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The best-known feature of Islamic banking is the prohibition on interest, known as "Ribba". It encourages the notion of higher risks and higher returns, the objective is that high-risk investments provide a stimulus to the economy and encourage entrepreneurs to maximize their efforts. Islam encourages investments in order that the community may benefit.
The shareholders and depositors should all share the risks and the rewards of financing business ventures. This is unlike the interest-based commercial banking system, where all the pressure is on the borrower: to pay back his loan, with the agreed interest, regardless of the success or failure of his venture.
Islamic banking helps to contribute towards a more equitable distribution of income and wealth and increased equity participation in the economy.
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(c) 2010. Emirates Islamic Bank - All Rights Reserved.
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