Investment banking in Islamic framework

Islam aims to devise a society of equals, free of poverty and working at optimal productivity. Therefore, there ought to be way to allocate funds to investments that is informed by the overall needs of society. This is the vital role of the banking system. Interest conventionally has been involved in the allocation of investment. Pakistan has begun developing a system that will channel funds productively without the harâm element of riba . When banks serve as financial intermediaries, depositors and the entire community benefit from the expertise of the banks' investors. Investment bankers take liquid savings and transfer them into medium- and long-range ventures. Because an Islamic system insists on profit-and-loss sharing, investment bankers participate in the life of the companies in which they invest. A banker must examine the management of a company before investing in it. The tools of Islamic finance include leasing, mark-up, mudaraba , and participation-term certifica