Central Bank of Kenya
Table 3: Conventional Banking vs Islamic Banking
1.
Distinguishing Factor Interest (Riba)
Conventional Banking Acceptable
2.
Uncertainty
Allowable
3.
Prohibited activities/commodities
Conventional bank can finance such.
4.
Mobilization of funds
Funds may be mobilized through interest bearing deposits
5.
Investment activities
Conventional banks may lend funds and charge interest
2.4 There was an upward trend in employment
16
Islamic Banking Not acceptable. Returns are based on profit and loss sharing Any contract based on the nonoccurrence of a future uncertain event, within Islamic banking, is not generally allowable e.g. hedging, derivatives. The Sharia prohibits financing of enterprises involved in pork, pornography, conventional financial services, arms or ammunitions, cinema, tobacco, gambling and alcohol. Islamic Banks cannot mobilize funds by paying interest to their depositors. Funds are mobilized on the basis of the profit and loss sharing contracts by which Islamic banks agree to manage the funds of customers (investment account holders) in return for receiving a share of the profits from investing the funds and the account holders agree to bear any losses incurred from investing their funds. Islamic banks cannot lend money by charging interest but have to engage in permissible investment and trading activities.
Employment Trends in the industry
Employment in the banking sector rose from 12,589 in 2005 to 15,568 in 2006 as shown in Table 4 below. The increase in staffing was in response to the expansion of the institutions’ branch network and expanded business volumes attributed to economic growth. The table below shows the category and shift in employment amongst various cadres in the banking sector:
Bank Supervision Annual Report 2006