The Abu Dhabi Islamic Bank
Abu Dhabi Islamic Bank is an Islamic bank which is based in Abu Dhabi city in the United Arab Emirates.
The bank was established on the 20th of May 1997 as a Public joint stock company through the Amiri Decree No. 9 of 1997.
The shares are quoted on the Abu Dhabi Securities Market.
The founders of Abu Dhabi Islamic Bank hold 39% of its equity while the remaining 61 % is held by approximately 100,000 shareholders.
The founding shareholders of ADIB are the members of the ruling family, the Abu Dhabi Investment Authority or ADIA and the prominent UAE Nationals.
ADIB commenced its operations with a paid-up capital of One Billion Dirhams divided into hundred million shares, the value of each share being ten dirhams. The shares are quoted on the Abu Dhabi Securities Market.
The Islamic banking system is different from other banking experiences because it revolves around several well-established concepts such as: Islamic banking must operate within the framework of the religion; its affairs must be based on Qura'n and Sunna.
Because of this, only Halal activities are allowed in this kind of banking.
The Abu Dhabi Islamic Bank considers ethics as one of the many important factors in banking.
The Islamic bank does not, for example, finance liquor manufacturing, transportation, storage or distribution companies.
They also hire scholars who trained in Islamic Law, better known as Islamic Jurisprudence, to screen the suitability of the different investments on an ongoing basis. This also provides guidance on products to the bank’s management.
Interest, known as Reba in Islam is forbidden. Unlike other banks which have interests, this bank has none. All the banking activities must avoid interest. Instead, the bank earns profit or mark-up and fees on financing facilities which it extends to its customers.
The depositors of the bank also earn a share of the banks profit as opposed to interest. If you are wondering about the return on savings and investment accounts, the answer would be that the accounts are variable and dependent on the bank’s performance and the profits from Halal business transactions only.
If you’re afraid or has doubts according this issue, the bank assures you that while the profits are not necessarily guaranteed, the transactions are dealt with professionally so that the bank could ensure the customers better returns than other conventional banking alternatives. Another difference is that, current accounts do not earn income because they are taken as Qard; they can be drawn by customers on demand and they do not bear any risk of loss either since they are kept as safekeeping or Amanat.
One other important difference between conventional banking and Islamic banking is in terms of the balance between moral and material requirement. In the Islamic bank, the requirement to finance physical assets which banks usually take ownership of before resale reduces over extension of credit while in the conventional banking system, there is excessive use of credit card and debt financing can lead to financial problems.
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