Is banking allowed in ISLAM

Answer 1

Banking started as a mean of receiving money (gold/animal etc) from depositor with a promise to repay after certain period of time with an added value which is interest. Bank received money in one hand and lend on the other. when it lent money it charged higher interest than the interest payable to depositor. So banking is a mechanism of making money out of nothing out of others money. Say a bank received money 100 from an investor to repay 150 after 1 year. and then it lent this money to a borrower with a guarantee to get repayment from borrower 200. So at the end of the year the investor profits 50 from its investment, bank earned 50 profit for nothing. Say in the middle of the year if the borrower defaults, bank will cease the borrowers guarantied assets. in such situation, the bank and the investor is gaining from the borrowers loss.

The forbidden of usury in Islam came from this context. one can not gain from others suffer. That's why gambling also forbidden.

Now if we look at the traditional banking from this aspect, Banking is surely forbidden. Islamic banking is merely a marketing strategy by non Islamic financial organization. If we look at the activities of any Islamic bank, the difference is only how it applies the technique. As bank is something which makes money out of Else's money..(often at the cost of one party) I don't understand how Banking could be allowed in Islam!!

Islam is not something to deceive people with Arabic name. I have read many articles about Islamic banking and the reason of approval by the so called sharia council. All of them consider only interest part of banking...but not the over all context. Islamic banks argue that instead of fixed term loan they buy goods and re sell them to the buyer (borrower). Well My question is the money they spend to buy the good to resell is not their money...its investors money. So its the same game like the traditional banks ... using someone elses money to make money..which is not acceptable in Islam. In the brand of Islamic finance/banking they are deceiving people religiously as well as financially by over charging with emotional pricing.