Definition:
Islamic Banking
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Because the Qur'an spoke against usury, Islamic Banking aims at removing or redefining interest rates from financial institutions.In Islamic banking, the lost time value of money is compensated by charging a mark-up on the asset that is financed.
The asset usually remains in the name of the bank, until the principal loan including the mark-up has been paid.
In the case of a business loan, instead of charging interest, an Islamic bank will require a certain percentage of the borrower's business profits to be paid to the bank for an indefinite period of time.
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