1. Avoiding Riba (Usury): One of the fundamental principles of Islamic finance is the prohibition of usury or riba. Financial professionals working in Islamic financial systems should ensure that their financial transactions do not involve any form of interest-based lending. For example, they can offer profit-sharing arrangements or Islamic bonds called sukuk instead of traditional loans with interest.
2. Ensuring Transparency: Islamic finance emphasizes transparency in all financial transactions. Financial professionals should ensure that all terms and conditions of a financial product or service are clearly disclosed to the customers. This includes providing information on fees, charges, and potential risks associated with the transaction.
3. Avoiding Gharar (Uncertainty): Islamic finance prohibits transactions that involve excessive uncertainty or ambiguity, known as gharar. Financial professionals should ensure that their financial products or services are free from any elements of gharar. For example, they should avoid speculative investments or gambling in financial transactions.
4. Promoting Social Responsibility: Islamic finance promotes social responsibility and ethical behavior in financial transactions. Financial professionals should consider the social impact of their investments and ensure that they contribute to the well-being of society. For example, they can prioritize investments in projects that benefit the community, such as affordable housing or healthcare facilities.
5. Emphasizing Risk-sharing: Islamic finance promotes the principle of risk-sharing between the parties involved in a financial transaction. Financial professionals should ensure that risks and rewards are shared fairly among all stakeholders. For example, they can offer profit-sharing arrangements where both the financial institution and the customer share profits and losses based on agreed-upon terms.
Ethical banking involves consciousness of how banking practices affect society and the
environment. Financial institutions that emphasize ethical practices seek profit like any other
financial institution. However, they strive to generate earnings without sacrificing principles
or causing harm.
Discuss any FIVE (5) best ethics that should be performed by the financial person who works
in Islamic financial system. You need to give examples in explaining it.
1 answer