Islamic Bank - Interest Free Lending

In Islamic banking, the charging of interest on loans is forbidden, along with all other forms of predatory lending. Loan interest is viewed as exploitive, because is is a tool used to take advantage of someone in need of assistance. So how do Islamic banks make profit? Through an agreed upon profit ratio. Borrowing and lending is acceptable when an agreed upon profit ratio is determined, but not the rate of return itself. Simply put - profit is the objective, profiteering is not.

The concept of profit-and-loss sharing as a basis of financial transactions is a progressive one, as it encourages better resource management. It also ensures both parties have a mutual interest in success. The Islamic principle remains one of equity and reward sharing unlike the concept of loan-interest relationship.

In Kuwait with over 30 years of pioneering experience, Kuwait Finance House (KFH) has become a global leader in the Islamic banking industry and an authority on modern islamic banking and finance. It's main competeters in Kuwait are the conventional banks like National Bank of Kuwait and Gulg Bank. By witnessing the success of KFH's in the Islamic banking industry many others also entered into the Kuwait banking industry like Kuwait International bank (KIB) and Boubyan Bank and also recently Warba Bank.