Sorry, a correction to Item 5 :-)

Item 5: Asset-backing principle would mean that if a client were unable to make the payments on an original financing contract, banks could not take full possession of the property, despite the fact that the client would have amortised at least part of the original loan (as in a mortgage).

Instead, the client would gradually taking an increasing ownership stake in the asset. The Islamic version would be equivalent to saying that if a home-loan client were to default on payments after amortisation of 40% of the original loan, the home would be sold and the client would receive 40% of the sales proceeds and the bank would receive 60%

Thanks Grateful.
Ban of Riba
1. There is no universal ban on interest in the Judeo-Christian tradition which is why societies with that faith heritage have interest bearing accounts and aim for growing economies. The ban in the Jewish scriptures is generally understood to refer to excessive interest, and charging interest when lending to the poor among them; ie their own people. This is not generally understood as including commercial transactions but in context is about giving charity to our own poor - we should lend without interest in those circumstances to our family members. My aunt did that for me to get my first car and this is quite common in families but not a useful commercial arrangement. There was no trading restriction on Israel in this way. And Jesus used the analogy of a man burying what he'd been given and not gaining interest on it as an example of a ‘bad servant’. (Mathew 25: 14-30) We expect a return on investment – growth is an expression of life.
2. When sharia compliance redefines interest as fees, rental or profit – it’s just been rebadged. The cost of banking remains the same and this appears to be deceptive.
To be continued:

Ban on Uncertainty?
In his 2010 submission to the Board of Taxation, sharia finance practitioner David Clark noted, “Accordingly, any review of the economic substance of Islamic finance transactions must take into account there being no difference in the financier’s risk profile, the characteristics and movement of interest or the bank’s rights to accelerate and enforce.”

Clark commenting on two of the sharia financial structures, Mudarabah and Wakalah, said they are defined “without regard to market reality”.

Adding… “Whilst Islamic banks may have had limited exposure to collateralized debt obligations, they did not survive the financial crisis relatively better off and any such claim … is wrong. Given their relative lack of options regarding risk-hedging and asset diversification, Islamic banks found themselves over-exposed and over-concentrated in particular asset classes, particularly property.” This is something the Austrade publication ‘Islamic Finance’ also affirms.
To be continued,,,

Ban on certain sectors:
In her report regarding the American International Group (AIG) sharia advisory board Dr Ehrenfeld notes the board is “unlikely to invest in Jewish, Israeli or Christian businesses, which are considered haram (forbidden) according to sharia law”. Dr Ehrenfeld notes the AIG case study where investment in western weapons and defence is forbidden whereas investment in Muslim weapons and defence is not.
To be continued...

Profit & Loss and Risk sharing...

In a landmark decision in December 2005 by the High Court of Malaya, Justice Datuk Abdul Wahab Patail “actually made the whole concept of Arabic banking unlawful” based not on terror funding but on unethical banking practices. He ruled that it was unlawful for an Arabic bank to insist that a defaulting borrower pay up all the monthly installments for the full tenure of a 18 year housing loan when the borrower had defaulted on the loan after a period of only two and a half years; referring to this as “bloodsucking usury”. (Doesn’t seem like equitable sharing to me)

So these are some of the concerns Grateful. Kind regards Vickie (PS - unable to respond for a day or two if you want to continue)

Vickie, with the greatest respect, you should broaden your horizons a little.

>>Jesus used the analogy of a man burying what he'd been given and not gaining interest on it as an example of a ‘bad servant’. (Mathew 25: 14-30) We expect a return on investment – growth is an expression of life.<<

There are many other forms of growth other than interest growth. If you borrow money to build a business, for example, the success of the business itself is far more relevant to "growth... an expression of life" than the means by which you acquired the capital.

>>When sharia compliance redefines interest as fees, rental or profit – it’s just been rebadged. The cost of banking remains the same and this appears to be deceptive.<<

Non-sharia banks also have a range of fees and charges that are not interest-related. These are not, on their own, deceptive. They are part of the cost of finance. Nor is extracting the concept of "interest" from the equation in itself deceptive.

>>Islamic banks found themselves over-exposed and over-concentrated in particular asset classes, particularly property<<

Along with every non-sharia bank, of course. No-one is suggesting that sharia finance is inherently more secure. All lending involves risk.

>>In a landmark decision in December 2005 by the High Court of Malaya, Justice Datuk Abdul Wahab Patail “actually made the whole concept of Arabic banking unlawful”<<

Are you suggesting that this opinion holds, and that sharia banking is not practised in Malaysia?

Try this for size:

http://zulkiflihasan.files.wordpress.com/2008/07/the-effectiveness-of-legal-framework.pdf

In it, you will find some interesting facts.

"In Malaysia, separate Islamic legislation and banking regulations exists side-by-side with those of the conventional banking system"

"The Islamic banking sector has become a major contributor to the overall economic growth"

The reality is that even in a Muslim country such as Malaysia, banking remains a commercial operation, with citizens and businesses free to choose the financial instrument most appropriate to them.

As the above briefing document points out:

"Moreover, non-Muslims also were attracted to the package of Islamic products offered in the market. ".