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Islamic banking in the GCC in the Next ten Years
Finance & Accounting
Pages 20 (5020 words)
Islamic banking in the GCC in the Next ten Years Introduction History of Islamic Banking The foundations of Islamic banking were laid with the emergence and spread of Islamic over 1400 years ago. The first example of Islamic banking surfaced in the year 1963 in Egypt.
These Islamic banks neither charged any interest nor paid it. The functioning of these banks was limited to the industries and trade in which they made investments either as the depositors’ partners, or using their own capital. Considering the functionality of these banks, they were more of financial institutions than the commercial banks we see today. The first commercial bank was opened in 1971 in Egypt with the name Nazir Social Banks. The charter of this bank did not refer to Shariah. The first bank that was entirely and overtly based on the principles of Shariah was made in the year 1974 by the Organization of Islamic Countries (OIC). The name of this bank was Islamic Development Bank (IDB). The function of this bank was to engage in the intergovernmental activities to provide funds to the member countries for developmental projects. The business model of IDB included fees for the financial services as well as financial assistance for the developmental projects through profit sharing. During the 1970s, numerous Islamic banks were established across the world which included but were not limited to the Dubai Islamic Bank established in 1975, the Faisal Islamic bank of Sudan established in the year 1977, followed by the Bahrain Islamic bank established in the year 1979. Several Islamic banks were also successively opened in the Asia Pacific region. ...
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