Research 65 ILIC 2019

Abstract:  After conventional banks realised that many investors and customers invested with Islamic banks due to the religious reason, conventional banks started to open windows that offer services to those who want to invest on the interest-free basis. There are many conventional banks that provide services in accordance with Shariah principles. However, at first, these conventional banks could not receive large number of clients because that clients have doubt that these banks are unable to provide interest-free banking services. Recently, Islamic windows of conventional banks have improved and attempted to offer various services that are similar with interest-free banks to their customers. Opening Islamic windows in conventional banks is a complex process. There are many rules and regulations that should be applied by conventional banks to establish an Islamic window.
Although the number of Islamic windows is increasing, there are still some challenges. There are two major challenges that these conventional banks have to overcome. One is the inability of these banks due to the reality of insufficient experienced staff and scholars in Islamic banking; another one is the doubt of the customers that the financial services including contracts and transactions provided by the Islamic windows of these banks may not be Shariah-compliant. Due to these challenges, the Islamic windows are short of clients.
Under such context, this paper discusses the challenges that are faced by Islamic windows and then tries to offer suitable solutions. For the collection of data, this study follows qualitative approach which collects data from both primary and secondary sources such as Acts, textbooks, journal articles and relative websites.
Keywords: Islamic windows, conventional banks, challenges and solutions.