LC Financing. Comparison between an Islamic and a conventional bank in Essay

LC Financing. Comparison between an Islamic and a conventional bank in Qatar - Essay Example It is a financial agreement – a secure mode of payment - between an importer and exporter for goods shipped (Finance). In Wall Street Words, David L. Scott defines a letter of credit as â€Å"a promise of payment in the event that certain requirements are met. A letter of credit essentially substitutes the credit of a third party (usually a large bank) for that of a borrower. In the case of municipal bonds, an LOC generally permits a trustee to draw six months' interest and sufficient funds to retire outstanding bonds at par in the event of default† (qtd. in Letter of Credit). Since L/Cs carry a risk for the issuing bank in case the client defaults, the bank assesses the client’s creditworthiness and financial position to evaluate his ability to pay in the future. In some cases, the bank may ask for a security to minimize chances of loss. There are various departments within the bank which cater to such analysis and evaluation in order to judge whether the custom er is worthy of providing credit or not. If the customer simply is asking for a letter of credit then the bank assumes responsibility for the traded goods coming into the country. In that case, checks and balances are even stricter and require that the customer is of extremely good credit worthiness based on which financing and LC facilities are then provided. Corporate and commercial banking departments are formulated where teams sit and evaluate companies for their creditworthiness as well as their capacity to pay back the loans that they have taken. Other departments that may be involved in this case may include Risk Management department, Credit management department, Commercial Banking and Audit as well as a committee that is formulated especially to evaluate credit packages that are developed through the corporate or commercial banking departments. (Islam). Uniform Customs and Practice for Documentary Credits (UCP 600), issued by the International Chamber of Commerce, includes the latest rules which govern letter of credit transactions in international trade finance worldwide. What are  L/C finance contracts? There are various financial solutions offered by banks for trade financing. L/C finance contracts are one of them, with modern banks offering a wide range of L/C financing products to meet complex needs of traders. One of these is export contracts through which the exporter's bank extends a loan to him. Trade loans are regarded as an important trade finance technique. They are especially suitable for wholesalers and manufacturers as they can be utilized for both one-off and regular purchases of raw materials, goods, etc. The bank can extend finance until payment from the on-sale of goods is provided by the client (Barclays). L/C finance contracts in Islamic bank Muslim jurists believe that reward for capital needs to be linked to the outcome of any project if financing is being extended by the bank. They are of the view that gains should be made v ia trade involving sale and purchase (Hanif 3). Islamic banks have thus come up with alternate, Shariah-complaint financial solutions for customers as compared to conventional banks. Murabaha is one of the most commonly used principles in Islamic trade finance. It refers to: â€Å"†¦a contract of sale and purchase at a profit margin between the supplier and the purchaser of the good. The

Comparison & Contrast on Romanticism and Realism literary movements Essay

Comparison & Contrast on Romanticism and Realism literary movements - Essay Example Consequently, as industrial revolution progressed, these poor working conditions raised a lot of concerns and people started to advocate for changes. Artists and writers were amongst the people who were championing for the changes (Dahiya 4). They responded to these conditions in many different ways and as a result, romanticism and realism artistic movements emerged. Romanticism movement originated from Europe in the mid of the 18th century and was concerned with emotions and imagination (Morris, 169). It opposed aristocratic social and political ideologies of the age of enlightenment and the scientific rationalization of nature (Mendelowitz 153). Romanticism was highly centered on visual arts, literature and music but had greater impacts education and natural history (Morris, 49). During the 18th century, romanticism was common and popular (Reynolds 81). However, in the second half of 19th century it lost its popularity and was overtaken by realism movement. Realism movement was bas ed on real life and unlike their immediate predecessors (romantics), the practitioners of realism sought to portray real life, both good and bad. They were far more interested in science and in civilization, and far less interested in nature and the occult. Realists, like Romantics, were very moral writers, but moral causes changed with the times as new conditions dictated new issues (Richardson 56). Both romanticism and realism gathered a lot of fame during the era of industrial revolution. However, it was realism that was more popular from mid 1800s on. Romanticism only dominated from mid 1700s to the mid 1800s (Dahiya 4). Romanticism artists and writers put passion and emotions in their work. The works created by these writers and artists often dealt with themes that bring hope and inspiration or reflected nature’s beauty (Ferber 15). The works were always based on nationalism, spirituality and mankind. The works of the romantic artists gave the people an escape from the p roblems and challenges that they faced during the industrial revolution (Reynolds 111). The works of literature that are usually associated with this movement are the poems of William Wordsworth and William Blake. Other works include Mary Shelley’s novel, Frankenstein, which was a story about a scientist who tried to create human but created a monster, Alexandre Dumas’s work, The Three Musketeers and Victor Hugo’s novel, The Hunchback of Notre Dame (Richardson 67). The works of realists were based on real life. The art and literature developed or made by realists exposed life as it was. They clearly pointed out the difficult living and working conditions that were eminent during the era of industrial revolution. Most of the writers and artists of realism were activists who used their works to reveal the evils of society in the hope that they would be reformed. Realists had hopes that their works would bring inspiration to the politicians and other people in powe r thus enable them make lasting changes in living and working conditions (Herman 11). The realists were also referred to as social critics since they used to criticize the society. In US, the realists were referred to as muckrakers since they raked the muck that was in the society. The criticism of the realist was always on specific cause such as child labor, living conditions and working conditions in industries. Realists’ literature writers created factious works but their plots were real. The most known realist author is Charles dickens who was a British