ke1-overviewofIslamic Banking&financialsystem.pptx -...

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BANKING AND FINANCE OVERVIEW OF FINANCIAL SYSTEM
CONTENT OVERVIEW OF FINANCIAL SYSTEM BANKS AS FINANCIAL INTERMEDIARIES ISLAMIC BANKING GOALS AND OBJECTIVES OF ISLAMIC BANKING DIFFERENCES BETWEEN ISLAMIC BANKING AND CONVENTIONAL BANKING SYSTEM ADVANTAGES OF ISLAMIC BANKING CHALLENGES OF ISLAMIC BANKS 2
FINANCIAL SYSTEM Concept of Financial System The collection of accounting processes and procedures that allow a business to keep accurate financial records, monitor accounts, prevent fraud and mistakes, and catch any discrepancies. A financial system allows a company to maintain accountability for expenditures and revenues, and to control their finances to minimize waste and loss. A financial system is concerned about money, credit and finance. 3
FINANCIAL SYSTEM Concept of Money Money is anything generally accepted as a means of paying for goods and services and a measure of value. Functions of Money : Medium of exchange Measure of value Temporary store of value Concept of Credit/Loan An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. There is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capital markets have developed many ways of managing this risk). 4
FINANCIAL SYSTEM Concept of Finance Finance is the procurement (to get, obtain) of funds and effective (properly planned) utilization of funds. It also deals with profits that adequately compensate for the cost and risks borne by the business. Finance deals with matters related to money and the markets. 5
BANKS AS FINANCIAL INTERMEDIARIES Financial intermediaries is an entity that acts as the middleman between two parties in a financial transaction. Financial intermediaries encompass a wide range of entities in terms of size and scale of operation ranging from a banks, broker-dealers, investment advisers and financial planners. Roles of banks as financial intermediaries: 1. Promote savings and capital accumulation to finance projects using various modes of financing. 2. Finance international trade. 3. Mobilize resources for investments for the benefit of society. 4. Contribute social welfare through Corporate Social Responsibilities (CSR) and zakat. 6
PRINCIPLES GOVERNING OF ISLAMIC BANKING Islam Aqidah (Faith and Belief) Shariah (Practices and Activities) Ibadat Muamalat Political Activities Economic Activities Banking & Financial Activities Social Activities Akhlak (Moralities and Ethics)
ISLAMIC BANKING Islamic banking is defined as banking system which is in consonance with the spirit, ethos and value system of Islam and governed by the principles laid down by Islamic Shariah.

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