Islamic banking: principles as well as roots

Islamic law and tradition dictate that money be used for production and for collaboration in entrepreneurial activities. Acceptable returns are expected under Islamic structures through the use of Islamic financial instruments, trade and commodity finance, property management, and leasing. Large Western commercial banks such as Citibank and ANZ Grindlays act as wholesale-service providers for Islamic financial institutions, offering guarantees that the money deposited with them by Islamic institutions is invested in a halâl manner. The Bank of England raised a thorny regulatory issue in the United Kingdom. The interpretation of the British bank is that Islamic banks are not deposit taking institutions but rather fall into some hybrid category not yet entirely definable by Western finance houses.