1. Islamic & Conventional Banking
Sara Riaz

2. Banking
Bank
A bank is a person who carries on the business of banking. The legal definition of the business of banking is
Conducting current accounts for customers
Paying to the customer's order (e.g. the customer's cheques drawn on the bank), and
Collecting the cheques deposited to the customers's account, as the customer's agent and crediting the proceeds to the customer's current account.

3. Islamic Banking
Islamic banks adhere to the concepts of islamic law,islamic banking revolves around many well established concepts which are based on islamic canons.islamic banking refers to a system of banking or banking activity that is consistent with islamic law (sharia)principles and guided by islamic economics

4. Principles of Islamic banking
Prohibition of riba (interest)
Profit sharing (mudharabah)
Safekeeping ( wadiah)
Joint venture ( musharakha)
Cost plus ( murabahab)
Leasing ( ijarah )

5. Conventional Banking
Functions and operating modes of conventional banking are based on fully man made principles
The investor is assured of a predetermined rate of interest
It aims at maximizing profit without any restriction.
Lending money and getting it back with compounding interest is the fundamental function of the conventional banks

6. State Bank of Pakistan & Its Role In Islamic Banking
In order to promote Islamic Banking in Pakistan, State Bank is following a three pronged strategy as under:
I) Establishment of full-fledged Islamic bank(s) in the private sector; II) Setting up of subsidiaries for Islamic Banking by existing commercial banks; and III) Allowing Stand-alone branches for Islamic banking in the existing commercial banks.

7. Criticism

8. Differences between Islamic bank and conventional

9. Conventional banking Islamic banking It does not deal with zakat
In modern Islamic banking, it has become one of the service oriented function of the Islamic banks to be a zakat collection centre and they also pay out their zakat
It can charge additional money in case of defaulters
Islamic banks have no provision to charge any extra money from the defaulters
Very often it results in the banks own interest becoming prominent. it makes no effort to ensure growth with equity
It gives due importance to the public interest, its ultimate aim is to ensure growth with equity
Conventional bank has to guarantee all its deposits
Islamic bank can only guarantee deposits for deposit account, thus depositors are guaranteed repayment of their funds
The status of a conventional bank, in relation to its clients is that of creditor and debtors
The status of Islamic bank in relation to its clients is that of partners, investors and trader buyer and seller

10. Islamic or Conventional Banking
Which One is Better??
Islamic or Conventional Banking