Ahmad Elnaggar ( ) is the economist who pioneered the formation of the

Islamic Banking Islamic banking, Islamic finance ( ''masrifiyya 'islamia''), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics. Some ...

system by setting up the Mit Ghamr Savings Bank in

Egypt Egypt ( , ), officially the Arab Republic of Egypt, is a country spanning the Northeast Africa, northeast corner of Africa and Western Asia, southwest corner of Asia via the Sinai Peninsula. It is bordered by the Mediterranean Sea to northe ...

in 1963. This took the form of a

savings bank A savings bank is a financial institution that is not run on a profit-maximizing basis, and whose original or primary purpose is collecting deposits on savings accounts that are invested on a low-risk basis and receive interest. Savings banks ha ...

based on

profit-sharing Profit sharing refers to various incentive plans introduced by businesses which provide direct or indirect payments to employees, often depending on the company's profitability, employees' regular salaries, and bonuses. In publicly traded compan ...

in the Egyptian town of

Mit Ghamr Mit Ghamr (, ) is a city in Dakahlia Governorate, Egypt and located on the banks of the Damietta branch. It is a major center producing aluminium accounting for more than 70% of Egypt's total production, especially aluminium utensils. Mit Ghamr ...

. The experiment lasted until 1967, by which time there were nine such banks in the country. These banks, which neither charged nor paid

interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...

(or ''

riba ''Riba'' (, or , ) is an Arabic word used in Islamic law and roughly translated as " usury": unjust, exploitative gains made in trade or business. ''Riba'' is mentioned and condemned in several different verses in the Qur'an3:130

'' in Islamic terminology), invested mostly by engaging in trade and industry, directly or in partnership with others, and shared the profits with their depositors. Thus they functioned in essence as saving-investment institutions rather than as

commercial banks A commercial bank is a financial institution that accepts Deposit (finance), deposits from the public and gives loans for the purposes of consumption and investment to make a Profit (economics), profit. It can also refer to a bank or a division o ...

. Subsequently, The Nasir Social Bank, established in Egypt in 1971, was declared an interest-free commercial bank, although its charter and title made no reference to

Islam Islam is an Abrahamic religions, Abrahamic monotheistic religion based on the Quran, and the teachings of Muhammad. Adherents of Islam are called Muslims, who are estimated to number Islam by country, 2 billion worldwide and are the world ...

Sharia Sharia, Sharī'ah, Shari'a, or Shariah () is a body of religious law that forms a part of the Islamic tradition based on Islamic holy books, scriptures of Islam, particularly the Quran, Qur'an and hadith. In Islamic terminology ''sharīʿah'' ...

, for fear of being seen as a manifestation of

Islamic fundamentalism Islamic fundamentalism has been defined as a revivalist and reform movement of Muslims who aim to return to the founding scriptures of Islam. The term has been used interchangeably with similar terms such as Islamism, Islamic revivalism, Qut ...

which was anathema to the ruling regime of Egypt at the time.

References

20th-century Egyptian economists Year of birth missing (living people) Living people {{Egypt-economist-stub