(by : nans)
In some cases, Islamic banking and conventional banking have equations, especially in the money acceptance technique , transfer mechanism, computer technology, general requirement to get credit like ID Card, NPWP, business plan, financial statement, and so on.Yet there are many basic differences between them. The differences related to legal aspect, organization structure, debitor, and environment of work.
Agreement and Legal Aspect
On the Islamic Banking, each of agreements has consequence, not only world consequence but also eternity consequence. Oftentimes a debitor brakes the rules because the agreement only uses the positive law.
Every islamic banking agreement, wheter it is goods, transaction perpetrator, even agreement rules, have minimum rules that must be fulfilled :
1.Minimum aspect within a transaction :
-Seller
-Buyer
-Goods
-Price
-Agreement
2.Requirement
-Product must be rightful, so unrightful product transactions are not allowed.
-Product price must be obvious.
-Delivery place has to be obvious because it will affect the transportation cost
-Transaction product must be owned fully.
ORGANIZATION STRUCTURE
Islamic Banking can have the same structure as cnventional banking, such as commissary board and board of directors, but an aspect that is extremely different must be available is Sharia Supervisory Board. They have duty for observing banking operational and all of their products in order not to break the sharia rules.
SHARIA SUPERVISORY BOARD
Because the transaction is very special and different from common transaction in conventional banking, therefore it’s needed special guidelines. Those guidelines are compiled and determined by National Sharia Board.
Sharia Supervisory Board has to make statement regularly (usually every year) that operational sharia banking has been run according to the sharia rules. This statement is released on the annual report.
Besides that, they also already have a duty for checking and making recommendation of new product from the bank. Thereby, Sharia Supervisory Board undertakes as a first filter before a product is checked again and it’s given religious advice by Sharia National Board.
BUSINESS ACTIVITIES THAT IS GIVEN CREDIT
In Islamic Banking, a credit will not be accepted before being fixed several main things, among other things are :
1.Wheter the object of credit is rightful or unrightful.
2.Wheter the project generates benefit for the society.
3.Wheter the project is related to immoral activities.
4.Wheter the project is related to gambling.
5.Wheter the project is related to ilegal weapon industry.
6.Wheter the project can harm Islam, directly or indirectly.
ENVIRONMENT OF WORK AND CORPORATE CULTURE
The Islamic Banking righteously has the best environment of work. In the case of ethics, for example accountable (shidiq) and reliable (amanah), each employee must have those characteristics so that they can be reflected well integrity as a moslem executive. Besides that, islamic banking employee must be skillful and profesional (fathanah), and able to do the best in team-work or in personal work at all of the functions of the organization (tabligh).
Then, the way of dressing and the behavior from the employees must reflect they work in the big name of Islam, no porn and rude behavior. That way also when they face the clients, the good behavior must be kept.
THE COMPARATION OF ISLAMIC BANKING AND CONVENTIONAL BANKING
Islamic Banking
1.Only invest in rightful way
2.Based on profit sharing principal, trading, or renting.
3.Profit dan religious oriented
4.The relationship with the debitor is a partner.
5.Funding and chanelling must be according to religious advice from Sharia Supervisory Board.
Conventional Banking
1.Rightful And Unrightful
2.Using Interest
3.Profit Oriented
4.Creditor And Debitor
5.There is no Sharia Supervisory Board.
Islamic Banking
It isn’t based on interest, speculation and unobviousness
Expessed explisitely and coherent in the goals of organisation
Must have Sharia Supervisory Board
Conventional Banking
Based on interest
None
None
The Differences of Profit Sharing
Islamic Banking
The size based on :
-Bank’s earning
-The percentage of profit sharing whitin bank and client
-The size of client deposit
-the average deposit balance in the bank
-The duration of deposit
Conventional Banking
The size based on :
-Interest rate for each months
-Deposit nominal
-The duration of deposit
Islamic Banking
-Islamic Banking gives profit to client by LDR approach (Loan to Deposit Ratio), that is consideration ratio within fund of third party ratio and the total size of credit.
-LDR not only reflect balance, but also justice because the bank really shares real income.
Conventional Banking.
-All of interest becomes a cost.
-Without calculating how much income can be generated.
-Consequently, the bank must add when the interest from debitor is smaller than the duty of bank that must be given to client (negative spread).
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