Banks collect money from different sources and then lend it to people on the condition that the money lent is returned with a certain percentage increased in the total. This increase is strictly prohibited in Islam for its obvious abuses.
An Islamic bank has, therefore, one difficulty to face in the collection of funds and another to lend money with no interest and yet to arrange and manage everything in a manner as a modern bank is used to do. A modern bank meets expenditure from the interest it receives on the loans that it advances on interest but wherefrom shall an Islamic bank which has no source of interest meet its expenses. How can these difficulties be solved? Here arises the basic question about the Economic Philosophy of Islam. Does this philosophy revolve round the aim of money making as the policy of the modern banks is? Does economic philosophy of Islam uphold the same aim?
We can categorically say no in answer to this question. We can say the Economic Philosophy of Islam has its roots deep in the basic principles of Islam, which lead a Muslim to the ideal of gaining the good-will of God Almighty through efforts that are regulated by His guidance and the guidance of His prophet (PBU). This guidance prohibits interest with full authority on other side and on the other side invokes in all possible manner the desire to spend in His way for His cause and on His family or say the people.
The banking system of the present age is not a simple affair. It involves matters other than collecting and dispensing of money. It undertakes productive jobs on the basis of share-holders cooperative system. It transacts business of sending money from one place to another. It sells and buys shares of companies and it deals with the exchange of money in between countries and states.
Among these mentioned and other unmentioned situations how many would an Islamic bank handle, one can say that above actual expenses the labour charges would require extra money of such situations as they shall fall within the framework of the Islamic bank. An Islamic bank can go onward on His way and can function as Bait-ul-maal of an Islamic state, wherein the source of income are certain to perfection and so are the heads of distribution also.
As trade and productive field of work is not prohibited very little cause is left for the system becoming unproductive or improfitable. The main aim to serve His cause in His way and His family is served well, though the main ill of usury finds no place in the whole system.
Banks on some Islamic principles started in different corners of the world can easily join into a bank federation, which shall serve humanity on an international scale. The relations of such banks with each other and with the banks that already exist can also be regularised on the interest-free jobs in the first instance and then carried to other fields on the Islamic principles of an Islamic bank.
The interest-free loans, the unreturnable aids, and the honest and God fearing attitude of the workers of the Islamic banks with the economic philosophy of Islam at the root of the whole system is sure to gain unrivalled popularity to the system, "Insha-allah".