Challenges and Future Prospect of Islamic Banking

Abstract

Islam has its peculiar economic system which is based on just economic activities in a society. Islam bases its economic system on Riba/ interest free economy the aim of which is to provide equal opportunities to all the inhabitants of the society.  Islam desires at promoting societies in which all have equal opportunities and in which wealth is not confined to few people only. Through the principal of Riba/ interest free economy, Islam halts various forms of usury and exploitation. Riba/ interest based economic system wows to facilitate people with loan whenever they need it but in fact this system usurps people’s freedom by putting them under constant pressure when they have to pay back additional money. Sometimes people pay more than what they have received still they cannot win their freedom back in case they are late in returning the money in time and heavy fine is imposed upon them. Islam categorically forbids this and stands for Riba/ interest free system. Today many Muslim and non-Muslim countries have adopted Islamic Banking system which is getting more and more popular. Coming out of traditional and interest based banking system and to completely adopt the Islamic banking system is not a straight forward issue. It has many challenges despite having a bright future prospect. Some challenges are extremely complicated and they need efforts from international block to overcome. The present article addresses these challenges and future prospective of Islamic banking in Pakistan.