Islamic banking and conventional banking are two distinct systems that operate on different principles and practices. In the context of the Ofqual Level 5 Certificate Concepts of Islamic Finance and Banking online course, it is essential to understand the key differences between the two.
| Islamic Banking | Conventional Banking |
|---|---|
| Based on Sharia principles, which prohibit the payment or acceptance of interest (riba). | Interest-based system where interest is charged and paid on loans and deposits. |
| Focuses on profit-sharing and risk-sharing arrangements, promoting fairness and transparency in financial transactions. | Primarily focused on lending money for profit, with little emphasis on risk-sharing. |
| Prohibits investments in industries such as alcohol, gambling, and pork products, in line with Islamic principles. | May invest in a wide range of industries, including those considered unethical by Islamic standards. |
| Encourages ethical and socially responsible investing, with a focus on supporting the community and promoting economic development. | May prioritize profit maximization over social and ethical considerations. |
By understanding these key differences, students enrolled in the Ofqual Level 5 Certificate Concepts of Islamic Finance and Banking online course can gain a deeper insight into the unique principles and practices of Islamic banking compared to conventional banking. This knowledge will not only enhance their understanding of Islamic finance but also prepare them for a career in the growing field of Islamic banking and finance.