Top 2 important questions about Islamic loan
There is no second argument that the banking system in the UAE has changed the picture of this region through international investors. The two parallel systems in which Islamic banking is equally fruitful like traditional or commercial banking and we can take it as an interest-free option. This system is common as most of the public sector banks provide Islamic banking options, the reason is simple and straight forward that local investors prefer it. But one has other options as well in the form of commercial banking. It’s up to you which way you want to swing because one is an interest-free system and others can’t provide a single option without taking interest rate.
But here we will differentiate both with their functions like if someone is looking for a commercial loan package, which one should be preferred. There are so many other services on the basis of which we will try to make it easy for you. There can be two questions which are must to answered here
• What is Islamic banking?
• Why we should prefer Islamic commercial loans?
What is Islamic banking?
Due to interest-free investment plans through the Islamic banking system, UAE imposed a strong footprint in the different industries and established a new system to attract international and local investors. The only difference is the interest rate. The contribution of sharia-compliant services has contributed a lot in the fast-growing economy of UAE and most of the banks are providing Islamic loan services along with wealth management solutions, life insurance policies and similar others .The financial sector is the most important part of UAE as half of the economy is based on it. With the addition of Islamic banking in UAE, the economy gets reboots with a strong speed through best investment funds schemes.
Why Islamic banking is so popular?
The reason behind the popularity of Islamic banking in Dubai is only because of interest-free loan packages. Such financial services have not only contributed to the individual’s life but also help to manage a lot of benefits at the corporate level. The main difference is the absence of interest rate and account holders prefer it.Traditional banking structure is completely based on interest rate while on the other hand Islamic banking and finance are totally opposite to that. There is no interest rate in the Islamic banking system for all kinds of offers including loan packages and regular stuff. It is not a new or a fresh idea because this system is running from so long back and the concept of Islamic banking was introduced in 1970 by Mashreq Al Islami. The idea of Islamic principles and the Sharia-compliant system based on Islamic laws in which interest rate is prohibited strictly.
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