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The Contender
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Islamic banking system prevails over other banking systems

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Voting Style: Open Point System: 7 Point
Started: 9/2/2014 Category: Society
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,795 times Debate No: 61177
Debate Rounds (3)
Comments (11)
Votes (1)




I am going to argue that the Islamic banking system prevails over other banking system.

round 1) acceptance only.


I accept the debate.
Debate Round No. 1


A person goes to a normal bank and takes 200,000$ loan for a house with 10% interest, if that person returns the money in 2 years he will have to pay back 240,000, and if he returns it in 5 years, he will have to pay 300,000. And as the time increases he has to pay more. And if a person is unable to return the money quikly due to some problems the amount of money he has to pay back keeps on increasing. In some cases this might leave the person in a huge debt. In India many farmers suicide because they are unable to pay back this huge debts which keeps increasing usually as a result of crop failure, whcih unables the farmers to return the debt.

Almost two-thirds of people who took out expensive payday loans have used the money to pay household bills or buy essentials such as food, nappies and petrol, a survey by Which? has revealed.
But while payday lenders say the loans help people ease through tricky points of the month, the research indicates many become trapped in a spiral of debt because they cannot afford to repay their loans by the agreed date, and so incur exorbitant penalty charges.
A third of people said they experienced greater financial problems as a result of taking out a payday loan, while one in five were unable to pay it back on time. A quarter said they had been hit with high, hidden charges for reminder letters and failed payments.

In Islamic banking interest plays no role.
A person who wants to buy a house, goes to the bank and says that he wants a particular house the bank buys the house,
lets say it costs 200,000$ and sell it back to him in 250,000$. He can pay back that money in installments and the money which he has to pay back does not keep increasing with time. of course there is a time limit for the returning of money. The bank can always add pressure on the debtor for the return of the money as the bank keeps something as mortage.

Since the bank does not charge any interest, the person does not end up getting trapped in a huge debt.

Other then that people who deposit their money in the bank do not recieve any interest, rather they become shareholders.
If the bank do not make enough profits they do not get any share, if they do make good profit, the shareholders
will get there share of profit acordingly. If the bank makes 20% profit in the end of the year, the shareholder may get 10% more money of what he has deposited.

In normal banks the amount of interest the depositers get back is fixed and only the top 20 % of the rich people keep getting the interest, while the rest of the 80% of the population is is usually giving the interest.
This increases the gap between the rich and the poor or average income family, which does not happen so much in Islamic banking system.
The amount of money held in Islamic banks totals about $1 trillion, or less than 1 percent of global financial assets. But in many countries Islamic banking is growing rapidly.



Erroneous Numbers and Facts

The amount of money a person will pay back isn't as simple as 10% or 20% any more, there are now complex equations to figure out what a person will pay back and 10% doesn't necessarily mean 10% and 20% doesn't necessarily mean 20% [1] [2].

The Islamic banking system doesn't actually stop interest ("money paid regularly at a particular rate for the use of money lent.") it stops some parts of it (you admit this yourself in your 3rd paragraph).

Why the Mixed ("Western") Banking System is Superior to the Islamic Banking System

Under the Islamic banking system it is much more difficult for small business to receive loans, this is because it is harder to distribute risk when accumulated interest is eliminated from the equation [3].

Furthermore the system known as Islamic banking could exist within the mixed banking system. It is totally within the realms of possibility for the sort of agreements that would occur in an Islamic banking system to occur in the mixed banking system. This is especially the case because if the populous agrees with my opponent about the superiority of the Islamic banking system. Under the system I would instigate, the people would be able to chose (through the free market) which system they would prefer and have some degree of choice in the matter.

Post Script

The current version of the western system isn't exactly what I advocate as it has become shall we say a "little" corrupt.



Debate Round No. 2


Yes there are complex equation to find out how much a person will have to pay back, but still the money to pay back keeps increasing with time.

Its kind of more like a trade, where the banks buys what the person wants and sells it back to him for s little higher price,which the person can return as intallments over a period of time. So nothing to do with interest.

Small buisness can recieve loans the rsk factor is mostly 50:50, same goes for the benefit.

Yes the islamic banking system can exist in mixed banking system, but what i am trying to prove is that the method of banking used in an Islamic banking are better then the normal banking system.

Two disadvantages of present banking system

1) A person who takes loan from the bank and is unable to return it due to some reason like losing his job will fall in huge dept as the amount to be repaid keeps increasing,

2) The present banking system promises to give certain amount of interest back to its depositers, When many people are unable to return the money back to the bank, the bank finds it difficult to pay the interest to its depositers. Which could in some cases lead the bank to get bankrupted

whereas in Islamic banking this does not happen

1)when people are unable to pay back the money due to some reason , the amount of money to be payed back does not increase with time. Therefore the person does not fall into huge debts.

2) The bank does not promise any interest to its depositers, so when people are unable to pay back due to some reason,and if the bank does not make enough profits it does not have to pay to the depositers.

