Islamic banking, also known as Sharia-compliant banking, has been gaining momentum in Pakistan. With the assets of the Islamic Banking Industry (IBI) reaching Rs 6,902 billion in September 2022, it’s essential to understand what Islamic banking is and its implications for investors.
Islamic banking operates in accordance with Islamic principles and prohibits the charging or paying of interest (riba). Instead, it promotes profit-sharing arrangements, risk-sharing partnerships, and ethical investment practices. This system aims to align financial activities with Islamic values and promote social justice and economic stability.
