key features of islamic banking business in dubai.

 Among the two distinct trends of revivalism, modernism emphasized on the religious aspects substantiated by the Shari’a and debated the premise that interest can amount to Riba only if it is perceived as unfair, while neo-revivalism staunchly upheld its notion that interest in any form tantamount to Riba and hence should be abolished. During 1970s neo-revivalists, augmented by “the oil-wealth of the conservative Gulf countries” (Saeed, 1996, P. 15), were successful in establishing their interpretation that interest is equivalent to Riba. Consequently, Islamic banks were established across the globe with the primary aim of abolishing interest from the banking as well as financial systems.

The Dubai chapter of Islamic banking has vital significance to the Islamic financial system. Though neo-revivalism had given rise to semi-Islamic banks in Egypt and Malaysia back in the 1960s, Dubai came up with the first Islamic bank per se in the form of the Dubai Islamic Bank (DIB), whose operations started simultaneously with that of the Islamic Development Bank (IDB) in 1975 (Shoult, 2006, P. 213).

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The banking sector as observed in Dubai is a prominent subset of that of the UAE and reflects most of the trends shown by the latter. UAE’s banking sector has benefitted immensely from the stupendous economic development and the factors that have contributed to its prosperity are low rates of interest coupled with high price bands of its most precious natural resource – oil. An important feature of UAE’s banking sector is that the government holds huge stakes in it which signifies its enhanced control over the oil based macroeconomy of the Gulf nations (Global Investment House, 2007, P. 7).

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