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Interest Free Banking Essay and Article for Students

Interest free banking essay and article for students

This Post discusses different interest free banking essay that students and professionals can write. The interest free banking essay/interest free banking article aims to tell the based structure of islamic banking system.

The first interest free banking essay describes nationalized banks in Pakistan. It has established interest-free counters where customers can open PLS Saving Accounts and PLS Term Deposit Accounts on a profit and loss-sharing basis. Islamic banking provides an alternative to the existing interest-based banking system and promotes financial inclusion. The profit earned by the bank through the investment of PLS Deposits determines the rate of profit distributed among the depositors. Interest-free banking has gained popularity in Pakistan and is expected to play a significant role in making Pakistan an Islamic state.

The second interest free banking article discusses the growth and benefits of Non-interest banking in Pakistan, which operates according to Islamic law principles. This provides an alternative to conventional banking and promotes financial inclusion, catering to the needs of a wide range of customers. This interest free banking article also discusses that The government of Pakistan has established a favorable regulatory framework to encourage the growth of Islamic banking, which has gained international attention. With the growing demand for Islamic banking services, This is likely to continue to grow in popularity.

Interest Free Banking Essay #1

Interest-free banking is based on a sort of partnership with the capitalist. While the existing interest-based structure of deposits will remain in vogue for some, nationalized banks operating in Pakistan will now open interest-free counters in all the banks where deposits in the following categories will be received on a profit and loss sharing basis:

  • PLS Saving Accounts
  • PLS Term Deposit Accounts
  • PLS Saving Accounts:

These accounts will be opened with sums of not less than Rs. 100/=. If at any time the balance falls below Rs.100/= the account will not qualify for sharing in profit not shall it be liable for loss, if any. There will be no restriction on the maximum amount.

  • PLS Term Deposit Accounts:

Accounts in multiples of Rs.1,000/= will be accepted for six months and above.

Only the basis of the half-yearly profit earned by the bank through the investment of PLS Deposits. The Head Office will determine the rate of profit to be distributed among the PLS Savings and terms Deposits. On intimation of the rate of profit for Savings and Terms, Depositors branches will calculate the profit due to each depositor and disburse as per the existing procedure. In this way, interest-free banking will play a very important role in making Pakistan an Islamic State.   

Interest Free Banking Article #2

Interest free banking, also known as Islamic banking, is a banking system that operates according to the principles of Islamic law (Shariah). The principles of this banking prohibit the charging of interest on loans and require that all transactions be conducted in a socially responsible manner. In Pakistan, interest-free banking has gained significant popularity over the past few decades, with many financial institutions offering Islamic banking services to customers.

The introduction of noninterest banking in Pakistan can be traced back to the 1980s when the government of Pakistan established the Islamic Banking Department within the State Bank of Pakistan. Since then, the popularity of Islamic banking has grown steadily, and today, there are several full-fledged Islamic banks and conventional banks that offer Islamic banking services.

One of the key benefits of interest-free banking in Pakistan is that it provides an alternative to conventional banking, which many Muslims believe is not in line with their religious beliefs. Islamic banking offers a range of products and services, including savings accounts, current accounts, home financing, car financing, and personal financing, all of which are based on the principles of Islamic law.

Another benefit of interest-free banking in Pakistan is that it promotes financial inclusion. Islamic banking products and services are designed to cater to the needs of a wide range of customers, including low-income individuals, small businesses, and rural communities. Providing access to financial services to previously underserved populations, it has the potential to promote economic growth and reduce poverty.

In addition, this has gained the attention of the international community, with many countries, including the United Kingdom, Malaysia, and Bahrain, developing their Islamic banking systems. The growth of interest-free banking has also been supported by the government, which has established a favorable regulatory framework to encourage the growth of Islamic banking in the country.

In conclusion, This has gained significant popularity in Pakistan over the past few decades, with many financial institutions offering Islamic banking services to customers. It provides an alternative to conventional banking, promotes financial inclusion, and has the potential to promote economic growth and reduce poverty. With the support of the government and the growing demand for Islamic banking products and services, This is likely to continue to grow in popularity in Pakistan and around the world.

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