Islamic banks and finance and the possibility of agricultural investments in the Republic of Serbia

Abstract

Financing the economy and agriculture as well in the Republic of Serbia in recent past present was realized and has been implemented with the financial and credit support of the state, as well as through expensive commercial bank loans and financial leasing. Bearing in mind the productive resources, the importance of agriculture to the national economy and employment of the population, and that the financing of agriculture in the Republic of Serbia, at its current level of development, should be implemented with the support of the state. States should work towards the establishment of specialized agricultural banks and by legislation facilitate the arrival of financial institutions which will place funds at favorable conditions such as the Islamic financial institutions do. Islamic financial institutions in the placement of funds-loans do not use the loan interest rate which is according to the Islamic beliefs unfair and unacceptable. The theoreticians of Islamic economy see an alternative in the fundamental values and teachings of Islam, the Quran and the Sunnah, which strictly prohibit interest. Islamic bank can make certain comparative advantages in respect to the other domestic banks. It is in a position to establish a sound business relationship with clients from Muslim countries for the local companies to perform in their markets, as well as with the performance of companies from Muslim countries on the Serbian market. A further advantage of this bank we see in the fact that one of its founders would be the IDB - Islamic Development Bank - the leading development bank of the Muslim world, whose experience in the implementation of development projects in Serbia can be of great benefit. However, the largest Islamic bank has potential in the establishment and development of business relationships and cooperation with a growing number of financial and other institutions whose operations are based on the principles of Shariah.