Abu Dhabi Islamic Bank: Different From Conventional Banking

A bank that has its foundations laid in the soil of Islam in UAE is the Abu Dhabi Islamic Bank.

On the 20th of May, 1997, this bank was founded as a joint stock company which is Public. This was done through the Amiri Decree No. 9 of 1997.

The functioning got started from the 11th of November, 1998. The inauguration was done by the UAE Minister of Information and Culture, His Highness Sheikh Abdullah Bin Zayed Al Nahyan, on 18th April 1999.

The Abu Dhabi Security Market has its shares quoted on it.

Close to 100,000 people are the shareholders and share 61% of the equities with the founders of this Islamic Bank who have 39% of the shares.

These founders are the members of the family that is in rule, the ADIA (Abu Dhabi Investment Authority) and the important nationals of UAE.

The commercial functioning of the Abu Dhabi Islamic Bank started with a sum of one billion Dirhams divided in some hundred million shares, equating every share with 10 Dirhams.

Being a bank that follows Islam very strongly, the banking system is unique in itself. Religion is an important criterion to work and the operations should be based on Quran and Sunna.

This results into Halal activities only. Also, ethics play a very important role in the whole banking scenario.

The bank does not support in financing liquor manufacture, transport, storage or company distributions.

To manage the operations of the bank, Islamic Jurisprudence are also hired that are the experts in the filtering of various money transactions on the current basis.

Reba or the interest in Islam is prohibited. Hence, the bank earns only through the charges on the financial services that it asks from its customers. The bank, unlike other banks always ignores the concept of interest.

Hence, for customers, the profit from them comes from the profit of the bank. Hence, the returns on savings depend directly upon the performance of the bank. Instead of the interest, the depositors enjoy share in the profit of the bank itself.

This type of banking raises concerns in the mind of a normal customer. The bank though, has an answer. Instead of the conventional banking, this bank guarantees professional transaction dealings even if the profit is guaranteed or not. Also, the current accounts are treated as safekeeping or Amanat. They are taken as Quard and are free from any loss risks and can be drawn by the customer according to his own will. This is a major difference in this type of banking and other banking procedures.

One more difference between the conventional way of banking and this type of banking is in relation to the balance between moral and material requirement. In conventional banks, credit cards are in usage very frequently and this debt in financing results in several financial complications. While, in Abu Dhabi Islamic Bank, over or excessive extension of credits is limited by the undertaking of the ownership of the physical asserts before resale.

Source: http://ezinearticles.com/6269815

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