Growing Importance of Islamic Finance and Islamic FinTech

Islamic finance refers to the commerce conducted according to Islamic law, i.e., sharia law, across the world. With nearly 2 billion Muslims in the world, accounting for close to 10 trillion dollars in combined GDP (for the Organization of Islamic Countries), Islamic finance terms have started playing an important role in the world of finance and economics. Indonesia, Turkey, Saudi Arabia, Iran, Egypt, Nigeria, Pakistan, Bangladesh, and UAE account for 50% of the total GDP of Islamic countries.

Though the OIC has over 50 countries, 7 countries – Indonesia, Pakistan, India (not in OIC), Bangladesh, Nigeria, Egypt, Iran, and Turkey – account for 65% of the Muslim population, while South Asia, Southeast Asia, and the Middle East form the major hubs for Islamic finance. Though the rules for Islamic finance have a similar thesis in the three regions, for the most part, there tend to be some differences to a certain extent dependent on the clergy’s interpretation of sharia law in the respective region.

The key elements of Islamic finance are dependent on following Islamic principles and avoidance of the below elements that could be classified as “haram” (banned/not allowed):

  1. Interest: Charging or paying interest is not allowed in Islam. Hence any Islamic banking needs to be interest-free.
  2. Inv ...
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