by Samir Abid Shaikh — (henrymakow.com) Oct 14, 2013
(Samir Shaikh is the Ex. Secretary General of The International Association of Islamic Banks)
The simplest way to define Islamic Banking is to say that: it is banking practiced according to the teachings of the religion of Islam .
Islamic banking is a form of banking that is harmonious with the goodness of humanity on Earth. The goodness in four different spheres : man to God , man to man , man to creatures of soul i.e. animals of all kinds , and man to inanimate creatures, i.e. nature.
In money matters such as trade , investments, and banking – the salient feature of goodness is manifested in the virtue of justice. In other words, when people deal in material objects, these dealings have to be fair to all parties concerned.
Islamic banking is supposed to be based on fairness and justice to all parties concerned, the bank as well as the public who use the service. One major obstruction of justice is usury which is manifest in the interest-based financial system.
One simple rule of detecting usury in Islamic teaching is that “Any loan that stipulates benefits to the loaner is a form of usury”.
Most people borrow because they are in need , and need in itself is hurtful to human dignity. So to force people in need to pay penalties for their need is the epitome of inhumanity. This banning of the interest mechanism is therefore the cornerstone of Islamic banking.