The Art of Islamic Banking and Finance: Tools and Techniques for Community-Based Banking

language and accounting principles and abiding by all U.S. accounting regu-
lations, principles, and standards. However, that does not prevent the RF
banker from thinking and constructing an (internal) RF bank balance sheet,
based on the RF principles detailed in this book, without violating the Fi-
nancial Accounting Standards Board (FASB) rules and regulations. RF
banking and financing is about style, philosophy, mode of operation, char-
acter, and mindset. This prompts the RF management to look at different
parts of the balance sheet with an RF perspective, upholding the laws of the
land while also upholding Shari’aa. Exhibit 12.1 contains a table that
attempts to contrast the RF bank’s balance sheet with the conventional
riba-based bank balance sheet.

Please note that the income and expenses of the bank are handled in
another financial statement, which accounts for all the income sources of
the bank and its expenses.

EXHIBIT 12.1 RF bank balance sheet versus conventional riba-based bank
balance sheet.

Riba-Based Conventional Bank RF Bank

Assets Assets

Investments:

Federal funds sold

Interest-Bearing Deposits

Investments:

Federal funds sold

Short-Term RF Credits

Loans Asset/Service-Based Credits/Investments

Commercial

Real Estate

Consumer

Commercial

Real Estate

Consumer

Liabilities Liabilities

Interest-Bearing Deposits:

NOW, Money Market,

Savings

Time Certificates of Deposit

Matched Rent/Income-Generating Deposits:

RF NOW, RF Money Market, RF Savings

RF Certificates of Deposit

Shareholders’ Equity Shareholders’ Equity

Operating an RF Bank in the United States 339