University Islamic Banks vs. Other Banks: What’s the Difference?



MUSLIMCREED In the past few years, a new type of bank has emerged in Indonesia called Islamic banks or university Islamic banks (UIB). They are different from the regular private banks in many ways. This article aims to explore what are the differences between UIBs and other private banks in Indonesia, as well as its pros and cons.



The first university Islamic bank was established in Jordan in 1977 by a group of students at Cairo University studying banking and finance. In 1982, the first university Islamic bank in the United States was opened by Muslim students at The Ohio State University. 

Today, there are more than 150 university Islamic banks operating in 37 countries worldwide. A university Islamic bank is a cooperative venture between various banks that cater to Muslim customers, which is sponsored by an accredited academic institution. These types of banks offer financial services to individuals and corporations that meet their Shariah guidelines.

Read : Exciting news for university students – the Islamic bank program will be back in 2022!

Types of Customers

One of the main differences between a university Islamic bank and other banks is that university Islamic banks are only open to students, faculty, alumni and parents of current students. The other difference is that they will not be doing any financing deals with alcohol companies or businesses that deal in pork products or entertainment like concerts, movies, etc. – In contrast, other banks don’t have these restrictions and have a much broader customer base 

– Students at these universities are typically more devout Muslims and it would therefore make sense for the school to cater to this specific group


Many people are under the impression that university islamic banks are very different than other banks, but in reality they’re not that different at all. University islamic banks have a religious affiliation, which means they abide by Islam’s guidelines when doing business and don’t use interest or charge credit cards fees (2% and 18% respectively). 

In order to open an account with one of these banks you must show documentation proving your Muslim faith, for example you must be able to recite certain verses from the Quran. As long as you have this document on hand, opening an account with one of these banks is relatively easy. The difference between university islamic bank and other bank has more to do with what products each offers rather than how it does business.

Read : University bank launches new islamic banking division – get your questions answered here!

Business Model

UNIVERSITY ISLAMIC BANKS are usually smaller and more personal than their counterparts, with an emphasis on their local communities. 

UNIQUE FEATURES OF UNIVERSITY ISLAMIC BANKS include not charging interest on loans, providing ethical investment opportunities, and often having a social responsibility component to what they do as well. Contrary to popular belief, university Islamic banks are subject to the same international banking regulations and standards as other banks in their countries of operation. 

University Islamic banks provide services such as retail banking, corporate finance, consumer finance and other types of financing for business projects or mortgages.

Products and Services

At University Islamic Bank, our primary focus is on meeting the needs of Muslim individuals and families in North America who are looking for financial services that comply with their faith. We offer a wide range of products and services including checking accounts, savings accounts, certificates of deposits (CDs), mortgages, home equity lines of credit (HELOCs), car loans, student loans, business banking and more.

Read : The American Islamic University: A Hub of Religious and Academic Tolerance


The term university Islamic bank is a relatively new one, and is used to describe financial institutions that provide shari’ah-compliant services to students, faculty and staff at universities in Muslim-majority countries. The first university Islamic bank was established in 1988 at Istanbul University in Turkey, with more being established throughout the 1990s as other universities recognized their potential as an attractive investment opportunity for investors seeking shari’ah-compliant investments.

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