Abstract

Islamic banking with the passage of time is acquiring impetus. Many local and international banks have started to open separate Islamic banking branches and windows to cater the needs of customers who are interested in shari’ah approved products. Islamic banking system is facing a good competition from developed conventional banking system in products and services. With the passage to time the awareness of Islamic banking and its products is improving substantially. The purpose of the study is to understand the practical procedure of currency salam transaction in Islamic banks. Methodology of this paper is quantitative research. For this 60 questionnaires were distributed among bankers dealing in currency exchange transactions in Islamic Banks, out of which 52 respondents were received and used. The content and descriptive analysis techniques were employed to analyze the data. The SPSS software is used to anlayse the data collected by questionnaire. The study supports the literature and according to data almost 71% respondents of Islamic banks believe that salam transaction is practically implemented in selected Islamic banks.

Highlights

  • Eradication of riba, gharar and qimar is the first challenge for the establishment of Islamic financial markets

  • The questionnaire was prepared by using dichotomous scale and distributed among those bankers who deals in currency salam transactions of two Islamic banks in the city of Lahore

  • The questionnaire is designed to understand that how currency salam transaction is practically implemented in Islamic banks

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Summary

Introduction

Eradication of riba, gharar and qimar is the first challenge for the establishment of Islamic financial markets. Islamic banking has lucratively provided the Islamic models for banking and insurance but research proved that currency markets still needs to be addressed .1. Islamic scholars and bankers put their efforts to provide such instruments which are according to shariah and able to pay them halal returns. These scholars are very successful in their true efforts but still the concepts of Islamic banking and finance are in development stages. Islamic banking and financial institutions have expanded to the global market as the western countries are eager to experiment with Islamic financial techniques

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