Arab Banks work without interest charges - How's That?

Question

Apparently, some banks in Arab countries work entirely without interest charges levied or paid out, for religious reasons. My question is: How can they still be profitable?

Answer 1

The Islamic banks paid no interest on deposits, and collected no interest on loans. Instead, they made equity investments in companies and then shared in the venture's profit or loss, some of which would then be passed on to depositors.

Answer 2

The key is the title transfer. Instead of lending against a collateral (such as real estate or inventory), the "lender" buys the collateral in its name and sells it to the "borrower" on an installment plan. The interest is implied, but not explicitly assessed.

Zero-coupon, income pass-through, and equity-related structures are also popular with Islamic banks...

Answer 3

maybe its a government bank.

bank sometimes makes profit by selling or auctioning properties that have been mortgaged then not paid fully in due time,

Answer 4

how is that possible?