Islam has given an immense importance to Islamic \n\nEntrance of Sukuk(Rental Certificates) in 2010. Increased Turkish export market\n\nCauses of Emergence of Islamic Banking(Religious,Social,Economic)\n
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Starting in the Name of Allah,
The Most Beneficent, The Most Merciful
In partial fulfillment of a Master Thesis in Capital market and finance.
Thank you for giving me the honor of presenting an overview of Islamic Banking and Sukuk
“Worldwide "Islamic banking", in Turkey also known as "participation banking" or interest-free banking, can be defined as working on the basis of profit and loss sharing in fund raising and in the use of funds, operating on sharing profit and loss by partners and institutions running according to Islamic principles.”
In Arabic the word ‘Senet’ refers to bonds and bills but Islamic bonds are called "Sukuk". In this context, the defined phrase as "financial certificate"s Islamic version is "Islamic bonds" and is used as sukuk. Its interest-free structure is considered as an instrument in harmony with Islamic principles. For this exact reason, Sukuk’s limits over interests is a security to Islamic laws Sukuk being a product of the participating banks(AlBaraka Bank, Kuveyt Turk Bank, Financial Turkish Bank, Asya Bank and Ziraat Bank) , it assures to be one of the most important beyond the exportation field worldwide
Before explaining the concept “what is Islamic Banking” the elaboration of concept “why Islamic Banking” is very important.
Islam is a complete code of life that provides guidance regarding each aspect of life.
The primary objectives of Islamic Economic System are as under.
These objectives can never be achieved in Interest/Riba based economic systems.
1) Functions and operations are based on Sharia’h principles
1)Functions and operations are based on fully man made principles
2) Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs)
2) Investor is assured of pre-determined rate of interest
3) Aim at maximising profit but subject to Sharia'h restrictions
3) Aim at maximising profit without any restrictions
4) Partners, investor and traders, buyer or seller relationship
4) Creditor-Debtor relationship
5) Encourage asset-based financing and based on commodity trading
5) Based on money trading. Money is a medium of exchange and not a commodity, its sale and purchase is prohibited in Islam.
6) No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss.
6) It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed.
Currently available Islamic Banking Products and services are
Musharaka Sukuk, Mudaraba Sukuk,
Murabaha Sukuk, Salam Sukuk
Ijarah Sukuk, Diminishing Musharaka Sukuk
Increasing the number of the participating banks for more productivity on the no interest matter
Producing more Sukuk types and implementing them in the country for more productivity and benefits as the name Sukuk started as it is and is now named “Icara Sukuk” and could have more of secondary names for more implementation
Having a common thought regarding the religious matter of interests and implementing it in all banks for the satisfaction of all parties
Increasing the number of conferences, workshops and educations about the no interest banking
More methods like the certificate rentals and no interest based investments with more marketing and advertisement in regards with it, like television ads, newspapers, magazines and mostly social media and so on to raise awareness
Increasing the research on no interst banking and the products inthe making
Increasing the quantity of the products with no interest banking