Mr. Hassan has already dealt in detail about the methodology of Islamic banking. So I don t want to repeat the same here. Methodology is not the point for discussion here but the philosophy is certainly important. Let us look at different opinions favouring such banking system. More emphasis on project viability than securities as is done in conventional banking system.
More new entrepreneurs are likely to emerge leading towards fast economic development.
Deposit holders will have better chance to earn more than the interest paid under conventional banking system. Disappearance of interest will reduce the prices of all commodities. Shortcomings of the system 1. While competing with conventional banks, the PLS basis of Islamic banking makes the proposal unattractive to deposit holders under Modarabah. Banks have to recruit highly competent persons in evaluating each proposal or project before entering into any partnership.