Yes, Islamic banks buy a cotton worth 10 million and sell it to a company at 11 million after one year or predefined period. In actual, no cotton is sold and only paper work is done. (leaking bucket #1)
Rupees 1 million profit that bank earns is as per interest rate set by state bank, if it is high, islamic banks profit is also high. (leaking bucket#2)
Now lets suppose a company that bought cotton from islamic bank at 10 million incurs a loss, in should return bank less amount but since return to islamic bank is set based on interest rates, bank earns a profit whereas company loss. No sharing in profit and loss. (leaking bucket#3)
Islamic banks only earn profits inline with interest rates and give less profits to its depositors in the name of islam until last year citing that they cant give fixed profits to depositors but when it comes to earnings, they charge inline with Interest rates (leaking bucket#4)
If a borrower do not return money back, it is penalised and penalised amount is then given to charity. Islam always lends support by sharing and do not penalise if financee fails to return money (Leaking bucket#5)
In islam trade is halal which means share profits and losses equally. Islamic banks do not do it.
This is excerpt taken from the article of miftah Ismael who is former finance minister of Pakistan.
Bro, can you share the main idea please?