The Beginning and Evolution of Banking System: Origin of Conventional and Islamic Banking from Ancient Usurer Business
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.
Chowdry Noor Ahmad Khan Dhadhy, Prof.Dr.Ali Asghar Chishty. (2018) بینکاری کا آغاز وارتقاء: قدیم مہاجنی کاروبار سے سودی واسلامی بینکاری کا سفر, Hazara Islamicus, Volume 7, Issue 1.
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