{"id":6471,"date":"2023-03-27T17:29:22","date_gmt":"2023-03-27T17:29:22","guid":{"rendered":"https:\/\/cometinsure.com\/blog\/?p=6471"},"modified":"2024-03-21T07:50:38","modified_gmt":"2024-03-21T07:50:38","slug":"islamic-vs-conventional-banking-products","status":"publish","type":"post","link":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/","title":{"rendered":"Islamic vs Conventional Banking Products"},"content":{"rendered":"<div  class=\"tatsu-hcexmu9eqi4morlp tatsu-section  tatsu-bg-overlay   tatsu-clearfix\" data-title=\"\"  data-headerscheme=\"background--dark\"><div class='tatsu-section-pad clearfix' data-padding='{\"d\":\"15px 0px 15px 0px\"}' data-padding-top='15px'><div class=\"tatsu-row-wrap  tatsu-wrap tatsu-row-one-col tatsu-row-has-one-cols tatsu-medium-gutter tatsu-reg-cols  tatsu-clearfix tatsu-hcexmu9eukgah9hr\" ><div  class=\"tatsu-row \" ><div  class=\"tatsu-column  tatsu-bg-overlay tatsu-one-col tatsu-column-image-none tatsu-column-effect-none  tatsu-hcexmu9exh4vdxgg\"  data-parallax-speed=\"0\" style=\"\"><div class=\"tatsu-column-inner \" ><div class=\"tatsu-column-pad-wrap\"><div class=\"tatsu-column-pad\" ><div  class=\"tatsu-module tatsu-text-block-wrap tatsu-hcexmu9f0je1o6d4  \"><div class=\"tatsu-text-inner tatsu-align-center  clearfix\" ><style>.tatsu-hcexmu9f0je1o6d4.tatsu-text-block-wrap .tatsu-text-inner{width: 100%;text-align: left;color: rgba(0,0,0,1) ;}.tatsu-hcexmu9f0je1o6d4 .tatsu-text-inner *{color: rgba(0,0,0,1) ;}<\/style>\n<p style=\"text-align: left;\">Islamic banking refers to a banking system that operates following Islamic principles, which prohibit interest-based transactions and encourage profit-and-loss sharing arrangements. The products of Islamic banking are designed to adhere to fairness, transparency, and ethical conduct.<\/p>\n<p style=\"text-align: left;\">Conventional banking, on the other hand, operates based on the principle of interest, which is charged on loans and other financial products. The products of conventional banking are typically designed to generate profit for the bank by charging interest and other fees.<\/p>\n<h2 style=\"text-align: left;\"><strong>Importance of Understanding the Differences<\/strong><\/h2>\n<p style=\"text-align: left;\">Understanding the differences between Islamic banking and conventional banking is essential for the following reasons:<\/p>\n<ol style=\"text-align: left;\">\n<li><strong>Religious and Moral Considerations:<\/strong> For individuals who want to adhere to Islamic principles and avoid interest-based transactions, Islamic banking provides an alternative that aligns with their values.<\/li>\n<li><strong>Ethical Considerations:<\/strong> Islamic banking promotes ethical conduct and transparency in financial transactions, which can appeal to individuals and businesses prioritizing social responsibility.<\/li>\n<li><strong>Investment Opportunities:<\/strong> Islamic banking products offer unique investment opportunities not available through conventional banking products, such as profit-and-loss sharing arrangements.<\/li>\n<li><strong>Financial Management:<\/strong> Understanding the differences between Islamic and conventional banking can help individuals and businesses make informed decisions about their financial management strategies.<\/li>\n<li><strong>Global Business:<\/strong> As Islamic banking gains popularity worldwide, understanding the differences between it and conventional banking can help businesses expand their reach and tap into new markets.<\/li>\n<\/ol>\n<p><img loading=\"lazy\" class=\"alignnone size-full wp-image-6482\" src=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking.jpg\" alt=\"\" width=\"1366\" height=\"650\" srcset=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking.jpg 1366w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-300x143.jpg 300w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-1024x487.jpg 1024w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-150x71.jpg 150w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-768x365.jpg 768w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-1160x552.jpg 1160w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-105x50.jpg 105w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-650x309.jpg 650w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-1000x476.jpg 1000w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Key-difference-between-islamic-and-conventional-bancking-50x24.jpg 50w\" sizes=\"(max-width: 1366px) 100vw, 1366px\" \/><\/p>\n<h2 style=\"text-align: left;\"><strong>Key Differences Between Islamic and Conventional Banking Products<\/strong><\/h2>\n<p style=\"text-align: left;\">The following are the differences between Islamic and Conventional banking products.