Islamic banking -- some questions and replies thereto

The profitability of banks is a concern now that the Pakistani banking system is rid of interest. One worry is that banks will return smaller profits, or even losses, to depositors than they did under the interest system. Another is that the time involved in finance payments will prevent returns from ever materializing. Such concerns are a result of lack of exposure to Pakistani business practices. In truth, banks never give funds to unprofitable ventures. Rather, the legitimate area of concern is that businesses might report lower-than-actual profits. To avoid such a problem, banks should inspect the management and obtain the quarterly reports before they disburse funds to a firm. Banks should also be ready with proper measures if misrepresentation has occurred. Since the profit-and-loss sharing system will increase businesses' profits, the government's tax revenues will rise and tax rates may possibly decrease in response. Although all revealed religions forbid interest, the