The term “Swiss Banking”’ is pretty popular with the public because of movies in which business tycoons, governments and high-profile gangsters time and again mention about their Swiss accounts in which they have stored billions of dollars over the years.
For a start, Swiss Banking is related to the banking system in Switzerland which dates back to Middle Ages. That’s precisely how much the banking scene in Switzerland has matured through the years and in today’s world is undoubtedly considered as one of the safest and reliable banking systems. Because banking in Switzerland is regulated by Swiss Financial Market Supervisory Authority so the term Swiss Banking was coined.
Another reason why Swiss banking is so popular is because the Swiss franc is considered as one of the world’s premier currencies. It has virtually zero inflation and is even backed historically by approximately 40 percent gold reserves. Swiss banks are well-known because of their professionalism and sophisticated investment services. If an individual is looking for the safest option while depositing money, the best option for him/her is Swiss banking as Swiss banks are governed by Swiss Bankers Association, SBA. The rule of SBA dictates that even in case of bank failure, the bank will be liable to provide all the money to its depositors.
When we talk about the banking scenario in Middle Eastern countries, the usual banking system cannot work as the majority of people residing in these countries are Muslims and they do not indulge in interest-based banks. Interests are rigidly forbidden in Islam therefore Muslims tend to look out for other options where they can store their money safely without having to have forced into interests game. Therefore Muslims from such countries do Shariah-complaint investment. The concept of Shariah-compliant investing goes back four decades as it was first introduced in 1940s, yet the sector has only really taken off in the last five years. The concept is more complicated than it looks as considerable steps are taken so as to invest in compliance with the Shariah principles at both the fund operations level and all sorts of underlying investments.
Shariah-complaint investment is defined as the investments which are done with accordance to the Islamic Shariah (principals). There are three types of rules which need to be followed to have a Shariah-complaint investment:
- Absence of Interest in the investment
- No Investing in Alcohol, Tobacco, Pornography (directly or indirectly-related) companies, and Gambling
- Nature of the contract between both the parties involved should be transparent and clear
Arab Bank Switzerland
There are a number of banks which are working in Middle Eastern countries which are following both the models of Swiss banking and Shariah-complaint investments to cater to the needs of Muslims. One such bank is Arab Bank Switzerland. Arab Bank combines the traditional features of Swiss banking while keeping them in alignment to the Shariah.