Compare and contrast non interest banking with conventional counter past
Non-interest banking, also known as Islamic banking, is a banking system that adheres to Islamic principles and prohibits the charging or payment of interest. Conventional counter past, on the other hand, is the traditional banking system that allows for the charging and payment of interest on financial transactions.
One of the main differences between non-interest banking and conventional counter past is the way profits and losses are shared. In non-interest banking, profits and losses are shared between the bank and the customer, while in conventional counter past, interest rates are set by the bank and profits are kept by the institution.
Another key difference is the types of financial products offered by each system. Non-interest banking offers products such as Islamic mortgages, Islamic credit cards, and profit-sharing accounts, while conventional counter past offers products such as savings accounts, loans, and credit cards with interest charges.
In terms of risk management, non-interest banking operates on a risk-sharing principle, where both the bank and the customer share the financial risks associated with an investment. Conventional counter past relies on risk transfer, where the bank assumes the risk and the customer pays a predetermined interest rate.
In summary, the main differences between non-interest banking and conventional counter past lie in their treatment of interest, profit sharing, types of products offered, and risk management principles.