Frequently Asked Questions on Islamic Banking

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Shari'ah (Islamic rulings) and its practical application through the development of Islamic economics. Shari'ah prohibits the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as carrying out trade and other activities that provide goods or services considered contrary to its principles.

No, the products offered by Public Islamic Bank are for all individuals regardless of their race and religion both Muslims and Non-Muslims as well as to business entities.

No, Islamic banks accept the deposits either on profit and loss sharing, Wadiah or on Qard basis. These deposits are deployed in financing, trading or investment activities by using the Shariah compliant modes of finance. The profit so earned by the bank is passed on to the depositors according to the pre-agreed ratio or granting hibah, therefore, cannot be termed as interest.

The validity of a transaction does not depend on the end result but rather the process and activities executed and the sequence thereof in reaching the end. If a transaction is done according to the rules of Islamic Shariah it is halal even if the end result of the product may look similar to conventional banking product.

There are at least six basic principles which are taken into consideration while executing any Islamic banking transaction. These principles differentiate a financial transaction from a Riba/interest based transaction to an Islamic banking transaction.

The business operations of Public Islamic Bank are under strict observation and endorsed by Public Islamic Bank’s Shariah Committee.