China - Islamic banking

There are three principles islamic banking stands on:
1. Do not charge interest, but share profit or loss
2. Do not finance anything that is not in accordance with the islamic belief. F.e. pork, speculation....
3. Do not finance anything that is later financed non-sharia way

This points are important to understand also in accordance with collection of the financing, sharing of the dissolving company value, mortgage financing or sale of the banks ownership or even responsibility of the bank for a good results and own capital amount.

Lets take it one by one:
*interest*
You are not allowed to charge interest, but u may charge drawdown fee & once in time loan management fee

*profit/loss sharing*
You can decide the percentage to share the loss or the profit. It shall be the same for both cases

*dissolving value*
once company is dissolved and there is any loss outgoing from the dissolution you share the loss in accordance with the profit/loss sharing percentage

*mortgage financing*
Bank owns the property and than sells it partially to purchasing party. Therefore property with building value of 100 is sold to new owner f.e. for 150 with f.e. 20/80 ration in begging. Therefore new owner needs to pay 30 (20% of 150) as a downpayment to start the deal. And than for every new payment, f.e. 15 the bank transfers 10% of property to new owner.

*sale of banks ownership*
As the bank is the owner of the property, not the owner of the collateral, it sells the % it owns in the property. Therefore direct relationship is established.

*Own capital*
The sharia loan is accounted as an own capital of the company