COST OF FUNDS – IS IT A PART OF ACTUAL LOSS (TA’WID)?

The understanding of the cost of funds from both the conventional and the Islamic perspective differs significantly. From the conventional perspective, the cost of funds is identified as the interest cost of borrowing money expressed as a percentage. It is simply understood as the interest rate paid on an outstanding loan. The parties involved in giving out loans to the banks include savings and current account depositors, lenders through the currency market, deposits and investment certificates holders, etc.