solution for banking, which ensures BFS institutions the flexibility to offer a wide range of Sharia compliant products and to create new value added offerings. Supporting a wide range of functions, ERP Solution for Islamic Banking enables coexistence of Islamic and conventional banking on the same platform, which is Suitable for the institutions operating in both areas.
Banking with sharia compliance is not being popular only in muslim dominated countries, even it is also being widely accepted in europe, and other non muslim areas.
Purpose of Islamic Banking
Islamic banking has the same purpose as conventional banking: to make money for the banking institute by lending out capital. But that is not the sole purpose either, adherence to Islamic law and ensuring fair play is also at the core of banking according to the rules of Islam because it forbids simply lending out money at interest, Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent it. The basic principle of this type of banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking. Concepts such as profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijar) have been introduced by banking according to Islam.
Sharia Banking and its scope
Recent surveys show that there is a national trend of migration towards Islamic banks in the UAE, although a lack of understanding of how these banks work is holding back further customer growth. That represents good news for these banks because the margins they receive from lending to individuals are higher than those to corporations where the risk is typically less.
It is widely being accepted in the West and other parts of the world and its migration to many countries is a validation of its popularity among the masses.