Islamic Banking vs Conventional Banking: Benefits for Expatriates
In this article you will get two aspects of two major working setups – Islamic baking option and conventional or we can say that traditional banking services. The point needs to understand here is that both systems are quite popular and effective for locals as well as for expatriates in UAE. The majority of the account holders have a tilt towards Islamic banking packages like Islamic saving account.
Here we will first evaluate the functions and parameters both systems are working:
Islamic banking option
The major difference between Islamic baking and conventional banking is the interest rate. The first one work without an interest rate system and the latter is based directly on that system and has no survival without interest. Well coming back towards the Islamic working, this system provides all kinds of banking plans in the light of sharia-compliant law. Suppose you are looking for a loan package then you can get the personal loan offers, home loan, or a business loan just having an Islamic business account. The key points of Islamic banking are:
• No interest rate concept
• Follow Sharia Compliant Law
• Profit and loss sharing on an equal basis
Conventional Banking Option
You can find this system everywhere in the world and it is a truly corporate setup based on the interest rate system. This is one of the major differences between Islamic banking and traditional banking working. Suppose you need a loan to get a property like we say a home in UAE. Can you imagine how difficult it would be? Let me clear you one thing, to get your own property that we can call a home is very much difficult because most of the people don’t have big reserves in terms of savings but there is another option as a home loan.
Banks in UAE are highly professional and provide home loans on easy installments that can be managed with a fixed rate repayment option for common users. For a big loan amount, you can choose an adjustable loan repayment option.
The interest rate on a loan scheme will vary according to the lending institution in the light of pre-held terms and conditions. So it is very important to have a look at the major points and plan your goals according to the ease of the package. We suggest you choose a bank which is attached to your company in which you are doing a job. This way you can easily get the loan amount and pay your transaction directly from your salary account.
Which Option is Better?
It depends on your status and situation. If you are an expat and working in a company then for sure the Islamic loan package would be the best choice. While on the other hand if you are a business person from an international setup then for sure you can’t afford profit loss haring on an equal basis. This is the only reason conventional corporate tycoons prefer second number choice. As we all know that the majority of the population in UAE is based on expatriates so the Islamic savings account option would be a better choice.