Islamic Financial Markets

Islamic financial markets uphold the important role within the Islamic financial system as conduits of funds between surplus fund units (SFUs) with deficit fund units (DFUs) within the interest-free realm of Shari'ah, thus distinguishing itself from conventional markets that operate on the basis of interest. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Islamic Banking

Deposit Insurance Scheme
Authorizing the Buyer to Act as the Seller’s Agent in Buying from the Exporter and Selling to Himself
إجراء عمليات الشراء الآجل للعملات الأجنبية (Forward)
استثمار أموال البنك في الأسهم والعقارات
بطاقة الائتمان الإسلامية وفقاً لصيغة القرض الحسن
Murabahah Debt Restructuring with Central Banks as Guarantor
Murabahah Structure
Murabahah With Exporting And Importing Companies
احتساب نتائج المشاركة
Resolution No. 139 (5/15): Credit Cards
Resolution No. 136 (15/2): Al-musharakah Al-mutanaqisah And Its Shari’ah Rules
How Can Parallel IstiÎnÉÑ Be Structured?
Are Operational Leases and Finance Leases Both Considered Valid Lease Agreements?
What is the Ruling on a Lease Agreement That Culminates in Ownership?
Clarifications on Some Conditions of Partnership
Taking Bonds or Bills as Payment for Debts
Can an Investor Withdraw from an Investment Project before Its Term?
Is It Allowed to Use LIBOR as a Benchmark?
What is the Investment Procedure in Case an Investment Savings Account is Opened in a Foreign Currency?
Is a Guarantee against any Defect in the Product of Istisna‘ Allowed?
What Are the Rulings of Establishing a Real Estate Portfolio?
Is it Permissible to Enter in a Salam Contract for a Third Party?
What are the Shari‘ah Conditions for a Musharkah?
Resolution No. 129 (14/3): Contractor Agreements and Construction Contracts

Source of Funds

Investment Funds means Investment Account funds. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Leasing Fund: Calculating Zakah
Can an Islamic Bank Let Companies That Deal With Usury Have Current Or Investment Accounts?
Providing Customers No-Interest Loans to Trade Currency for Profit
The Owner of an Investment Deposit Account Relinquishes His Account to Other Depositors for an Agreed Price
What to Do with Profits from Investment Accounts Closed by Their Owners when the Old Address Is not Valid?
Can an Islamic Bank Fund Recreational Activities for Its Workers Using Depositor or Shareholder Funds?
The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 135th Meeting
RESOLUTION No. 86/3/95: "BANK DEPOSITS (Bank Accounts)"
How to Treat an Overdraft on an Investment Account?
Investment Deposit Account As Pawn in Murabaha Financing
قرار رقم 143 (1/16) بشأن زكاة الحسابات المقيدة وشركات التأمين الإسلامية والتأمينات النقدية ومكافآت نهاية الخدمة
احتياطي معدل الأرباح
دفع ضريبة عن مخصص مخاطر الاستثمار وقيدها على حساب الرصيد المتجمع في حساب مخاطر الاستثمار
دفع الزكاة عن أرباح أموال المساهمين أو الاحتياطيات
استثمار أموال البنك في الأسهم والعقارات
حساب فترة الوديعة الاستثمارية
الأرباح من وديعة الاستثمار
Can an Investment Deposit be Used as Security for a Deferred Payment Sale?
Does Profit-and-Loss Sharing Apply to the Shareholders’ Reserve Funds?
What is the Rule When an Unrestricted Investment Deposit Holder Wants to Withdraw His Deposit before the End of the Deposit Period?
Can a Charitable Organization Invest Donated Funds to Generate Income to Be Spent in Charity?
Can Real Estate Portfolios of Differing Status Be Merged Together?
When Should Profits Earned Be Credited to the Accounts of Investment Account Holders?
Can an Investor Withdraw from an Investment Project before Its Term?
Can a Condition of Investment Link the Right of Withdrawal to Relinquishment of any Share in the Profit or Loss?
Is It Allowed to Mix Deposits of Different Periods?
Can Investment Accounts Share in the Same Profit and Loss Calculation if They Are Opened on Different Dates?
How to Treat a New Deposit in a Mudarabah Investment Account?
Is it Allowed to Deposit Funds in a Conventional Bank in Exchange for Reduced Fees on Tawarruq Transactions?
Is It Allowed to Restrict the Right to Withdraw from an Investment Deposit Account?
What is the Investment Procedure in Case an Investment Savings Account is Opened in a Foreign Currency?
What is the Ruling on Withdrawal of a Deposit Made in Foreign Currency from an Investment Account Before the End of the Deposit Period?
Issues in Foreign Currency Investment
Is It Allowed to Invest Zakah Funds?
Is It Allowed to Participate in a Project Involving Contracts That Contain Some Prohibited Clauses?
Is it Allowed to Lease a Property and Build Residences to be Leased to the First Owner of The Property?
Is it Permissible in a Project to Accept Shares of Companies that do not Conform to Shari‘ah?
Is it Allowed to Purchase Existing Companies in order to Islamize them?
What are the Rules to be Observed Concerning Al-Yamamah Portfolio Account?
What are the Shari‘ah Conditions to Invest in a Fund?

