The paper 'Benefit of Using Islamic Account in the UK" is an outstanding example of a finance and accounting case study. The finance industry and Islamic banking are developing at a yearly rate of more than fifteen percent (Abdul-Rahman, 2010). Several international and local institutions have marched into this multi-billion dollar successful industry by instituting its Islamic wings and component (Iqbal & Llewellyn, 2002). In spite of the Islam population being very few in most parts of the country as compared with the entire total population, considerable development has been noted in the previous years with the foundation of ceylinco profit sharing, Amana and others.
According to researchers, it has been discovered that the largest state possessing commercial bank, Bank of Ceylon plans to begin its Islamic banking entity very soon (Abdul-Rahman, 2010). All the new entities entail that this substitute banking system has captured the attention of several Muslims including the non-Muslim ones out of its unique growth characteristic. The fundamental principle with the Islamic accounts is the code of justice that is an important need for all types of Islamic financing.
In profit division from a financed project, the banker and the beneficiary divide up the actual/net profit or loss instead of tossing the risk encumber to the entrepreneur only. The code of justice and fairness entails that the net output of a similar project must be fairly shared between the banker and the beneficiary. If the banker is expectant of allege on the income of a project, he should be willing to carry a relative division of the loss of that similar project. In contrast with conventional finance approaches, Islamic banking is not centered when it comes to credit value and capability to pay back the loans and interest; in its place, the value and profitability of a project are the crucial criteria of Islamic banking while the capability to pay back the loan is sub-divided under profitability. As compared with conventional banks, the funding of Islamic banks are limited to valuable goods and services and desist from alcoholic drinks and tobacco or ethically undesirable services such as pornography and casinos, irrespective of legality or not of such goods and services in a mentioned country. The most unique and outstanding characteristics of Islamic accounts is the incorporation of principled and moral standards with its banking procedure (Hassan & Lewis, 2007).
The desirable and moral contemplation of Islamic accounts cannot be disconnected and their deeds should be unswerving with the ethical and moral principles put down by the Islamic shari’ ah (Iqbal & Llewellyn, 2002). Another vital characteristic that forms the foundation for the growth of Islamic banks is the association with the depositors. They transact with their clients on an investment basis instead of a prearranged set interest rate (Abdul-Rahman, 2010).
They put in the money of their depositors on greater profitable projects after passing through a strategic analysis so as to give a considerable return to their depositors. Therefore in the Islamic banking system, every bank endeavor to outperform several other banks if at all it desires to attract finances from investors, and the vital effect is that a greater outcome on investments for the client who is investing, that is dubious in another conventional bank where it transacts with their depositors on a programmed set interest rate.
Abdul-Rahman, Y., 2010. The Art of Islamic Banking and Finance: Tools and Techniques for Community-Based Banking. New York: John Wiley and Sons.
Hassan, K. & Lewis, M., 2007. Handbook of Islamic banking. London: Edward Elgar.
Iqbal, M. & Llewellyn, D., 2002. Islamic banking and finance: new perspectives on profit sharing and risk. London: Edward Elgar.
Kettell, B., 2010. Frequently Asked Questions in Islamic Finance. London: John Wiley and Sons.
Khan, M., 2010. Islamic Banking and Finance in the European Union: A Challenge. London: Edward Elgar.
Lewis, M. & Algaoud, L., 2001. Islamic banking. London: Edward Elgar.
Saeed, A., 1996. Islamic banking and interest: a study of the prohibition of riba and its contemporary interpretation, 2nd Ed. New York: Brill Publishers.
Schoon, N., 2009. Islamic Banking and Finance. London: Spiramus Press Ltd.