Abstract:
This research study provides a clear picture that Religious, Economic and Socio Psychological
are those influencing factors that Skewed corporate customers from conventional banking
towards Islamic banking. The global platform for bankers, economists and investors is auditing
and accounting for Islamic Financial Institutions (AAOIFI) is to promote the concept of Islamic
banking that all modes of business dealings are based upon interest free.
Pakistan is the second largest Islamic nation and 6th popular country in the world with over 180
million populations and the concept of Islamic banking is growing at 8% per annum. In our
country Islam is the pre dominated religion the corporate client of Islamic banking is 20 million,
40 million people are conventional banking customers and rest of the people of Pakistan do not
want to indulge with these financial institution. The trend of misconception about Islamic
banking rises because of non-professional bankers was marketing the Islamic banking products
in such a way they do the product marketing of conventional banking system.
The Islamic banking is based upon asset backed financing while the conventional banking based
upon money backed financing. SBP is the key motivator to adopt Islamic banking and the basic
motivating factor to adopt the mechanism ofIslamic banking is the unique methodology of profit
and loss sharing as per the regulation of Islamic sharia policy. Islamic banking has attracted
numerous customers who were never engaged with banks, it will provide opportunity to the
businessmen to expand their business operations through Riba free loans or interest free loans
and it give the impetus to the business along with the more employment vacancy and increase in
revenues. '
The operations of Islamic banking is totally different from conventional banking because in
accordance with teaching of Islam the State Bank of Pakistan does Shariah audit of the banks'
accounts and it is regulated by separate banks of SBP. Islamic bank does not engage in those
business dealings whose nature of business is totally prohibit by the Islamic shariah, they do not
indulge in those business transaction which are based upon interest; they do not invest in T-bills
and PEBs.
To conclude my research study it is clear that Islamic banking is 'HalaT and the attitude and
behavior of corporate clients is shifted toward the provisions of financial products and services
of Islamic banking while on the other hand conventional banking is 'Haram'.
