Banking Regulations and Islamic Finance

Finance T R Bishnoi S RAMACHANDRAN's paper on 'Banking Regulations and Islamic Finance' (December 23-30, 1989) was interesting but missed to note two important points: (i) The concepts of interest and profits inIslamic finance are different from those of the classical and Keynesian economics. (2) The viability of Islamic finance or banking is in doubt as the transformation of the entire interest based banking into profit and loss sharing (PLS) of Islamic type; as undergoing in Iran and Pakistan, seems to be retrogressive in effect encouraging disintermedia- tion process in the economy. The purpose of this note is to substantiate these two points.