Foreign Exchange

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What is Islamic Microfinance ?

• Abdul Samad
• Shariah Advisor
• The Bank of Khyber

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Why Islamic Banking?

• The body which is promoted by Hiram sources is
  bound to hellfire.
• On the Day of Judgment, a person will not be
  moved from the place where he stand until he is
  asked about the sources of his income and they
  way he spent it.
• Purifying of the needs of life (food, drink,
  clothes house etc) is one of the most important
  reason for the acceptance of prayers by Allah.

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Rulings In Islam

• These 5 primary objectives follow by Shariah can
  be observed though the Al Ahkam (rulings) upon
  which Fiqh (Islamic Jurisprudence) rotate around.
  The rulings are categorized as follows
• a. Wajib (obligatory)
• e. Haram (unlawful)
• b. Mustahab (recommended) (Sunnat)
• c. Mubah (permissible)
• d. Makruh (disliked)

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Rulings

• Wajib- An obligatory action or something that
  shall be performed. Anyone who leave it is
  liable to gain the punishment of Allah s.w.t. in
  the Here after as well as a legal punishment in
  this world.
• Haram- An unlawful action or the one that shall
  not be performed and is strictly prohibited.
  Anyone who engages in it is liable to gain the
  punishment of Allah s.w.t. in the Here after as
  well as a legal punishment in this world.
• Mustahab- A recommended action or something that
  should be performed.
• Mubah- A permissible action or something that is
  neither encouraged nor discouraged.
• Makruh- A disliked action or something which is
  abominable and should be avoided but not in
  strictly prohibitory terms.

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Islam and Shariah
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Human Financial Needs
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External (Equity Debt) Financing
Equity Financing Debt Financing
Al-Musharakah (Joint Venture Profit Sharing) Uqud al-Muawadhat (Deferred Contracts of Exchange)
Al-Mudarabah (Trustee Profit Sharing) Al-Bai Bithaman (Mu)Ajil (Deferred Installment Sale)
Others Bai al-Murabaha (Cost Plus Profit Sale)
Al-Ijarah (Leasing)
Bai al-Salam (Commodity Sale)
Bai al-Istisna (Sale on Order)
Equity Market Debt Market
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Most Important Islamic Teaching Related To
Business

• Elimination of Interest (Raba)
• The prohibition of uncertainty (Gharar)
• The prohibition of Gambling (Qimar)
• The precipitation of games of chance (Maser)
• Honesty and Fair Trade (Ghishsh and Khilabah)
• Spending in the Good Cause
• Buy Back
• Two Mutually Conditional Contract
• Entitlement to profit depends on liability
• for risk

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Interest

• Interest, Usury, or Riba is forbidden in almost
  all major religions of the world e.g.
• Judaism
• Christianity
• Islam

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Riba in Quran

• God has permitted trade and forbidden interest.
• (The Cow Sura Al-Baqara 2275)
• O believers, fear Allah, and give up what is
  still due to your from the interest (usury), IF
  indeed you are true believers!!!. If you do
  not do so, then take
• Notice of War from Allah and his Messenger.
• But, if you repent, you can have your principal.
• Neither should you commit injustice,
• nor should you be subjected to it.
• 
  (The Cow Sura Al-Baqara 2278-9)

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Riba in Quran (Related in context to 2278)

• The only reward of those Who make War upon Allah
  his Messenger, and strive after
  corruption in the land, will be that they will be
  
• Killed
• Or, Crucified,
• Or, have their Hands and Feet on alternate sides
  Cutoff,
• Or, will be Expelled out of the land.
• Such will be their degradation in the world, and
• in the hereafter, theirs will be an terrible
  doom.
• (Quran The Table Spread - Al-Maida Chapter 5
  Verse 33)

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Riba in Hadith

• The Prophet cursed
• the receiver and
• the payer of interest,
• the one who records it and
• the witnesses to the transaction
• and said They are all alike (in guilt).
• (Sources Jabir Ibn Abdullah, Muslim, Tirmidhi,
  Musnad Ahmed

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RIBA
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The prohibition of uncertainty (Gharar)

• There are strict rules in Islamic finance against
  transactions that are highly uncertain or may
  cause any injustice or dishonesty against any of
  the parties. 
• The concept of Gharar has been broadly defined by
  the scholars in two ways.
• First, Gharar implies uncertainty.
• Second, it implies dishonesty.

