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Dear Mehboob
Disagreed. These are the major differences 1. Principal : Conventional : lending ( ie pure interest driven loans. in this case, the Bank extends a loan to a borrower to buy a house.) Islamic : Sale and Purchase ie buy first , then sell at an agreed profit. The sale can either be in a bullet payment ie on cash or seller agrees to sell the property on instalment basis after factoring fixed profit over a certain period of time. 2. Profit margin vs interest margin Conventional : Interest margin banks extends a loan at a premium ie with an attached interest that varies according to the interest rate outlook. Islamic Profit margin Both parties agree to a certain amount of profit arising from the above Sale and Purchase. The profit shall be earned in full even though full payment is settled prematurely. NOTE : in Malaysia, when u settle prematurely , u shall be entitled for a rebate or hibab . 3. Titleship Conventional : title rests with the lender ( bank) Islamic : Title rests with the purchaser but with a claim on the asset by seller. In the event that the purchaser fails to honour his payment obligation, the seller has the right to claim on the asset. Hope the above explains and clarifies. DR. RIDZWAN Senior General Manager ( local commercial bank in Malaysia) ----- Original Message ----- From: mehboob-ul hassan <[EMAIL PROTECTED]> Date: Wednesday, June 22, 2005 11:43 am Subject: inquiry on Islamic Finance > Bismillah > Dear all memebers Assalamoalikum > > Last week, while I was attending the seminar of Pro. Nobukuni > Makoto, Presently at Nagoya city University, former advisor of > U.N. and Indonesian government, he said that Islam do not allow > Mortgage Business, if Islamic Banks are involving in Mortgage > business, then there is no difference between conventioanl and > Islamic Banks. > I could not reply at the spot because I my self did not knew about > it clearer. > > Is above (his) statement true? > If yes, why? > If not What are the Shariah compliance regarding Mortgage Business? > > Regards > > Mehboob ul Hassan > Ph.D. Fellow > Nagoya City University Japan > Tel 81-52-872-4744 > Mobile 81 90-2943-1150 > -------------------------------------------------------------------------- All views expressed herein belong to the individuals concerned and do not in any way reflect the official views of Hidayahnet unless sanctioned or approved otherwise. If your mailbox clogged with mails from Hidayahnet, you may wish to get a daily digest of emails by logging-on to http://www.yahoogroups.com to change your mail delivery settings or email the moderators at [EMAIL PROTECTED] with the title "change to daily digest". YAHOO! GROUPS LINKS
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