Islamic Banking in the digital age??

Islamic banking refers to a system of banking activities that is consistent with the Sharee'ah (Islamic law) and guided by Islamic economics.

Islamic banking has the same purpose as conventional banking except that it operates in accordance with the Islamic rules, known as Fiqh Al-Mu'aamalaat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of Ribaa.

Amongst the common Islamic concepts used in Islamic banking are profit sharing (Mudhaarabah), safekeeping (Wadee'ah), joint venture (Mushaarakah), cost plus (Muraabahah), and leasing (Ijaarah).

Islamic banking is well-known nowadays. Islamic scholars are open to creative solutions for the problems raised by modern finance. Any respectable Islamic fund or financial institutions has a board of scholars screening its investments and practices. “Nearly all the scholars now agree, for example that it is ok for Muslims to buy equities or stocks which are commitments to responsible ownership”, says Virginia-based Islamic scholar and fund adviser Yusuf Talal Delorenzo. This approval of the scholars is conditioned to such equities of stocks being Islamically lawful themselves.

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Muraabahah.