<\/p>\n<table class=\"table-responsive alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"293\"><strong>Conventional Banking <\/strong><\/td>\n<td width=\"307\"><strong>Islamic Banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"293\">In conventional banking, one financing mode is interest-based lending or loan. In this, the borrower must pay back the original loan amount plus interest.\u00a0 Conventional banking products such as personal loans, credit cards, mortgages, and business loans are based on interest-based lending. \u00a0 The interest charged on loans is a key source of revenue for conventional banks and is used to cover operational costs and generate profits.<\/td>\n<td width=\"307\">In contrast to Conventional, Islamic banking comes with three modes of finance: partnerships, rental arrangements, and trade\/ sale basics.\u00a0 <strong><u>Partnerships<\/u><\/strong> \u00a0 <strong>1. Mudarabah<\/strong> \u00a0 A partnership agreement where one party (the investor) provides the capital, and the other party (the entrepreneur) provides the expertise and manages the business. \u00a0 Profits are shared based on a pre-agreed ratio, while the investor bears losses. \u00a0 <strong>2. Musharakah<\/strong> \u00a0 A partnership agreement where both parties provide capital and expertise, and profits and losses are shared based on a pre-agreed ratio. \u00a0 <strong>3. Wakalah<\/strong> \u00a0 An agency agreement where one party (the investor) provides the capital, and the other party (the bank) manages the investment on behalf of the investor. \u00a0 Profits are shared based on a pre-agreed ratio, while the investor bears losses. \u00a0 <strong><u>Rental arrangement (Ijarah)<\/u><\/strong> \u00a0 The rental arrangement or Ijarah is a mode of finance in Islamic banking similar to leasing in conventional banking. \u00a0 It involves a contract between the owner of an asset (lessor) and the user (lessee), where the lessor leases the asset to the lessee for a specified period in exchange for periodic rental payments. \u00a0 The rental payments made by the lessee to the lessor are considered rent for the use of the asset and not interest-based debt. \u00a0 Ijarah promotes risk-sharing and transparency, as the lessor retains ownership of the asset and bears the risk of any losses or damages to the asset during the lease period \u00a0 <strong><u>Trade\/sale basis<\/u><\/strong> \u00a0 <strong>1. Murabaha<\/strong> \u00a0 Murabaha is a mode of finance based on the concept of cost-plus financing. It is a contract between a buyer and a seller. \u00a0 The seller purchases an asset on behalf of the buyer and then sells the asset to the buyer at a higher price that includes a profit margin. \u00a0 <strong>2. Musawamah<\/strong> \u00a0 In a musawamah contract, the price of the good or commodity is not disclosed to the buyer, and the negotiation is based on mutual agreement between the two parties. \u00a0 The seller is not required to disclose the cost of the goods or commodity, and the profit margin is determined through negotiation between the buyer and the seller. \u00a0 <strong>3. Salam<\/strong> \u00a0 Salam is a mode of finance in Islamic banking where the buyer pays all the payments in advance for goods to be delivered at a future date. \u00a0 <strong>4. Istisna <\/strong> \u00a0 Istisna is a mode of finance in Islamic banking where a manufacturer is contracted to produce a specific asset for a buyer who agrees to purchase the asset once it is completed. \u00a0 <strong>5. Tijarah<\/strong> \u00a0 Tijarah is a mode of finance in Islamic banking that involves trading goods and commodities between the buyer and the seller.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Current A\/C \u2013 All types &amp; variants for Businesses\/ Individuals<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Loan-based<\/td>\n<td width=\"301\">Qard-based (Loan based)<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">In conventional banking, the deposited funds of the customers are used for interest-based money lending and investments that generate profit through interest-earning businesses, such as loans and mortgages.<\/td>\n<td width=\"301\">Islamic Current Account operates on a Qard (loan) basis. The funds deposited by the account holder are not used for any interest-based investments.\u00a0 Instead, they are invested in shariah-compliant avenues such as trade, real estate, and other permissible businesses.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>\u00a0<\/strong><strong>Savings A\/C &amp; Term Deposits &#8211; Businesses\/Individuals<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Interest-based<\/td>\n<td width=\"301\">Mudarabah-based<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The savings accounts in typical or conventional banking are based on load, where the bank pays a fixed interest back to the depositors.