Islamic Banking and Finance

To replace interest the ideal mode of financing under the Islamic banking system is Financing on Profit & Loss Sharing (PLS) basis. Qard Hasanah are for the benefit of the individuals and the society at large. To safe-guard the interest of depositors/investors these type of loans as a matter of policy do not constitute a significant source of financing by Islamic banks. However if in any country the Islamic System of Zakat is established and the Islamic State treasury starts functioning the requirements of Qard Hasanah would primarily be met by the treasury.