Very simple but with a complete opposite banking system as compared to a traditional bank. Most of the UAE residents, even the majority of the population is well aware of the two banking systems – one is the Islamic banking system and the other is a conventional banking method, both are popular among locals. Now the following question raised when we compare the both:
- What is the Islamic banking system?
- What new innovations in this system?
- How it is different from conventional banking?
These are few simple questions but when we have a deep analysis, we came to know that there is a big difference in the way both works, their services and charges as well. The popularity factor is increasing day by day as expatriates are highly interested in this system. From the last few years it is really in demand and to have an idea about the way these two are functioning is important for all account holders.
Dubai is an Islamic state so if we look at the banking sector it is completely professional and works according to international standards. Although a large number of banks are working under the system of sharia law, there are hundreds of others who are working with conventional means to facilitate foreign clients.
Why it so? Well, first thing is that if you are getting all kinds of facilities at easy rates then there is no need to go for conventional banking. There is another reason that the majority of the population in Dubai is interested in Islamic banking due to no interest rate and no other bank can offer you services without interest.
Major features of an Islamic banks in UAE are these:
- If you have an account in an Islamic bank, you will get all kinds of services according to the sharia-compliant method.
- There is no interest rate on any service being provided by an Islamic bank. You can take all kinds of loans like personal loans, mortgage loans, and business loans without any interest. But the functioning and procedures are different from conventional banking.
- Both borrowers and lenders are at the same place while sharing profit and loss.
Services of Islamic bank
We will have a look at three major services which are – Loan packages, Credit card services, and Investment services.
Let me explain to you through an example. Suppose you are an expatriate in UAE and we all know that green lavish lifestyle of this region is always attractive for everyone. Your mother, wife or child will demand all new items according to their wishes and you have to cover all of the demands. How it would be possible? If you will see the best innovative Islamic bank in the UAE, you can take maximum opportunities. As we have told you earlier that Islamic banking is a completely interest-free system, so you can get loans or easy credit card services to meet your daily needs. You can manage your own home in UAE for your future generation which is very easy through home loan services that are available without any interest rate.
To understand the loan offers through this system, I will explain shortly a home loan deal under the Islamic mortgage in Dubai. Suppose you need personal finance to get your own property for a home. You can visit a bank for lending options. The lender in case of a bank will ask you about a few requirements like:
- You need to provide your passport so that to cover your nationality portfolio.
- Then you must have to provide your previous credit history.
- The loan will be approved or not, it completely depends on your credit history. If you have a good credit history with no pending debts then you will be eligible to get your requirements on your own demands. While on the other hand, the situation would not be in your favor.
The repayment of the loan will be very easy and without any interest rate so you don’t worry about such things. While on the opposite side conventional bank will bound you to pay the interest rate along with the actual loan amount.
Similar if we talk about credit card services, there is a big difference between Islamic banking and conventional banking system. On one side you can get the best Islamic bank credit card with unlimited perks and benefits, while on the other side conventional banking also provides pretty attractive packages but these are interest bound.
Accelerate your economic progress
Most of the expatriates don’t have any idea about the Islamic finance companies working in UAE along with the Islamic banking system. Keep one thing in your mind that these are certainly have created profit and growth in all sectors. So all of the people who are working in a company should get some benefits from such financial institutions. This can be counted as a side business along with your job.
One can choose to invest in businesses based on their potential for growth and success. Believe me, there are unlimited chances to get maximum profit without any risk. Thus in the Islamic banking industry, each bank will invest in a promising business with a clear mind because highly professional experts are present on the front. They have complete knowledge about ventures and attempt to out-perform with the local as well as international competitors. This is also a new marketing tool the attracts more funds from its depositors.
If we have a look at the overall picture, this will eventually result in a high return on investments both for the bank and the depositors. While on the other hand, this is unlikely in a conventional bank, you can only maximize your profit scale with a fixed interest rate. This is the only way where depositors redeem returns on their deposits.
Which bank is most suitable for Islamic banking services is the most frequent question asked by different readers. According to the past track records Mashreq bank, a private one is a suitable option for expatriates working in UAE.