DefinePK

Abstract

Islamic banking in its true spirit is a need of the era to fulfill Shariah permissible financing needs as well as to provide legitimate and trustable investment avenues. For investment purposes, Islamic banks have saving accounts which are based on the principles of Sharikah (participation by capital), Mudarabah (participation by capital from one side and by work from other side), Wakalah (Investment Agency) or Tawarruq (Commodity Murabaha) worldwide. Legislation has been taken place globally to ensure that the saving account of Islamic banking remains compatible with the principles of Sharikah, Mudarabah, Wakalah or Tawarruq as the case may be in different regions. Resistance from some jurists/experts also exists regarding Shariah basis of Islamic saving account as well as their operational stages. So, with the aim of analyzing the prevalent basis of Islamic saving account along with its operations in the light of Islamic laws, narrative research methodology is adopted in this paper. Simply, the process of Islamic banks with respect to the saving account is that they do business with the funds provided by their depositors and share profit with them as per the underlying mode of investment. Therefore, in the light of Shariah rulings, this practice of Islamic banks is valid and to take profit from this account is lawful by Shariah, and no doubt, the current practices related to saving account require further improvement and keen attention especially in tawarruq cases, but it is not correct to think of it same as a conventional banks’ saving account, because conventional banks borrow interest based loans for their saving account from account holders and pay the interest thereon, which is strictly prohibited by Islamic Shariah.