Herald of Steel

Chapter 1442: Two Types of Banks

The various nobles who suddenly wanted to meet with Prince Philips and rope him into their group did so with obvious purpose.

Getting the eldest son of the king to join their cause would be like getting the Moby Dick of legitimacy.

It was just too bad that their hastiness had led to their untimely detection.

Unbeknownst to them, they were being watched like a hawk even as they were just starting out.

But this was also perhaps a great showcase of why most of them were small houses to begin with. They lacked the necessary skills and experience to be competent, to covertly plot and scheme.

This was also one of the reasons why Alexander’s own reaction to such developments was one of relief and not much surprise.

It was only reasonable for a land that had managed to stave off the enormous Adhania’s expansion for millennia to not be subdued just after a few defeats.

The want to continue to resist was natural.

And towards this, Alexander really had no other option but to slowly use the time to grind them down, passing various policies and laws to slowly bring them to heel, and ’digest’ them.

If he were to instead try something drastic, such as arresting or killing the suspected nobles, the shock of it would likely only cause more such plots to surface, with more neutral nobles taking up the mantle.

This was because the simple fact was that Tibias had only been conquered, it had not been subdued.

So for now, he decided to tolerate these small fries, wishing to just contain them through a policy of slight appeasement.

The hope was that most nobles would find it not worth rebelling and without enough support, these extremist groups would eventually fizzle out.

Thus learning of the plot, Alexander only urged Camius to keep an eye out for any large movement and use his resources to get him regular updates.

The pasha would move only once he had strong enough evidence, or if the group tried to do something big.

....

Camius’s report was also the main reason he was trying to suck up to Lady Parthia so much regarding this money lending business.

Normally what he did in Zanzan should have never bothered the distant Tibian nobles. What did it matter to them if he collected some interest from unknown merchants?

But now, he did not want his action to become a kind of rallying cry for the group.

’Look! The outsider is a usurer. The spirit of our ancestors compels us to act!’ They could cry flying their war banners.@@@@

This was a possibility Alexander very much tried to avoid, especially if he was dealing with Ptolomy’s civil war at the same time.

Hence he tried to get Lady Parthia, one of the most respected voices within the Tibian nobility to support his act.

....

Now regarding the Tibian queen’s own thoughts on the matter of rebellion...

This is just like how you can buy stock at 10 dollars and sell it for 1,000 dollars, there is no problem.

No one will say it is unfair for you to make a 10,000% profit. You made an investment, you took a risk and you won.

Similarly, it is also halal for the banks to buy a part of the business in exchange for the loan.

So as long as it is profitable, they can continuously make money, doubling, tripling, or even getting a hundred times the money, just like you can buy dividend paying stocks and they will continue paying as long as it is profitable.

But if the business makes a loss, well then the bank gets nothing in that quarter. And if the business totally fails before the bank recoups its cost... well then the loan turns bad and all the money is lost.

So the caveat in all this is risk.

Whatever absurd deal an Islamic bank makes, there has to be some possibility of losing money in the deal.

You cannot charge a fixed interest on the loan with the condition it has to be paid back no matter what like the traditional banks.

Those banks will get their money back even if they have to sell your business, your houses, break your bones and if it was legal, sell even yourself.

But because the Islamic banks cannot guarantee their money back, they naturally take a lot more risks and thus demand a much higher reward.

In the same way, businesses face far less pressure in this system as they only have to pay back the loan if they make a profit and pay the amount as a proportion of the profits, not net income.

Because of these advantages, they naturally are asked to pay a lot more in total over a long time.

....

Now with the ruling on lendee done, let us move to the depositors who save their money in an Islamic bank.

Here too they defer from a traditional bank.

Whereas a normal bank pays its depositors a fixed interest from the profit it makes, with the Islamic institution, depositors also part take in the profit or loss.

So if the bank makes a profit, they get a percent of that earnings. And if it makes a loss, well tough luck, their savings also take a percent hit.

Thus instead of the traditional banks promising you, say, a 5% savings rate on your savings, the Islamic banks might offer some percentage of their profit based on your account health and how aggressive they want to be with their investments.

Also, yes, most Islamic banks will typically ask before they loan their money out to any businesses so that you know exactly where your hard earned money is going.

This is very much unlike the traditional banks which are under so such obligations

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