Islamic banking: concept, challenges and proposed solution

All the branches of religion, belief and system aim at finding out ways to increase peace & happiness i.e. ways to reduce suffering of general masses. Islam with its novel concept of “Zakat’ truly fulfils the basic philosophy behind existence of any belief system. Islamic banking system being integral part of Islam better serves the ultimate aim of humanity through its interest free i.e. equity based philosophy and needless to say it widens its scope across all the belief and value system. Islamic banking system being crucial financial intermediary of financial system not only facilitates smooth mobilization of fund but also stimulate productive investment which in turn leads to economic growth and also on humanity side it prohibits misuse of money pooled through “Zakat ’and ensures proper channelization of this money to help needy people in their socioeconomic upliftment through asset based financing. In this article of Islamic banking system we are covering the basic concept of Islamic banking along with its limitations and challenges by comparing it with existing commercial banking system under central bank of concern country.