So the bank has lesser chances of getting bankrupted



Fewer Loans

Under the Islamic banking system the lenders will be less willing to lend to small businesses because they have to take on much more risk that they have to under the mixed banking system. This means that ultimately more people will be trapped in poverty, unable to escape because they cannot get any capital to start a business.

The Problem of Interest

I think my opponent should be reminded that the option of default is open to those who become trapped in debt. Now this does have its drawbacks but these people are not eternally trapped in debt. Furthermore remember that accumulated interest means that more people can have loans granted to them.

Also under the Islamic system when money isn't repaid on time there are a number of problems. The first is inflation, the value of money tends to decrease and because of this without charging interest banks will constantly loose money this means the economic viability for banks will be difficult.

The other problem is that banks will struggle to grantee a certain amount of income which causes problems both for share prices and the maintenance of a permanent staff.
Debate Round No. 3
11 comments have been posted on this debate. Showing 1 through 10 records.
Posted by khizr 3 years ago
Your right, i wrote prophet, it is profit
sorry for that.
Posted by Vajrasattva-LeRoy 3 years ago
For the Moderator, etc. :
Khizr has apparently deleted his statement, or part of it, in which he refers to a profit as a prophet.
I thought that was impossible ...

Islam, by definition, means submission to the will of God.
I note that nobody has disagreed with that statement,
so we'll assume that it's correct.
There is no such religion as "submission to the will of God" ,
so Islam CAN'T BE a religion.
Since people have been Refusing to submit all along,
Islam has to be FALSE.
Islamic Banking probably won't work.
There is, of course, no way that it can be shown to be superior to non-Islamic Banking.
I've already read what you've written. It doesn't make sense.
Trying to argue that you have to be excused because English isn't your first
or primary language is invalid.

We sure wish that Cheyennebodie would get her head out of her whosis !
Obviously, if Islamic Banks don't charge people/ businesses any interest
on $ they borrow, that ISN'T the same as elsewhere, at all.
Posted by cheyennebodie 3 years ago
kzir: The only time in recent memory that interest was 10% was under that idiot Carter.And I see no difference. You people lend and share in the profits and losses. It is the same here. If a business succeeds it pays interest. If it fails ir files bankruptcy and the bank loses. I see no difference. You just call it different names. I , myself do not borrow. Am not in debt and never will be.
Posted by khizr 3 years ago
@ Vajrasattva-LeRoy : Read, that is all i have to say.
Posted by YYW 3 years ago
Religion is not true or false, so you could not have proven that it was...

Posted by Vajrasattva-LeRoy 3 years ago
If Islam is False, as I've proved,
Islamic banking obviously won't work.

Nobody in their right mind would trust their $ in an Islamic bank.

If Islamic banks don't charge their customers interest,
where would they get the $ to operate?

The word is PROFIT, not PROPHET.
Posted by YYW 3 years ago
The Catholic Church once had a similar policy that Christians could not charge interest on money lent to other Christians. This has since been abandoned, but the methods of banking described are certainly interesting and worth consideration. Excellent debate topic.
Posted by khizr 3 years ago
@ Vajrasattva-LeRoy : what are you talking about.

prevail: prove more powerful, superior, better.

Islamic banking system is a type of banking system in which interest plays no role.
I will explain you with an example.

A person goes to a bank takes 200,000$ loan for a house with 10% interest, if that person returns the money in 2 years he will have to pay back 240,000, and if he returns it in 5 years, he will have to pay 300,000. And as the time increases he has to pay more.

But in Islamic banking the bank buy's the house for that person and sell it back to him in 250,000 which he can pay in installments over a period of time, there is no increase in price for delays.

And if an Islamic bank lends money to people for their business, they share the prophet and loss in pre determined ratios.

A person who keeps his money in an Islamic bank becomes like a shareholder who shares the prophet and loss made by the bank.
Posted by TrasguTravieso 3 years ago
What exactly does it entail? I assume there Is some type of limit on usury, but more exactly? Also, what do you mean by prevails?, globaly at least it isn't all too prevalent. Care to clarify?
1 votes has been placed for this debate.
Vote Placed by bladerunner060 3 years ago
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Total points awarded:03 
Reasons for voting decision: Pro had one argument only--that there is no interest in the Islamic system, and gives an example (Which, I think, is an oversimplification of islamic banking in general). As Pro presents islamic banking, claiming there's no interest is, of course, a fiction: as he presents it, you still pay for the privilege of taking out the money, and have a set time in which to pay it--it's a flat, rather than a compounding, interest, but it's interest nonetheless; despite the shuffling of property, Pro gives me no real difference between a conventional mortgage and an Islamic one. I'm surprised Con didn't point out that someone who repays a loan quickly will pay little to no interest, but Pro never responded to the arguments that Con did make regarding bank solvency and loan availability. Pro had one argument, and it just wasn't particularly strong enough to fulfill his BoP.