<\/td>\n<td width=\"301\">In Islamic saving accounts, the bank returns a variable amount of profit with you as a depositor, which is not fixed or earned from interest as in conventional banking.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">For your information, the bank earned interest on the loan it gave to another person or company and shared a part with the depositors.<\/td>\n<td width=\"301\">As the return is based on the Mudarabah, there may be some losses, but these are shared with you and the bank. Although the chances for losses are very low, it\u2019s worth telling.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Interest Rate\/ Profit Rate<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The depositor is paid a fixed return rate over the amount they deposited.<\/td>\n<td width=\"301\">The depositor is paid a proportion of the actual profit earned according to the profit-sharing ratio set between the bank and you as a depositor.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Fixed returns<\/td>\n<td width=\"301\">Varying returns<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Running Finance\/Working Capital Limits<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Loan\/ revolving credit facility<\/td>\n<td width=\"301\">Many modes\/facilities are available depending upon the bank, including Musharakah, Salam, Istisna, Tijarah, Finance, or Murabaha Finance.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The only risk with conventional banking is that the client\/ loanee may default, not paying back the loan and interest.<\/td>\n<td width=\"301\">The risk for Islamic banking varies according to the financing type and the customer\u2019s business.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>\u00a0<\/strong><strong>LCs\/ Contracts\/ Guarantees<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Mark-up on credit advanced and credit warranty against a fee.<\/td>\n<td width=\"301\">Multiple modes are in Islamic banking, including Trade based modes ( Murabaha\/Musawamah) and Service based modes (Wakala\/ Kafalah).<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The customer is charged for non-funded facilities.<\/td>\n<td width=\"301\">Customers are also charged in Islamic banking for non-funded facilities.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Banks charge interest on delayed payments.<\/td>\n<td width=\"301\">\u00a0Islamic banks cannot charge interest, but they charge profit on credit sales.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Long-Term Finance <\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Loan facilities for the years of the tenor.<\/td>\n<td width=\"301\">Different financing modes are used, e.g., Diminishing Musharakah, Ijarah, etc.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Conventional banks provide loans to their customers and charge markup (interest) on the outstanding principal amount.<\/td>\n<td width=\"301\">In Diminishing Musharakah, Islamic banks form joint ownership in a new asset and rent out their share to the customer. The bank&#8217;s ownership share in the asset decreases over time while the customer&#8217;s share increases.\u00a0 In Ijarah, Islamic banks buy an asset on behalf of the customer and lease its usufruct to the customer for a specific tenor.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Conventional banks do not involve asset ownership arrangements while providing customer loans.<\/td>\n<td width=\"301\">The bank remains the asset owner throughout the tenor and receives monthly instalments from the customer.\u00a0 At the end of the tenor, the asset transfer is done either by gifting the asset to the customer or by recognizing the customer&#8217;s last instalment or security deposit as consideration for the asset&#8217;s sale to the customer.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Compounding of interest also takes place annually.<\/td>\n<td width=\"301\">The bank&#8217;s ownership share in the asset decreases over time while the customer&#8217;s share increases.\u00a0 Islamic banks sell their ownership share in the asset to the customer periodically.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Lending &amp; Borrowing Mechanism<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Banks take money from depositors as a loan and lend it to customers at a higher interest rate, allowing them to profit by keeping the difference between the interest rates.<\/td>\n<td width=\"301\">Savings accounts are based on the Mudarabah-based model.\u00a0 A current account is deposited on qard bases.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Conventional banks take money from depositors on a debt basis and lend it out on a debt basis, charging interest to customers as their profit.\u00a0 They also offer interest to depositors, which is considered Riba in Islam.