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Classical Examples of Gharar

• Selling goods that the seller is unable to
  deliver
• Selling known or unknown goods against an unknown
  price, such as selling the contents of a sealed
  box  
• Selling goods without proper description, such as
  shop owner selling clothes with unspecified sizes
   
• Selling goods without specifying the price, such
  as selling at the 'going price'  
• Making a contract conditional on an unknown
  event, such as when my friend arrives if the time
  is not specified  
• Selling goods on the basis of false description
• Selling goods without allowing the buyer the
  properly examine the goods
• The Prophet (pbuh) prohibited the pebble sale and
  the Gharar sale.

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Qimar

• Qimar includes every form of gain or money, the
  achievement of which depends purely on luck and
  chance.
• All Lotteries and Prize schemes based purely on
  luck come under this prohibition.
• O ye who believe! Intoxicants and gambling,
  sacrificing to stones, and (divination by)
  arrows, are an abomination, of Satans
  handiwork.. (590-91)
• He who played Qimar has disobeyed Allah and His
  Messenger. (Ibn Majah )

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Honesty and Fair Trade (Ghishsh and Khilabah)

• Thus Manipulations and Mismanagement like
  Hoardings
• Black marketing
• Cheating
• Profiteering
• Short weighting
• Hiding the defective quality of the goods are
  prohibited in Islamic Financial System.
• The prophet (PBUH) said the truthful
• honest merchants are with the prophets
• In the Day of Judgment.

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Spending in the Good Cause

• The Islamic economic approach is one, which is
  directed towards the achievement and
  actualization of justice in human relations.
• The result of this effort is falah or success and
  salvation, and hayah tayyibah or good life in
  this world and the hereafter.
• So Islamic banks dont permute to establish any
  relation with commodities, services and
  individuals whose moral practices are doubtful
• Some people spend Allahs wealth (i.e. Muslims
  Wealth) in an unjust manner, such people will be
  put in the (Hell) fire on the day of
  resurrection (Bukhari and Ahmad)

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Buy Back

• The financier sells an asset to the customer on a
  deferred-payment basis, and then the asset is
  immediately repurchased by the financier for cash
  at a discount.

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Two Mutually Conditional Contract

• Two mutually contingent contract have been
  prohibited by the holy prohibited by the holy
  Prophet (pbuh).
• The sale of two item in such a way that one who
  intends to purchase good is obliged to purchase
  the other also at any given price.
• One sale transaction with tow prices.
• Combining sale and lending in one contract.

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• WHAT IS ISLAMIC BANKING?

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WHAT IS BANK?

• The name bank derives from the Italian word banco
  "desk/bench.
• In practice, the word Bank means an institution
  which borrows money from people and lends money
  to people for interest or profit and provided
• other financial services.

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BANKS ENGAGE IN THE FOLLOWINNNG ACTIVITIES.

• Accepting money
• Processing of payments by way of telegraphic
  transfer, internet banking, or other means
• Issuing bank drafts and bank cheques
• Lending money
• Providing documentary and standby letter of
  credit, guarantees, performance bonds, securities
  underwriting commitments and other forms of off
  balance sheet exposures
• Safekeeping of documents and other items in safe
  deposit boxes

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WHAT IS ISLAMIC BANKING?

• Islamic banking has been defined as banking in
  consonance with the ethos and value system of
  Islam and governed, in addition to the
  conventional good governance and rick management
  rules by the principle laid down by Islamic
  Shariah.

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Comparison of the Islamic and Conventional
systems

• Conventional Banking
• Conventional Banks take deposit on interest basis
  and lend on the basis on interest. A part of
  interest is paid to the depositors and the
  remaining interest is left for the bank as its
  income. If this residual is more than its
  expenses, it will have Net Income otherwise it
  will have Net loss.
• Islamic Banking
• Islamic Banking accepts deposits on PLS basis and
  invest in Shariah based modes. Whatever is the
  profit, it is shared with depositors. If there is
  a loss it will also be shared.

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OBJECTIVES OF ISLAMIC BANKING

• Shariah compliant banking, to enable Muslims to
  do their banking transaction a Halal way.
• Achieving the goals and objectives of an Islamic
  economy.

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Types of contract
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COMPONENTS OF VALID SALE
SALE
CONTRACT
SUBJECT MATTER
PRICE
POSSESSION

• Offer/Acceptance
• Buyer/Seller

• Certain

• Physical
• Constructive

• Existence
• Ownership
• Possession
• Valuable
• Halal Purpose

• Instant and absolute
• Unconditional

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DERIVATION OF MURABAHA

• The word Murabaha has been derived from the
  Arabic word Ribah, which has literary meaning
  of profit.
• The Murabaha can be denoted as Sale With
  Profit.

