1. ISLAMIC FINANCIAL SYSTEM Md. Nurul Islam Deputy Managing Director Islami Bank Bangladesh Limited

9. ISLAMIC FINANCIAL SYSTEM Basis of Difference CFS IFS 1. Religious Belief Secular & separates Religion from other Parts human life Belief in unity of God & relates this belief to economic Life of a man 2. Freedom of Economic Activity In socialism govt. enjoys economic freedom but in capitalism Individuals enjoys freedom. Restrictive freedom is allowed in the light of Shariah both by the govt. &/or individuals 3. Ownership of means Socialism-state ownership, Capitalism-individual ownership Allah is the exclusive owner. Man is the caretaker of the property 4. Goals of financial System Socialism-profit of the society Capitalism-Individual’s profit Welfare of both here and hereafter. 5. Competition Socialism-No competition Capitalism- Logical & unethical competition Logical Competition and financial co-operation 6. Wealth distribution Socialism-Equal Capitalism – Unequal Equitable

10. ISLAMIC FINANCIAL SYSTEM Basis of Difference CFS IFS 7. Basis of Economic System Riba or Interest Interest Free; PLS, Zakat & Compensation based 8. Sources of the System Intellects brain storming of the economic problems of men’s life Devine book “Al-Quran” & Prophets(SM) speeches 9. Result Capitalism concentration of income & economic power in few hands. Inefficiency Maximum & equitable Distribution of economic opportunities and higher production in the society 10. Social & environmental welfare Do not consider the social & environmental welfare Ensure social & environmental welfare 11. Owners exception in respect of respect of investment Dividend or part of profit in case of equity financing Part of Profit or Loss 12. Lender or Bank’s expectation in terms of dept financing Interest Profit or Loss Sharing 13. Modes of Investment Loan, Overdraft & Cash Credit Mudarabah, Musharaka, Murabaha etc.

21. ISLAMIC FINANCIAL SYSTEM UNDER CAPITALISM UNDER ISLAM 1. Economic Laws are like physical laws 1. Economic laws are like natural laws 2. Positivism: Economics is a positive science as like as biology, physics which have no value, value neutral 2. Economics is value oriented. Permissible & prohibition have to be observed 3. Motive for More: Pecuniary interest. Man is rational economic being. Survival of the fittest, destruction of the poor 3. Man does not work for only personal interest. He has to secure the interest of this world & the world hereafter. 4. Market Oriented: Market can solve all the problems. Poors’ need is not reflected in the market. Demand is backed by purchasing power. Result is the mismatch in resource allocation. 4. Market can solve major problem but not all. At least 20% economic problems to be solved by the government. Communism prescribes 100% solution by government. Capitalists leaves it 100% to market. 5. Little concern for poor humanity 5. Major concern for poor. Poverty alleviation by Zakat, Sadaqa & gives emphasis on economic progress 6. Nearly 100 corporate of ¾ countries control the world economy in the name of globalization. 6. No concentration of wealth in few hand. Wide dispersal of wealth & property 7. 18-20% people in B angladesh live below poverty line (not getting two meals a day) 7. None can live below poverty line if Islamic economic system is established