Saturday, 20 February 2016

Afghanistan Bank Association: Islamic banking is important for boosting money circulation and improving country’s monetary system

According to Afghanistan Bank Association (ABA), over 10% of Afghans have deposited about 30 billions AFN in cash in banks. “Demands for Islamic banking system is on the rise in Afghanistan. With the availability of Islamic banking service, more people will deposit money in banks and boost money circulation,” said ABA CEO Mr. Najibullah Amiri. Meanwhile, a number of residents have also called for expansion of Islamic banking in the country and believe that more people will trust the banks if Islamic banking system is present. 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. The principles which emphasize moral and ethical values in all dealings have wide universal appeal. 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. While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to provide an alternative basis to Muslims although Islamic banking is not restricted to Muslims. Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shari’ah, known as Fiqh al-Muamalat (Islamic Rules on Transactions). Islamic banking activities must be practiced consistent with the Shari’ah and its practical application through the development of Islamic economics. Many of these principles upon which Islamic banking is based are commonly accepted all over the world, for centuries rather than decades. These principles are not new but arguably, and their original state has been altered over centuries.