Comparative Study of Functions, Products and Financial Performance of Islamic Banks with Conventional Banks in Pakistan

Abstract

The structure of Islamic banking is working on the basis of Islamic ideology with distinctive and different characteristics. A number of Muslim leaders in the world were questioning for a very long time that how to implement a banking system which will be the main constituent of Islamic principles based economy. The combined efforts were taken by Muslim scholars for the materialization of Islamic Banking to fulfill the banking needs of Muslim population also aligned with their religious obligations. Governments of different Muslim countries gave permissions to their Central Banks to allow other private and independent banks to operate a banking system based on Shariah. Islamic banking system was established in early 1960's in Egypt. But in those days political climate of the country were too volatile resulting in its closure. But in 1975 Dubai Islamic Bank was opened as the first private Islamic Financial Institution.