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Regarding the rate of profit and loss sharing – i.e. the "agreed upon percentage of the profits (or deduction of losses)" the Islamic bank takes from the client – there is no market to set it or government regulation of it. This leaves open the possibility the bank could exploit the client with excessive rates.
While the original Islamic banking proponents hoped profit-loss sharing (PLS) would be the primary mode of finance replacing interest-based loans, [156] long-term financing with profit-and-loss-sharing mechanisms is "far riskier and costlier" than the long term or medium-term lending of the conventional banks – according to critics such as ...
(For example, one Islamic bank—Al Rayan Bank in the UK—talks about "Fixed Term" deposits or savings accounts). [172] In both these Islamic and conventional accounts the depositor agrees to hold the deposit at the bank for a fixed amount of time. [173] In Islamic banking return is measured as "expected profit rate" rather than interest. [174 ...
The industry has been praised for turning a "theory" into an industry that has grown to about $2 trillion in size; [6] [7] [8] for attracting banking users whose religious objections have kept them away from conventional banking services, [9] drawing non-Muslim bankers into the field, [2] and (according to other supporters) introducing a more stable, less risky form of finance.
Conservative scholars promoting Islamic finance consider murabaha to be a "transitory step" towards a "true profit-and-loss-sharing mode of financing", [16] and a "weak" [17] or "permissible but undesirable" [18] form of finance to be used where profit-and-loss-sharing is "not practicable."
Islamic banking has been called "the most visible practical achievement" of Islamic economics, [21] and the "most visible mark" of Islamic revivalism. [154] By 2009, there were over 300 "shariah compliant banks and 250 mutual funds around the world, [ 155 ] and around $2 trillion were sharia-compliant by 2014.
RAKIslamic, RAKBANK's Islamic banking division, operates under the principles of Islamic Sharia, avoiding interest-based transactions, and providing Sharia-compliant financing and investment options based on profit and loss sharing. The bank's product Skiply is a digital app developed by RAKBANK, for managing education payments.
Despite this "rebooting", Khan states that the new, purified, full-fledged Islamic banks are the same in "form and function" as the old Islamic banks, and that eleven years later (as of 2013), use only a minuscule amount (3%) of profit and loss sharing, and make up only about 10% of the country's banking sector.