Myths Regarding Sharia Banking And Finance

You may have come across the words Islamic banking, Islamic finance, Sharia Loans, or sharia-compliant finance at some point. It has left you wondering about what exactly it is or how it's different from other banking and finance.

It is providing the financial products and services whether it be the Shariah Financial Planner or loans are regulated by Islamic Banking principles to ensure none of these principles is broken when getting the finance as it may then be a sin. All of these products and services provided by Islamic banking or finance are reviewed and approved by our Shariah Advisory Board.

People devoid of religions are opting for financial products and services like sharia bank loans. Still, due to the name, it leads us to one of the most common misconceptions.

Is It Only For Muslims?

Though the financial product and services provided by the Islamic finance industry are designed to meet Sharia standards, their use is not limited to just the Muslim community. There is no restriction for the one who visits to buy Islamic financial products or use the services. Anyone who is willing to invest ethically and morally can utilise these products and services.

Though the interpretations of Islamic law may vary from person to person, the basic idea is to invest in businesses that are socially responsible, avoiding the ones with excessive levels of debt possibilities.

As the Islamic principles adhere to moral and ethical principles, they keep off from providing finance to the companies related to the forbidden sectors like alcohol, gambling, weapons, pornography, or tobacco. Apart from it, financial products and services are for everyone.

Is It Purely Charity Based?

This can be very tricky to understand. As per the Islamic principles or shariah, making a profit from the interests is prohibited. The core pillar of the Islamic faith is Charity. This does not mean that these financial institutions would run without any return.

As per Islamic law, you accept using money to make more, which means you cannot lend money to earn a return. On the other hand asset classes like equity, property, and commodities are permissible for earning money. Unlike the old times when Islamic finance was only confined to a niche market, this led to considerably higher prices. Today the scope and size of the products and services in the market have increased, which is why you would be able to get the benefit of competitive rates in Islamic banking and finance too.

There are various aims of Islamic financial products and services like justice, financial inclusion, and more apart from the moral and ethical standards. Just believing in the misconception would only keep you from utilizing these products and services for your good. So leave aside these beliefs and try to know more truth and the details of the financial products and services. Compare them with the conventional products and services to choose the sharia bank loans or the conventional loan as per your requirement.