Islamic Banking, also referred to as halal banking, refers to financial activities that adhere to sharia. This is a profitable growing global islamic-compliant phenomenon practised in over 70 countries across the globe including the United Kingdom, Canada, the United States of America, the United Arab Emirate, Malaysia, China, Singapore, South Africa, Kenya etc. It is an alternative financial service offering which is open to all irrespective of race or religion.
It is based on the ethical principles of fairness, transparency and integrity. Halal banking as a non-interest banking scheme offers nearly all the services of conventional banks.
The principles of this form of banking are derived from the the central religious text of Islam hence, all transactions must be compliant with the legal code of Islam. The rules that govern commercial transactions in Islamic banking are referred to as fiqh al-muamalat.
This is a very common strategy in the trading world, but it’s mostly been a tool of large financial institutions. With the democratization of financial markets thanks to cryptocurrencies, there might be an opportunity for cryptocurrency traders to take advantage of it, too.
The basis of this form of banking is based on a profit-sharing principle, where the risks are shared by the bank and the client, contributing to a more equitable distribution of income and wealth.
Halal banking is about conducting business in a fair and transparent manner therefore, is not restricted to muslims only and is available to non-muslims as well.
Moreover, experiences of recent years have already indicated that the interest of people in halal banking goes beyond only Islamic investors. The UK is said to be the hub of halal banking in the world, yet only a minor fraction of its population are muslims.