Islamic Finance and Banking
In recent years, there has been a significant increase in the number of Islamic financial institutions. This in itself has led to an increase in the number of inventions in the Islamic banking market. The Market has however not fully developed. According to a report by the global Islamic finance, there were only about 505 registered Islamic banks in 2017. This paper seeks to come up with new a new Sharia compliant financial instrument that can be used in Islamic finance.
Due to advancement in technology, a virtual bank is one of the less popular and unexplored options in Islamic Finance and banking. There is a huge potential in Islamic world as most people prefer using debit or even credit cards. This system will use the Murabanah and mudarabah type of structure to provide cashless banking solutions. This will be made possible by introducing and issuing digital cards to our available customers. Developing a mobile application so that our customers are able to access their details anywhere despite their locations. They will also be able to make purchases, pay their bills, transfer funds to other users, either on the platform or even on other platforms, and even deposit cheques. Withdrawals will be done at selected ATMs and stores.
How the system will be Sharia Compliant
The system will be able to provide loans to its customers through equity participation systems. This means that as a financial institution, our banking system will not be charging interests. Instead, those given loans will return a share of their profits to the financial institution. In case the business does not make any profits, we get nothing. We will not be able to be involved in activities that are considered haram or even get involved in contracts where goods ownership solely depends on events that are uncertain, also known as masir. This institution is also prohibited from participating in contracts with a high level of risk or uncertainty.