free Commercial Banking

 by A.L.M. Abdul Gafoor

Studies the problems of eliminating interest from the banking system from basic principles. Using a general model of the commercial banking lending process, shows that interest can be eliminated from modern commercial banking without resort to drastic measures. Presents a commercial banking system that is free of interest, and yet is fully viable and compatible with current practices in the conventional system.

This system is practicable in strictly Islamic countries, nominally Islamic countries, as well as in other countries. The only requirement is that there is a clientele that wishes to avoid dealing in interest. Implementation of the system requires no changes in either the laws of the country or in that of commercial banking.

A full chapter is devoted to the study of Islamic banking: Its history, current practices and the problems it faces. Suggestions for overcoming these problems are also given. The resulting system is essentially the same as the one previously arrived at by removing interest from the conventional system.

The proposed system, however, rests on a firm theoretical foundation, and provides management information that is very useful for monitoring and control.