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DEFINITION OF MURABAHA

•  
• Murabaha is a particular kind of sale where
  Seller expressly mentions the cost it has
  incurred on purchase of the Asset(s) to be sold
  and sells it to another person by adding some
  profit, which is known to Buyer.

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Musawamah

• Musawamah is a general kind of sale in which
  price of the commodity to be traded is stipulated
  between seller and the buyer without any
  reference to the price paid or cost incurred by
  the former. Thus it is different from Murabaha in
  respect of pricing formula.
• Unlike Murabaha, seller in Musawamah
• is not obliged to reveal his cost.

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• VARIOUS
• MODELS OF MURABAHA FINANCE

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• MODEL - I
• TWO PARTY REALTIONSHIP
• Bank Customer
• MODEL - II
• THREE PARTY RELATIONSHIP
• (Bank-Vendor) and Customer
• MODEL - III
• THREE PARTY RELATIONSHIP
• Bank and (Vendor-Customer)

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MODEL - I

• The simplest possible Model emerges when the
  transaction involves two parties only, i.e Bank
  and the Customer.
• The Bank is also vendor and sells the Asset(s) to
  its Customers on deferred payment basis.
• From Shariah perspective it is an ideal Model
  and its profits are fully justified because Bank
  assumes all risks as Vendor/Trader.

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MODEL I GRAPHICAL PRESENTATION
2
Customer
Bank/Vendor
1
3
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MODEL I - PHASES

• Phase 1
• The customer approaches Bank (Vendor) and
  identifies Asset(s) and collects relevant
  information including cost and profit.
• Phase 2
• Bank sells Asset(s) to the Customer, transfer
  risk and ownership to the Customer at certain
  Murabaha Price.
• Phase 3
• Customer pays Murabaha Price in lump sum or in
  installments on agreed dates.

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MODEL - II

• In most cases Murabaha Transaction involves a
  third party (i.e. Vendor) because Bank is not
  expected to engage in sale of variety of products
  required for variety of Customers.
• The Bank directly deals with the Vendor and
  purchases the Asset(s).

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MODEL II

• The Bank sells the purchased Asset(s) to the
  customer on cost plus basis.
• There are two distinct sale contracts at
  different point of times. First between Bank and
  Vendor and second between Bank and the Customer.

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MODEL II GRAPHICAL PRESENTATION
Vendor
3
1
4
Customer
Bank
5
2
6
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MODEL II - PHASES

• Phase 1
• Customer identifies and approaches the Vendor or
  Supplier of the Asset(s) and collects all
  relevant information.
• Phase 2
• Customer approaches the Bank for Murabaha
  Financing and promises to buy the Asset(s).
• Phase 3
• The Bank makes payment to vendor directly.

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MODEL II PHASES

• Phase 4
• Vendor delivers the Asset(s) transfers the
  ownership of Asset(s) to the Bank.
• Phase 5
• Bank sells the Asset(s) to Customer on cost plus
  basis and transfers ownership.
• Phase 6
• Customer pays Murabaha Price in lump sum or in
  installments on agreed dates.

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MODEL III BANKING MURABAHA

• This Murabaha Model is mostly practiced model in
  Banking now a days and therefore we will look at
  it in more detail.
• We will also look at the documentation required
  at different stages of the transaction.
• It is also a three-party structure but it is bit
  complicated than previous ones.

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MODEL III BANKING MURABAHA

• The product of Murabaha that is being used in
  Islamic Banking as a mode of finance is something
  different from the Murabaha used in normal trade
  .
• It is called Murabaha to the Purchase Orderer .

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MODEL III BANKING MURABAHA

• It is a bunch of contracts completed in steps and
  ultimately suffices the financial needs of the
  client.
• THE SEQUENCE OF THEIR EXECUTION IS EXTREMELY
  IMPORTANT TO MAKE THE TRANSACTION SHARIAH
  COMPLIANT.

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MODEL III GRAPHICAL PRESENTAION
Vendor
3
4
5
5
Bank
Customer
2
6
Offer
Acceptance
1
7
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PHASE I PROMISE TO PURCHASE AND SELL

• The Customer approaches the Bank for Murabaha
  Finance and promises to purchase the Asset(s)
  from the Bank which, the Customer will purchase
  as an Agent of the Bank.
• Master Murabaha Finance Agreement (MMFA) shall be
  signed by the Bank and the Customer at this
  stage. This is basically a Memorandum of
  Understanding between two parties.

