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An Islamic window, also known as an Islamic banking window or Islamic finance window, is a mechanism used by conventional banks to offer Islamic financial products and services alongside their regular conventional offerings. The purpose of an Islamic window is to cater to the financial needs of Muslim customers who prefer Sharia-compliant banking products while still allowing the bank to operate within the existing regulatory and legal framework.

Here are the main differences between an Islamic window and a standalone Islamic bank:

  1. Legal and Regulatory Structure: A standalone Islamic bank is a separate financial institution that operates solely on Islamic principles. It has its own legal entity and regulatory framework specific to Islamic finance. On the other hand, an Islamic window operates within a conventional bank and adheres to the existing regulatory structure of the conventional banking system. It does not have a separate legal entity, but rather functions as a segment within the conventional bank.
  • Product Offering: Standalone Islamic banks offer a comprehensive range of Sharia-compliant financial products and services, including Islamic transactional accounts, Islamic financing, Takaful (Islamic insurance), and investment products based on Islamic principles. In contrast, an Islamic window offers a more limited selection of Islamic products and services, often covering basic offerings like Islamic savings accounts, Islamic home financing, and some investment products. The scope of products offered through an Islamic window may depend on the capabilities and expertise of the conventional bank operating the window.
  • Expertise: Standalone Islamic banks are staffed with experts and professionals well-versed in Islamic finance and Sharia principles. They are dedicated to managing Islamic financial operations exclusively. In an Islamic window, the staff responsible for the Islamic products may have some expertise in Islamic finance, but they also handle conventional banking operations. This can sometimes result in a difference in the depth of knowledge and specialization.
  • Separate Branding: Standalone Islamic banks typically have their own branding and identity, separate from their parent conventional bank. They are marketed as dedicated Islamic financial institutions. In contrast, an Islamic window operates under the branding and identity of the parent conventional bank, and its Islamic offerings are marketed as an extension of the bank’s services.

Overall, both standalone Islamic banks and Islamic windows aim to provide Sharia-compliant banking services. The choice between the two options depends on various factors, including the bank’s strategic objectives, the market demand for Islamic finance, and the regulatory environment in the country or region where the bank operates. Standalone Islamic banks are more prevalent in countries with a large Muslim population and strong support for Islamic finance, while Islamic windows may be found in regions where the demand for Islamic banking services is growing but does not warrant the establishment of a separate Islamic bank.

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