Why Islamic Banking is Better Than Regular Banking

she was the apple of your eyes, the perfect lady that you thought only existed in your fantasy. Just when you think you want to have her as your girlfriend, your wife, your significant other, your soul mate, you discovered that she is Muslim. You changed your mind immediately because you want to continue eating pork - I mean, because you did not want to convert your religion.While you might have zero interest in Islam studies, Islamic banking is something you should be interested in for various reasons, including this wonderful feature of zero interest.(Excuse the bad pun. Could not resist.)In a multiracial country such as Singapore, we accommodate the differences in religious belief. As savvy a savvy commercial hub, Singapore creates Islamic Banking to serve the need of the people. We try not to compare Islamic banking with regular banking because making such comparison is akin to comparing an baby product in Singapore with baby product in Australia - impossible as they are too different in various aspects such as dealing, transaction, business approach, product feature, investment focus and responsibility, due to the fact that Islamic banking is based on Shariah foundation (which means “the way to the source of life”) whereas conventional banking is, well, not. As we all know, conventional banking is based on a triangular debtor-creditor relationship; first between the depositors and the bank, and between the borrowers and the bank. In such a cold-blooded, commercialized relationship, interest is viewed as price of credit. It reflects the opportunity cost of money.  Islamic banking, on the other hand, is much more humane when it comes to loan. Under Islamic law, loan is given free of charge for the purposes of meeting any form of contingency. The practice of charging interest is believed to be a type of injustice, and since “deal not unjustly, and ye shall not be dealt with unjustly” is the cornerstone Islamic principle guiding such transactions, creditor should not take advantage of the borrower by imposing interest rate.Now, bearing in mind the absence of interest-based (riba) transactions in Islamic banking, whether you are a Christian, or free thinker, or Buddhist, or atheist - honestly, where would you go to obtain business loans? Zero interest was not the only reason that made Islamic banking better than conventional banking. Another interesting feature of Islamic banking is the belief that a person should not be rewarded unless he takes a risk, and this principle is applicable to both labor and capital; hence, there is no payment for labor (unless it is work-related). Naturally, it also means that there is no reward for capital unless it is exposed to business risk. In contrast with conventional banking where the investor is assured of a predetermined rate of interest, under Islamic banking, risk is shared between the investor and entrepreneur.    And we think justice and fairness are fictional terms.  There are other benefits to Islamic banking too, such as the avoiding economic activities involving oppression (zulm), economic activities involving speculation (gharar) and discouraging the production of goods and services contradicting Islamic value (haram).Islamic banking or conventional banking? You decide.