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PHASE II APPOINTMENT OF AGENT

• In the absence of expertise required to purchase
  particular kind of Asset(s), the Bank appoints
  Customer as its Agent to buy Asset(s) on its
  behalf
• Types of Agency Agreement

ON ASSET BASIS
ON TIME BASIS

• Global Agency
• Specific Agency

• Limited Period
• Open Ended

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PHASE III IV PURCHAHSE OF ASSETS BY AGENT

• The Customer identifies the Vendor, selects the
  Asset(s) on behalf of the Bank and advice its
  particulars, including the Vendors name and
  purchase price to the Bank.
• If the supplier is nominated by the Customer
  itself, guarantee for good performance can be
  demanded from
• the Customer.

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PHASE III IV PURCHAHSE OF ASSETS BY AGENT

• The Customer takes possession of the Asset(s) as
  an Agent of the Bank.
• It is the obligation of the Customer(Agent) to
  ensure, at this stage, that Asset(s) supplied is
  in accordance with the given specifications.
• To ensure that a fresh Asset(s) are purchased by
  the Agent, Banks staff should verify actual
  purchase of Asset(s).

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PHASE III IVDOCUMENTATION

• DECLARATION FROM CUSTOMER (AGENT)
• The Customer (Agent) will inform the Bank,
  through this document, that it has taken the
  possession of Asset(s) on behalf of the Bank.
• This Transactional Document shall be an integral
  part of Master Murabaha Financing Agreement
  (MMFA).
• This declaration must contain the statement that
  Customer has inspected the Asset(s) to ensure
  that its appropriateness and suitability to the
  customer.

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Steps Of Banking Murabaha
MOU ? Order Form ? Agency Agreement ? Purchase
? Payment of Purchase Price? ? Possession ? Offer
and Acceptance (Declaration) ? Payment of
Murabaha Price

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Short/ Medium Term Financing (Murabaha)
Supplier
3. Customer buys the goods as Banks agent. Cost
100
4. Disbursement of the Facility. Facility
Amount 100

• Features
• Fixed rate financing only
• Uses
• Inventory Financing
• Financing commodity purchase
• Tenor
• 12-18 months
• Risks
• Credit Risk

Customer
2. Bank appoints the Customer as its agent to buy
the goods.
1. Execution of Murabaha Agreement.
Sale
Bank
5. Under the Murabaha Agreement the Bank will
immediately sell the goods at 110 (cost plus a
profit margin) payable on a deferred payment
terms.
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SALAM
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INTRODUCTION

• There are three basic conditions for validity of
  a sale in Shariah
• The purchased commodity must be existing
• The seller should have acquired the ownership of
  that commodity and
• The commodity must be in the physical or
  constructive possession of the seller.
• There are only two exceptions to this principle
  in Shariah
• Salam (which is also called as Salaf) and
• Istisna.

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DEFINITION

• The seller undertakes to supply specific goods to
  the buyer at a future date in exchange of an
  advanced price fully paid at spot.
• The price is paid immediately in cash but the
  supply of purchased goods is deferred to a fixed
  date.  

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FROM WHERE SALAM STARTED

• Before prohibition of interest farmers used to
  get interest based loans for growing crops and
  harvesting. After prohibition of interest, they
  were allowed to do Salam transactions. This
  helped them to get money in advance for their
  needs.
• During the days of our prophet (SAAWS), the
  merchants going with caravans used to get
  interest based loans for purchasing the
  commodities. After prohibition of interest, they
  were allowed to do Salam.

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BENEFIT TO THE SELLER

• The seller gets in advance the money he wants in
  exchange of his obligation to deliver the
  commodity later.
• He benefits from the Salam sale by covering his
  financial needs whether these are personal
  expenses or expenses for productive or trading
  activity.

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BENEFIT TO THE BUYER

• The purchaser or the Bank gets the commodity it
  is planning to trade on the time it decides.
• The Bank will also benefit from the cheap prices
  because usually the Salam sale is cheaper than
  the cash sale. This way the Bank will also be
  secured against the fluctuations of price.

