Hazara Islamicus (Jun 2018)
The Beginning and Evolution of Banking System: Origin of Conventional and Islamic Banking from Ancient Usurer Business = بینکاری کا آغاز وارتقاء: قدیم مہاجنی کاروبار سے سودی واسلامی بینکاری کا سفر
Abstract
Bank is an organization which provides facilities for acceptance of deposits and provision of loans. The banks were based on usury business and this business is as old as human civilization on this planet. This study was planned to document the process through which the banking system evolved over different historical era. A historical and comparative method was adopted within which various academic sources were consulted to review the history, types and process of banking system. It was reviewed that the history of modern banks begins with the first prototype bank for merchants. These banks used to provide loan to the farmers and traders who carried goods between cities. These banks began around 2000 BC in Assyria and Babylonia. Archaeological evidence from this period in ancient China, India, Egypt and many other parts of the world shows such type of money lending activity. Development of a modern banking system was imitated by Jews to medieval during the Renaissance in Italy and spread over in the affluent cities of Florence, Venice and Genoa. Considering the negative and positive aspects of these Institutions, Muslim scholars are agreed that they need to be Islamized the banking system and to remove HARAJ from the Muslims. In this connection, Muslim countries established banks including Pakistan Interest۔Free Bank (1950), a social bank at Mit۔ Ghamr, Egypt (1963), Pilgrims Fund Malaysia in (1971), IDB in Saudi Arabia (1975) and Islamic commercial Bank in Dubai, UAE. Later on the series of IFIs was started i.e. Faisal Islamic Bank of Sudan(1977), Faisal Islamic Bank of Egypt(1977), Centre for Research in IE (1978), Bahrain Islamic Bank (1979) and Bank Islam Malaysia Berhad (1983). Now, Islamic financial institutions are seen everywhere in the world including Bosnia, Denmark, France, Germany, Holland, Russia, Switzerland and the United States. Islamic Banking and Finance Institutions are growing with very encouraging ratio with conventional banks all over the world. Total assets of the 275 Islamic Financial Institutions in 75 countries exceed to USD 400۔500 billion.
