Bankers Perception on Islamic Banking

Shari’a supervision plays an essential role in the governance of IFIs. It has different forms at macro and micro levels. (Chris Pierce, 1988) Deposits are strictly not considered as loans in the Islamic sense. If it is in the form of money, then he has an obligation to pay Zakat out of it. If these deposits are indeed loans, then it is the banks which should pay zakat on them. In reality,the banks make the depositors pay the zakat , which is injustice. (Alexandra R, Hardie & M. Rabooy, 1991) M. Norain, Ariffin, & M Adnan explained the perceptions and awareness among bankers in Islamic banks is essential to enhance corporate social responsibility. M. Norain, Ariffin, & M Adnan explained that to fulfill the Islamic needs of the society, proper policies have been developed so that there will be no recurring problems in the future relating to the banking system and investment. M. Norain, Ariffin, & M Adnan suggested that Islamic organizations, Islamic banks are accountable to Allah and to the communities in which they operate and have a duty to be transparent in all their activities.

Ethical investment now recently become an issue in the West, and it is very important in the Islamic world and Islamic Banks must work on these principles which fulfill the needs and commitment to the bankers. (Alexandra R. Hardie and M. Rabooy 1991) a serious question arises that whether Islamic Banks are keeping to the rules about partnerships. In this context some scholars believe that the working partner in mudaraba should not mix the capital of the various suppliers of funds; if this is done then the problem is very serious for the Banks, (Alexandra R. Hardie and M. Rabooy, 1991) Malaysian banks experience economies and annual productivity change on a big scale. The latter productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with passage of time. Mariani Abdul-Majida, David S. Saalb,* and Giuliana Battistic (2010)

The separation of Islamic from conventional banking services may allow managers to better focus on improving the cost efficiency of Islamic banking where as in the short run, the new Islamic banks will suffer manyr transitional problems. Mariani Abdul-Majida, David S. Saalb,* and Giuliana Battistic (2010) M. Khan & A. Mirakhor (1991) describes economic system which is based on Islamic principles is permanently have the prohibition on the payment and receipt of interest. This restriction makes Islamic banks different from financial institutions in many ways. Islamic banking system in Pakistan was adopted in such a manner to leave the intermediation role of the banking system undisturbed. Where as the banking system in Iran is used as an instrument for achieving the goals and objectives of the Islamic revolution. M. Khan and A. Mirakhor, 1991)

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Islamic Law prohibits charging interest. financial instruments used by Islamic banks are not based on profit-and-loss sharing (equity) but, debt like instruments are a rational response by Islamic banks to their contracting environments and debt becomes the dominant instrument. (K. Aggarwal & Yousaf, 2000) Egypt's Islamic banks, while observing certain Islamic precepts in their operations, in order to improve their status, these banks fulfils their social mission by enabling their customers according to Islamic needs. Elizabeth Mayer, 1985) Use of existing Islamic financial instruments such as zero coupons bonds, paper for trade finance and unitised securities. There is a need to encourage secondary market development so that instruments can be traded effectively. (Rodney Wilson, 1991) The scope for development of Islamic financial products is vast enough, such products can play a major role not only facilitating the muslim countries but widely promoting the economic advancement. (Rodney Wilson, 1991)

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