Conventional banks loan money and take it back with interest and borrow money and repay it back with interest.
However, in Islam loan mean it should not incurr any interest, therefore, Islamic banks has fundemntal difference in the way they operate, so they are not in the business of advancing loans to their customers, they either buy an asset and sell to the customer with profit, buy an asset lease to the customer, partner with the customer in the assets and have joint ownership and share profit and risk or engage in a trading relationship with their customer... the conceptual difference is that islamic finance is based on an asset that the bank and the customer are linked to, unlike where you would see in a conventional system whereby you can easily make money over money and then if you add the entire world economy you will end up with USD 30 Trillion, however, if you calculate the direvative market on its own, it will come close to USD 120 Trillion.. which show how fragile the entire financial system is.. also interest earned from loans are called usuary which is forbidden in christianity as well and other religion.
Conventional banks loan money and take it back with interest and borrow money and repay it back with interest.
However, in Islam loan mean it should not incurr any interest, therefore, Islamic banks has fundemntal difference in the way they operate, so they are not in the business of advancing loans to their customers, they either buy an asset and sell to the customer with profit, buy an asset lease to the customer, partner with the customer in the assets and have joint ownership and share profit and risk or engage in a trading relationship with their customer... the conceptual difference is that islamic finance is based on an asset that the bank and the customer are linked to, unlike where you would see in a conventional system whereby you can easily make money over money and then if you add the entire world economy you will end up with USD 30 Trillion, however, if you calculate the direvative market on its own, it will come close to USD 120 Trillion.. which show how fragile the entire financial system is.. also interest earned from loans are called usuary which is forbidden in christianity as well and other religion.