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PARALLEL SALAM

• The Bank being the purchaser of Salam commodity
  can further sell on Parallel Salam in a similar
  manner as it has previously purchased on first
  Salam without making one contract dependent on
  the other. However, in such case, the date of
  delivery shall not be earlier than the date of
  receipt of such commodity.
• The Bank also has the option of waiting to
  receive the commodity and then sell it for cash
  or deferred payment.

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FLOW OF SALAM TRANSACTION
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SALAM BASED FINANCIAL PRODUCTS

• Agriculture financing
• Working Capital Financing
• Commercial and industrial financing
• Export financing
• Operations and capital cost financing

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DIFFERENCE BETWEEN SALAM AND MURABAHA
Salam Murabaha
In Salam, delivery of purchased goods is deferred, price is paid on spot. In Murabaha, purchased goods are delivered at spot, price may be either on spot or deferred.
In Salam price has to be paid in full in advance. In Murabaha price may be paid on spot or deferred.
Salam is not executed in the particular commodity but commodity is specified by specifications. Murabaha is executed in particular commodity.
Salam cannot be effected in respect of things, which must be delivered at spot. e.g. Salam between wheat and barley. Murabaha can be executed in those things, subject to the conditions of hand to hand transfer and equal quantities.
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BASIC RULES
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SPECIFICATION OF COMMODITY

• The commodity (Al-Muslam fihi) should be known.
  It must be monitored by specifications to the
  maximum possible degree, only negligible
  variation is tolerated.
• It must also be ensured that the commodity is
  possible to be delivered when it is due.

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SPECIFICATION OF COMMODITY

• Only those goods can be sold through Salam
  contract in which the quality and quantity can be
  exactly specified. In other words it can be done
  only in such items which can be weighed, measured
  or counted.
• Salam can only be carried out in the items in
  which variations in numbers make no difference.

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DELIVERY CONDITIONS

• Due date of delivery must be agreed at the
  commencement of the contract.
• The place of delivery should also be known. If it
  is not known, the place where the contract took
  place shall be considered to be the place of
  delivery, unless it is impracticable. In such a
  case, the place of delivery shall be decided
  according to customary practices.

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DELIVERY CONDITIONS

• Before delivery, goods will remain at the risk of
  seller.
• After delivery, risk will be transferred to the
  purchaser.
• Possession of goods can be physical or
  constructive.
• Transferring of risk and authority of use and
  utilization / consumption are the basic
  ingredients of constructive possession.

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SALE BEFORE POSSESSION

• Commodity purchased under Salam can not be sold
  earlier than taking possession thereof. However,
  a very small school of though is of the view that
  this restriction should apply to the food
  commodities only.
• These commodities can, however, be sold under
  parallel Salam or may be promised to be sold at a
  future date.

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PARALLEL SALAM

• There must be two separate and independent
  contracts, one where the Bank acts as buyer and
  other in which it is a seller.
• The two contracts cannot be tied up and
  performance of one should not be contingent on
  other.

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BUY BACK

• Salam arrangement cannot be used as a buy back
  facility where the seller in the first contract
  is also the purchaser in the second.
• Even if the purchaser in the second contract is a
  separate legal entity but owned by the seller in
  the first contract, it would not tantamount to a
  valid Parallel Salam agreement.

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Ijarah- Concepts

• An Ijara is a lease purchase contract in which a
  financial institution purchases capital equipment
  or property and leases it to an enterprise. The
  financial institution may either rent the
  equipment or receive a share of the profits
  earned through its use.
• Ijara wa-Iqtina is the same as Ijara except that
  the lessees can acquire ownership of the asset by
  making installment payments. The responsibilities
  of the various parties to an Ijara wa-Iqtina
  contract are given below
• The bank buys the assets from the vendor
• The bank then leases the asset to the customer
• The bank collects periodic rentals
• The title of the asset remains with the bank
  under an operating Ijara.
• Title passes to the customer under an Ijara
  muntahia bittamleek, either gradually over the
  period of the contract or at the end.

