ANALYSIS OF THE DIFFERENCE BETWEEN CONVENTIONAL BANK INTEREST AND SHARIA BANK PROFIT SHARING ANALISIS PERBEDAAN ANTARA BUNGA BANK KONVESIONAL DAN BAGI HASIL BANK SYARIAH Section Articles

Abstract

With the development of the banking world in the community regarding the existence of  interest called usury', regulations emerged that permitted banking business activities  based on sharia principles that do not use interest but use profit sharing. The difference  between interest at conventional banks and profit sharing at Islamic banks is that interest  is the actualization of usury which is definitely forbidden by Islam. The equation that is  hard to argue with is that actually the application of interest to banks has more harm than  good, profit sharing is something that is covered by sharing the results of business  between the provider of funds and the fund manager. The distribution of business results  occurs between the bank and the depositor, or the bank and the beneficiary customer.

Banks as intermediary institutions collect funds from people who experience a surplus of  funds and distribute them back to people who need funds. The most important allocation  of funds for banking activities is the allocation of loan funds, which are known as  conventional-based credit and sharia-based financing. The difference between credit and  financing lies in the advantages that wanted.