<\/td>\n<td width=\"301\">On the other hand, Islamic banks collect funds either on qard basis (as a loan) or on a Mudarabah basis (as an investment partnership).\u00a0 They only offer profits to customers on their Mudarabah-based accounts, as earning interest on qard (debt) is strictly prohibited in Islam. This ensures that Islamic banking practices align with Islamic finance principles, prohibiting interest-based transactions.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Treating Money\/Currency as Commodity<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Money is like a commodity.<\/td>\n<td width=\"301\">Money isn\u2019t recognized as a commodity; instead, it\u2019s taken as a \u2018mode of exchange\u2019.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The banks can rent or trade the money or currency and make profits from it.<\/td>\n<td width=\"301\">The bank that follows Islamic banking can\u2019t rent or trade the money to make profits.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Risk Sharing<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Conventional banks only provide loans to their customers, and the only risk involved for the lender is the possibility of the borrower defaulting on the loan<\/td>\n<td width=\"301\">Islamic banks have different modes, e.g., Mudarabah and Musharakah.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The bank does not share any other risks with its customers.<\/td>\n<td width=\"301\">These modes operate based on a partnership, meaning the profit or loss is shared between the bank and the customer according to the agreed ratio.\u00a0 This way, Islamic banks share risk with their customers, unlike conventional banking.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">All the financial risk involved in the transaction is borne solely by the borrower, and the bank does not have any stake in the success or failure of the venture for which the loan was taken.<\/td>\n<td width=\"301\">All three parties are involved in the risk-sharing mechanism, depositors, the financed, and bank. The risk is divided among all partners according to the agreed proportion.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 style=\"text-align: left;\"><strong>Late Payment Charges<\/strong><\/h2>\n<table class=\" alignleft\" width=\"0\">\n<tbody>\n<tr>\n<td width=\"301\"><strong>Conventional banking <\/strong><\/td>\n<td width=\"301\"><strong>Islamic banking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Charges late payment fees as a source of income, which contributes significantly to their profitability<\/td>\n<td width=\"301\">Charges charity for late payments as a way to discipline clients and encourage timely payments.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Charges interest on outstanding debt, which compounds the total amount owed by the borrower.<\/td>\n<td width=\"301\">Shariah prohibits Islamic banks from re-pricing the outstanding amount, which becomes a debt.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">Does not waive off late payment charges in the course of business, as it adds to their profitability.<\/td>\n<td width=\"301\">Does not charge interest on outstanding debt, eliminating the compounding effect.<\/td>\n<\/tr>\n<tr>\n<td width=\"301\">The income generated from late payment charges contributes to the bank&#8217;s overall profits and is not directed towards social welfare.<\/td>\n<td width=\"301\">Charity income generated from late payments is not added to the bank&#8217;s profitability but is only collected and used for social welfare in the health and education sectors.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"text-align: left;\"><img loading=\"lazy\" class=\"alignnone size-full wp-image-6474\" src=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons.jpg\" alt=\"Islamic banking pros and Cons\" width=\"1366\" height=\"650\" srcset=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons.jpg 1366w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-300x143.jpg 300w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-1024x487.jpg 1024w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-150x71.jpg 150w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-768x365.jpg 768w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-1160x552.jpg 1160w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-105x50.jpg 105w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-650x309.jpg 650w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-1000x476.jpg 1000w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-banking-pros-and-Cons-50x24.jpg 50w\" sizes=\"(max-width: 1366px) 100vw, 1366px\" \/><\/p>\n<h3 style=\"text-align: left;\"><strong>Islamic Banking Pros and Cons<\/strong><\/h3>\n<h4 style=\"text-align: left;\"><strong>Pros<\/strong><\/h4>\n<ul style=\"text-align: left;\">\n<li>Offer ethical and shariah-compliant financial products and services.