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Y in islamic finance trading is prohibited 4 d former

(Guest)

y in islamic finance trading is prohibited 4 d former n it is must 4 d later.

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(Guest)

Dear Rakhiya,

The basic difference between profitable mode of investment in banking and Islamic finance is that trading is prohibited for the former and it is must for the later.

There are some reasons for these prohibitions. There was a time when banking in combination of trading was practiced by bankers who happened to be merchants also. During the economic disaster of 1929-32 this combination of banking with trading proved to be fatal for a number of banks. Since then banking laws, over the world were amended to restrict banking activities to risk-free interest base lending. As such trading is now strictly prohibited for a bank. Instead of ignoring this historical fact we should take a lesson from it.

In case of Islamic finance any kind of involvement in interest base lending is strictly prohibited. Therefore for an Islamic financial institution trading is the only option for making profitable investment.

Regards,

Veeral Gandhi

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CA Vasiullah (Vasi) (Audit Executive) (1813 Points)
Replied 20 August 2012

Originally posted by : Veeral Gandhi
	Dear Rakhiya, The basic difference between profitable mode of investment in banking and Islamic finance is that trading is prohibited for the former and it is must for the later. There are some reasons for these prohibitions. There was a time when banking in combination of trading was practiced by bankers who happened to be merchants also. During the economic disaster of 1929-32 this combination of banking with trading proved to be fatal for a number of banks. Since then banking laws, over the world were amended to restrict banking activities to risk-free interest base lending. As such trading is now strictly prohibited for a bank. Instead of ignoring this historical fact we should take a lesson from it. In case of Islamic finance any kind of involvement in interest base lending is strictly prohibited. Therefore for an Islamic financial institution trading is the only option for making profitable investment. Regards, Veeral Gandhi