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Procedure of Banking Ijarah

• Undertaking to Ijarah
• ?
• Agency Agreement
• ?
• Purchase
• ?
• Payment of Purchase Price
• ?
• Lease Agreement

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Finance Lease (Ijarah)

• Features
• Floating rate financing possible
• Can be used for refinancing
• Uses
• Financing Capital Expenditure
• Financing Big Ticket items like Aircraft, VLCCs,
  LNG Carriers, etc.
• Tenor
• 5-7 years
• Risks
• Credit Risk
• Performance Risk
• Cost Overruns
• Ownership Risk

Manufacturer / Supplier
1. Customer buys the property as Banks agent.
Cost 100
3. Disbursement of the Facility. Facility
Amount 100
Customer
4. Bank appoints the Customer as its agent to buy
the property.
2. Execution of Ijara Agreement
Lease
Bank
5. Under the Ijara Agreement the Bank will lease
the property immediately.
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Ijarahillustrative deal

• Ijara is used to raise finance against an asset
• XYZ Real Estate Deal Sale/leaseback of existing
  properties to fund construction of new buildings
• Client sells its existing asset to the Bank. The
  sale can be a beneficial transfer of ownership or
  actual legal title transfer
• Bank leases the asset back to the client for the
  period of financing, against periodic lease
  rentals.
• The rentals will comprise of only profit (during
  grace period) and both profit and principal
  payments (during amortisation period). The profit
  can be linked to a floating rate index, such as
  Libor.
• At the end of the term, Bank transfers the asset
  back to the client either as a gift or at a
  nominal sum or at the termination price (if
  bullet repayment).
• During the lease period, Bank is liable for
  insurance and major maintenance as owner of the
  property. However, Bank can appoint the client as
  its agent to perform these tasks

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MUZARA'A

• Muzaraa is partnership in crops in which one
  party presents land to another for cultivation
  and maintenance in consideration for a common
  defined share in the crop.

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MUZARA'A

• It can take several forms.
• For instance, contract based arrangement can
  specify that land and other physical factors of
  production for the enterprise could come from one
  party while labor could be provided by the other
  party.
• Incidence of a three-party in which the first
  party provides land, the second provides a
  combination of required physical inputs, and the
  third provides labor.

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MUZARA'A

• The location and characteristics of the land to
  be cultivated under Muzara'a must be clearly
  identified and submitted to the party that is to
  implement the operation.
• The production goal of the enterprise must be
  defined in terms of end products i.e. crops or
  live stock to be grown.
• The period in which the Muzara'a contract is to
  be effective must be defined.

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MUGHARASA

• Mugharasa (agricultural) partnership is a
  partnership in which one party presents a
  treeless piece of land to another to plant trees
  on it on the condition that they share the trees
  and fruits in accordance with a defined
  percentage.

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MUGHARASA

• The functions and obligations of each individual
  or party in the contract must be clearly and
  unambiguously defined.
• The location and characteristics of the land to
  be cultivated under Mugharasa must be clearly
  identified.
• The production goal of the arrangement must be
  defined in terms of end products.
• The period in which the Mugharasa contract is to
  be effective must be defined.
• Method of distribution of output must be stated
  clearly in the contract.

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Summary of the Presentation

• Islamic Banking is a system where deposits
  collected on profit loss sharing basis are
  invested in profitable Projects using any Shariah
  based mode and their net income/loss is shared
  between the depositor and the bank.
• It has three parts.
• Collection of deposits on pls basis.
• Investing deposits in profitable ventures using
  shariah based modes.
• Distributing profit and loss among depositors and
  the bank.

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(From Economists Point Of View)

• It is the pooling of cash resources (means) of
  the economy and diverting it to projects which
  have the greatest positive impact on the GNP and
  distributing the benefits of increased GNP among
  the segments of the economy.
• It has three parts.
• Pooling of cash resources.
• Diverting it to projects which have positive
  impact on GNP
• Distributing GNP benefits to resource providers
• Benefiting the Different segments of the economy
  through increased GNP

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Funds supply summary of possible ways in Islam
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• ISLAMIC BANKING MODEL

POOL OF FUNDS
Bank Equity
Operational Expenses
PLS Depositors
Investment
Income/Loss from Investment
Income from non fund business
SBP
Current Deposit
Current Deposit
Idle fund
Reserves
Distributable Income
Equity
Depositors PLS
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Comparison of the Islamic and Conventional systems

• Conventional Banking
• Equation of Banks Failure
• Admn Exp Interest Exp gt Total Income Reserves
• Equation of Banking System Failure
• Admn Exp Interest Exp gt Total Income Reserves
  Equity
• Islamic Banking
• Equation of Banks Failure
• Operational Losses gt Reserves PLS Deposits
• Equation of Banking System Failure
• Operational Losses gt Reserves PLS Deposits
  Equity
• Operational Losses
• Operational Losses Income (Losses) from Invest
  Admn Exp

86
Thank You