<\/li>\n<li>Encourages risk-sharing between the bank and customers.<\/li>\n<li>Focuses on real asset-based financing.<\/li>\n<li>Helps promote social justice and fairness in financial dealings.<\/li>\n<li>Provides an alternative banking system for people who want to avoid interest-based transactions.<\/li>\n<\/ul>\n<h4 style=\"text-align: left;\"><strong>Cons<\/strong><\/h4>\n<ul style=\"text-align: left;\">\n<li>Limited availability of Islamic banking products and services.<\/li>\n<li>Higher fees and charges compared to conventional banking.<\/li>\n<li>Less established regulatory framework in some countries.<\/li>\n<li>Lack of standardization of shariah interpretations and practices.<\/li>\n<li>Limited access to certain financial products, such as insurance.<\/li>\n<\/ul>\n<p style=\"text-align: left;\"><img loading=\"lazy\" class=\"alignnone size-full wp-image-6473\" src=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons.jpg\" alt=\"Conventional banking pros and cons\" width=\"1366\" height=\"650\" srcset=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons.jpg 1366w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-300x143.jpg 300w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-1024x487.jpg 1024w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-150x71.jpg 150w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-768x365.jpg 768w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-1160x552.jpg 1160w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-105x50.jpg 105w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-650x309.jpg 650w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-1000x476.jpg 1000w, https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Conventional-banking-pros-and-cons-50x24.jpg 50w\" sizes=\"(max-width: 1366px) 100vw, 1366px\" \/><\/p>\n<h3 style=\"text-align: left;\"><strong>Conventional Banking Pros and Cons<\/strong><\/h3>\n<h4 style=\"text-align: left;\"><strong>Pros<\/strong><\/h4>\n<ul style=\"text-align: left;\">\n<li>Availability of a wide range of products and services.<\/li>\n<li>Easy access to credit and loans for consumers and businesses.<\/li>\n<li>High liquidity of funds due to the use of interest-bearing deposits and loans.<\/li>\n<li>Greater stability and predictability in terms of returns for depositors.<\/li>\n<\/ul>\n<h4 style=\"text-align: left;\"><strong>Cons<\/strong><\/h4>\n<ul>\n<li style=\"text-align: left;\">Higher risk for borrowers due to compounding interest rates and potential for default.<\/li>\n<li style=\"text-align: left;\">Limited investment opportunities for those seeking Shariah-compliant options.<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><div class = \"tatsu-column-bg-image-wrap\"><div class = \"tatsu-column-bg-image tatsu-bg-lazyload\" data-src = \"\"><\/div><\/div><div class=\"tatsu-overlay tatsu-column-overlay tatsu-animate-none\" ><\/div><\/div><style>.tatsu-row > .tatsu-hcexmu9exh4vdxgg.tatsu-column{width: 100%;}.tatsu-hcexmu9exh4vdxgg.tatsu-column > .tatsu-column-inner > .tatsu-column-overlay{mix-blend-mode: normal;}.tatsu-hcexmu9exh4vdxgg > .tatsu-column-inner > .tatsu-top-divider{z-index: 9999;}.tatsu-hcexmu9exh4vdxgg > .tatsu-column-inner > .tatsu-bottom-divider{z-index: 9999;}.tatsu-hcexmu9exh4vdxgg > .tatsu-column-inner > .tatsu-left-divider{z-index: 9999;}.tatsu-hcexmu9exh4vdxgg > .tatsu-column-inner > .tatsu-right-divider{z-index: 9999;}<\/style><\/div><\/div><\/div><\/div><div class=\"tatsu-section-background-wrap\"><div class = \"tatsu-section-background tatsu-bg-lazyload\" data-src = \"\"><\/div><\/div><div class=\"tatsu-overlay tatsu-section-overlay\"><\/div><style>.tatsu-hcexmu9eqi4morlp .tatsu-section-pad{padding: 15px 0px 15px 0px;}.tatsu-hcexmu9eqi4morlp > .tatsu-bottom-divider{z-index: 9999;}.tatsu-hcexmu9eqi4morlp > .tatsu-top-divider{z-index: 9999;}.tatsu-hcexmu9eqi4morlp .tatsu-section-overlay{mix-blend-mode: normal;}<\/style><\/div>\n","protected":false},"excerpt":{"rendered":"<div><a href=\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\" class=\"exp-read-more exp-read-more-underlined\">Read More<\/a><\/div>\n","protected":false},"author":7,"featured_media":6472,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[61],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Islamic vs Conventional Banking Products<\/title>\n<meta name=\"description\" content=\"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Islamic vs Conventional Banking Products\" \/>\n<meta property=\"og:description\" content=\"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\" \/>\n<meta property=\"og:site_name\" content=\"Cometinsure\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-27T17:29:22+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-03-21T07:50:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-vs-Conventional-Banking-Products.