The Difference between Islamic and Conventional Banking only One! Is it True?

In this glorious era, the term bank is familiar. For all citizens who want security in depositing money. Besides being safer for saving money in a bank, banks also offer benefits that can be obtained by customers who will save money in the bank. So more or more all the people entrust security in storing their wealth in the bank. It is generally known that in the banking world, banks are divided into two namely Sharia and Conventional. Sharia banks are banks that carry out their business activities based on Sharia principles, or Islamic legal principles regulated in the fatwa of the Indonesian Ulema Council according to Law No.21 of 2008. Whereas Conventional banks are banks that conduct conventional business activities based on established procedures and regulations by the state. It is often a question that is asked by many people in choosing the place or bank to be entrusted to entrust their wealth, such as the question, what is the difference between Sharia banks and Conventional banks? 

Customers need to choose which place or bank they want to be entrusted with to place their financial savings or to simply trade without saving or saving money. For this reason, it is important to know the difference between one bank and another. There is only one fundamental difference between Sharia and Conventional banks, which is the contract. The difference between Sharia and Conventional banks in detail and detail there are many, but basically, only one of the key differences is commonly called a contract. The word contract comes from Arabic al-'aqd which etymologically means engagement, agreement, and agreement, (al-ittifaq). In terms of fiqh, the contract is defined as "bond affirmation (statement of binding) by the will of the shari'a which affects the object of the engagement". According to Hasbi Ash-Shiddieqy, who quoted the definition put forward by Al-Sanhury, the contract was: the consent of the consent. In a Sharia bank, a contract must be used in banking activities because it adheres to the Islamic Sharia which requires the use of a contract in every transaction in Sharia banking, but not for conventional banks that do not implement the contract. After all, all the rules and transaction policies in conventional banks have been regulated and run according to the law prevailing in Indonesia. That is what makes it a fundamental difference between Islamic banks and conventional banks. 

The types of contracts in Sharia banks that have been regulated in the MUI fatwa include Mudharabah (profit sharing), Musyarakah (partnership), Murabahah (buying and selling), Wadhiah (deposit), Salam (financing), Istishna '(financing) financing), Qardh (loan), Ijarah (leasing), Hawalah (transfer), Wakalah (agency). The existence of the contract is used in the existing profit-sharing system in Islamic banking because Islamic banks in principle do not recognize interest. In practice its activities Sharia banks do not apply the interest system to their services because this bank is run based on Islamic Sharia which strictly prohibits the use of interest. To replace the role of interest in Islamic banking, it is replaced by a profit-sharing system and gets several benefits from the profit-sharing system. While in conventional banks, it is clearly stated in Act Number 10 of 1998 that conventional banks operate conventional businesses and provide certain amounts of profit in the form of interest rates for their customers. This interest rate is regulated based on provisions issued by the government through financial and banking institutions where the interest rate must benefit the bank. Because this advantage will be used in carrying out operational activities in conventional banks. 

Fund management carried out by banks both from customers and bank funds to sectors must be the one that will benefit the bank. In Sharia banks, the management of Sharia bank funds is only limited to businesses that have tested halal conditions. Customer funds received in the form of deposits or investments cannot be managed in all business lines at random. Management must be based on Islamic law. Where the business is chosen must be following Islamic law. Whereas in conventional banks, the management of these funds can be done in various businesses that are considered safe and also benefit the bank. As long as the management of these funds does not violate applicable laws and regulations, the bank has the freedom to run and manage these funds in various business lines that are considered to provide the maximum benefit. 

As a wise customer, you must be very clever in choosing which bank to choose as a destination to entrust financial and transactions. For the Sharia banking system which forbids usury from us.