Communication In Economics - Essay Example

It is a complete guidance in social, political, economical and other aspects for the Muslims. The Koran gives a clear direction in dealing with common issues from warfare, governance of states, marriages, doing business etc. Islam focuses on doing any act in accordance with equality and justice. The Islam has prohibited some of the issues, which are considered to be today's key of success. One such concept is the prohibition of Interest. But Islam gives the complete rational reasoning for it's the things, which are included and excluded by Islam.

In today world, one of the main reasons for the businesses running successful in western world is because of mortgage and interest, however, Islam strictly rejects the concept of Interest in Islam. There are number of verses of Koran in which Interest has being strictly condemned. Interest in Arabic language is called 'Riba'. Interest is some amount of money received or has to pay for in order of lending and borrowing of assets. Islam has termed Riba as prohibited because a person is paying additional charges to which he not accounted to, and similarly earning extra money which he has earned without making an effort.

Such type of earning is called earning easy money. For instance, a person has invests $100,000 as his savings in a bank at an annual interest rate of 5%. After one year, his savings will be $ 105,000. This additional $5000 amount is the easy earning that he has got, Islam calls these as Haram (prohibited) according to Islamic laws called Sharia'a. Islamic Banking:Now in Islamic states, in order to curb interest, many Islamic banks introduced Islamic finance, which does working according to Sharia'a.

This type of banking started in 1970's. The Islamic banks works risk sharing system, in which the banks and the customers share profits under agreements. The people have the option of whether making an Islamic account or not. These banks have introduced La-Riba system (interest free) finance. When a person is making a saving account in a bank, he has two options. Either makes an account on zero interest or charge interest on it. In case of zero interest, he will receive the same amount that he deposited i.e. if he has invested $100000, he will receive $100000 on his withdrawal.

Where as in the second case, where he can ask for the interest, he has two alternate. Either he can ask the bank to deducted Zakat (Islamic charity system) or can take additional interest amount with him, and donate into welfare or charity himself. In this way, he is not using additional money for his personal use. Similarly, there are banks that offer loan on zero interest i.e. if a person wants loan, he can pay it off without giving additional charges. For instance, if a person wants loan for construction of his house, he asks for a loan of $500000, then he only has to pay this amount in installments.

However, it is suggested that it is better to invest your capital in project rather than banks. Because when you invest in a project, there you would be dealing with risks not with the Interest. New Products Offered by Islamic Finance: Since the arrival of these Islamic banks, there are some special Islamic products, which are being bought into the market. These products designed in accordance with Sharia'a laws. These products include Ijara, Murabahah, Musharakah, Mudarabah, sukuk etc. The basics of these products are discussed belowIjara is a type of Islamic leasing.