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1366\" \/>\n\t<meta property=\"og:image:height\" content=\"650\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"brandixsoft brandixsoft\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"brandixsoft brandixsoft\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\",\"url\":\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\",\"name\":\"Islamic vs Conventional Banking Products\",\"isPartOf\":{\"@id\":\"https:\/\/cometinsure.com\/blog\/#website\"},\"datePublished\":\"2023-03-27T17:29:22+00:00\",\"dateModified\":\"2024-03-21T07:50:38+00:00\",\"author\":{\"@id\":\"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/564403ff7ef5f4cb36d739e1c7c793bd\"},\"description\":\"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.\",\"breadcrumb\":{\"@id\":\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/cometinsure.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Islamic vs Conventional Banking Products\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/cometinsure.com\/blog\/#website\",\"url\":\"https:\/\/cometinsure.com\/blog\/\",\"name\":\"Cometinsure\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/cometinsure.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/564403ff7ef5f4cb36d739e1c7c793bd\",\"name\":\"brandixsoft brandixsoft\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/c64828293da82c13b36fda68634de45a?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/c64828293da82c13b36fda68634de45a?s=96&d=mm&r=g\",\"caption\":\"brandixsoft brandixsoft\"},\"sameAs\":[\"https:\/\/cometinsure.com\/blog\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Islamic vs Conventional Banking Products","description":"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/","og_locale":"en_US","og_type":"article","og_title":"Islamic vs Conventional Banking Products","og_description":"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.","og_url":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/","og_site_name":"Cometinsure","article_published_time":"2023-03-27T17:29:22+00:00","article_modified_time":"2024-03-21T07:50:38+00:00","og_image":[{"width":1366,"height":650,"url":"https:\/\/cometinsure.com\/blog\/wp-content\/uploads\/2023\/03\/Islamic-vs-Conventional-Banking-Products.jpg","type":"image\/jpeg"}],"author":"brandixsoft brandixsoft","twitter_card":"summary_large_image","twitter_misc":{"Written by":"brandixsoft brandixsoft","Est. reading time":"10 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/","url":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/","name":"Islamic vs Conventional Banking Products","isPartOf":{"@id":"https:\/\/cometinsure.com\/blog\/#website"},"datePublished":"2023-03-27T17:29:22+00:00","dateModified":"2024-03-21T07:50:38+00:00","author":{"@id":"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/564403ff7ef5f4cb36d739e1c7c793bd"},"description":"It\u2019s important to understand all the key distinctions between Islamic and Conventional banking products before choosing one. Read this guide for this.","breadcrumb":{"@id":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/cometinsure.com\/blog\/islamic-vs-conventional-banking-products\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/cometinsure.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Islamic vs Conventional Banking Products"}]},{"@type":"WebSite","@id":"https:\/\/cometinsure.com\/blog\/#website","url":"https:\/\/cometinsure.com\/blog\/","name":"Cometinsure","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/cometinsure.com\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/564403ff7ef5f4cb36d739e1c7c793bd","name":"brandixsoft brandixsoft","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/cometinsure.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/c64828293da82c13b36fda68634de45a?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c64828293da82c13b36fda68634de45a?s=96&d=mm&r=g","caption":"brandixsoft brandixsoft"},"sameAs":["https:\/\/cometinsure.com\/blog"]}]}},"_links":{"self":[{"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/posts\/6471"}],"collection":[{"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/comments?post=6471"}],"version-history":[{"count":4,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/posts\/6471\/revisions"}],"predecessor-version":[{"id":7032,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/posts\/6471\/revisions\/7032"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/media\/6472"}],"wp:attachment":[{"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/media?parent=6471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/categories?post=6471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cometinsure.com\/blog\/wp-json\/wp\/v2\/tags?post=6471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}