Sunday, 7 August 2016

Question: Are not Islamic banks just paying interest and dressing it as profit on trade and investments?



Answer: No, Islamic banks accept the deposits either on profit and loss sharing basis or on Qard basis. These deposits are deployed in financing, trading or investment activities by using the Shariah compliant modes of finance. The profit so earned by the bank is passed on to the depositors according to the pre-agreed ratio which, therefore, cannot be termed as interest.

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