What comes to your mind every time you hear the world halal? Do strict Islamic laws always come into play and all you can think about is the Islamic religion as a whole? You are not alone in this confusion. Halal means something that is permissible according to the Islamic law. That is where the confusion arises now. It means that halal financing is based on the Islamic laws.
People confess to different faiths. Others who practice Christianity, Buddhism and Hinduism may fail to seek Islamic financial products simply because they feel that it differs with their faith. It is okay to feel different based on religion but the following are the reasons why halal financing is for all.
Promotes ethical businesses
Greed has taken the better part of the modern-day world. People can kill or do anything just to get an extra coin or put food on the table. Hard economic times have also pushed people to the wall. Halal financing is strict on the type of businesses and activities that they fund. Islamic banks cannot fund ventures that engage in haram businesses like the sale of liquor. It is your role as a business owner to create an ethical environment and that is what Islamic banking is all about.
It is transparent
How many times have you heard people complain about some hidden charges in their banks? It happens especially when you are repaying loans in conventional banks. Such financial institutions are only after the interest that they earn from you. They always have provisions that will shift the burden of a loss to you during hard economic times. That is why they are fast to adjust interest rates when there is inflation but fail to lower them when the economy is performing well. On the other hand, Islamic banking gives you all the details of the repayment plan before you take a loan. Take for instance, if you want to buy a property through an Islamic financial institution. The bank will add a markup as the facilitation fee and there will be no other charges in the future.
A strong tool for poverty eradication
Some of the problems that we have in this world are man-made. We have the tools to get rid of these problems only that we do not want to apply them. Halal financing is based on some principles that are very powerful to eradicate poverty. Business risk is one of the most important principles that works perfectly towards poverty eradication. The business owner and the bank share the risks which makes it easy for people to engage in productive activities without fear of burdening loans.
There are different products to fit varying needs
Every time you walk into a conventional financial institution, you will find different types of products to cater to varying client base. Islamic finance is no different as it also has its categories. The Islamic financial products are designed in such a way that they provide solutions to the common problems facing humanity. We even have blockchain-based projects on the Islamic finance landscape.
The introduction of Islamic windows in conventional banks is a clear indication that halal financing is a force to reckon. Islamic financial institutions were in the past a preserve of Muslim-dominated but now these have changed.