Performance of banks under non-interest system

Interest-free banking performance can be evaluated within two frameworks. The first one is in light of shari`a , for the only reason to develop an interest-free banking system is to act in line with Islam and its economic outlook. The second framework is of evaluation in terms of financial results, for if the banks fail financially the interest-free system may be appear flawed. Current banking practices are unreflective of the recommendations of the (Pakistani) Council for Islamic Ideology: while over 80% of interest-free banking deals involve mark-up buybacks, the world's Islamic scholars do not deem this practice Islamic. The ideological council recommends mark-up financing in exceptional cases only. Legislation in 1984 set up banking tribunals, but they no longer operate. An analysis of return-on-assets statistics shows that rates have gone down. Inefficiency and poor management caused the slip.