Have a look at the banking sector and you will find two broader categories for all banking services – one is interest-free service and the other is with interest rate. In simple words, you can take it as Islamic banks in UAE while the category belongs to the traditional banking system. The question is how Islamic financing works and is it suitable for the majority of the expatriates in UAE? Very easy answer, you can take any kind of service but the point is which is suitable according to your requirements.

Suppose you want to get a business loan for a small business project. If you will go towards an Islamic bank, they can provide you a fixed loan amount without any interest rate. Even both parties will share the same space at the end of the output. If your business crosses your deficit and you get a profit, the same share you have to provide to your bank. While on the other hand if you get into a loss, the bank will share the half suffering.

Product Working and Investment Ratio

As we all know that conventional banking is totally based on commercialization but the opposite system is very easy and helpful. For example, a buyer asks the bank to buy the exact item or a product that they want to finance and bank on behalf of a client to make a business deal. This certain item is then auctioned or we can assume that sold to other customers at an additional markup which is a bit high than the actual price. This is the only way to generate some revenue. In this way, the bank earns some profit which is shared between a client and bank.

Let me explain to you about the Islamic business loan and its working. Few points are important to note down for such work:

• Try to approach a bank that is nearest to your resident. The reason is simple that you can visit off and on to get the latest updates.
• The second most important thing is the selection of projects, and you can get different opportunities in the business sector. Try to do some research work about the local market trends or you can get some help from your respective bank as well.
• The final thing is the input cost and output profit margin. If you are ok with the outcomes with a 70-30 ratio then you must go for it.