Use of Funds

Retail Financing: Retail financing can be defined as financing activities where the main emphasis is on service for individuals rather than businesses and corporate entities. It is a business segment which delivers financial services through a network of outlets and service points.

Corporate financing deals with the corporate financial decisions of the financial institutions which involve both term finance and working capital finance. For further details see: ISRA, Islamic Financial System; Principles and Operations.

An Islamic Bank Has Multiple Accounts in Different Currencies with a Foreign Bank, Some Overdrawn and Some with Positive Balance
Is It Permissible for KFH to Issue a Statement for One of Its Customers Stating That He Has Such-And-Such Amount in His Account When He Does Not Actually Have That Balance?
Charging the Customer a Fee to Fix a Mistake Made by the Bank
The Bank Transfers Funds into a Client’s Account, Issues a Certificate That He Has That Amount in Available Funds, Then Withdraws What It Transferred
What Is to Be Done with Tellers’ Positive Discrepancies?
What Should Be Done with Small Cheques Issued to Accountholders Who Cannot Be Located or Contacted?
Buying Gold That Has Been Deposited with the Buyer
Can an Islamic Bank Buy a Company That Runs on Riba in Order to Change It?
Is It Permissible for KFH to Charge a Certain Fee to the Customer for Changing His Name in the Promissory Note to the Name of a New Buyer He Sold the Commodity to?
Is It Permissible to Sell a Specific Commodity to Someone for a Combination of Cash and Credit and to Calculate the Price on the Basis of All the Expenses?
Is It Permissible If the Producer Mistakenly Shipped the Commodity in the Name of the Customer Who Promised to Purchase It from KFH Which Ordered the Commodity in Its Name?
Can the Trade License Be Made Part of the Price When Selling a Business?
Is It Allowed to Sell a Government-Issued License to Undertake a Project?
Resolution No. 103: No permission to write any text on the back of a bill of exchange
Resolution No. 175: The impermissibility of the Corporation issuing the International Traveller Card (Iyābā)
اعتماد عمولة تغطية قيمة الحوالة وعمولة تنظيم تعهد قطع تصدير/ كتاب مسبق وعمولة تسديد تعهد
تحويل الأموال المجنبة من وحدة مصرفية إلى أخرى
دعم منظمة من الكسب غير المشروع
إمكانية مساهمة البنك في بعث صندوقين مشتركين للتوظيف
تحميل الوعاء العام مصاريف إصدار بطاقة التقسيط
كتابة الآيات القرآنية في دفتر الادخار
أرباح حساب الحج
أخذ البنك عمولة مقابل الخدمات المصرفية
تأمين البنك على أمواله وممتلكاته الخاصة
مخصصات معالجة الديون المشكوك في تحصيلها
Insurance Premium
Various Types of Banking Insurance
Islamic Financing Insured By Conventional Insurance
An Islamic Bank Has Multiple Accounts in Different Currencies with a Foreign Bank, Some Overdrawn and Some with Positive Balances
Stipulating that Customers not Deal with Competitors
Can a Customs Clearing Agent Charge Different Fees Based on the Value of the Goods?
Can an Islamic Institution Give a Non-Muslim Employee Leave to Celebrate His/Her Religious Holiday?
Can an Islamic Bank Use Photos That Include Women for Promotional Purposes?
What Is the Rule on Selling Cameras and Their Accessories?
Can the Employer Delay Payment of the Monthly Salary of an Employee under Probation?
Is the Ruling on an Employee Careless about Confidential Job-Related Information?
Is it Islamically Lawful for an Employer to Decline to Transfer the Work Permit of an Employee Who Resigns to Take a Better Offer?
Is It Allowed to Open an Account for a Minor Orphan with His Guardian Listed as His Father?
Can a Commercial Institution Distribute Cards in Mosques Containing Information about Its Activities?
Can 3-D Cartoon Characters Be Used in Displays Intended for Children?
Taking Bonds or Bills as Payment for Debts
Can Muslim Male Employees Work with a Non-Muslim Woman Who Does Not Dress According to Shari‘ah?
Can an Islamic Bank Accept Assignment of Rights Requested by Usurious Banks of Their Customers?
Issues Related to Point-of-Sale Service (KNET)
Are the Amounts Given to Employees for their Official Business Travel Considered Their Right?
Is It allowed to Sponsor Some Types of Sports?
What is the ruling on charging a nominal fee for withdrawing an investment deposit before the end of its period?

Trade Financing

An Islamic accepted bill (IAB) is a result of the securitisation of a murabahah Islamic trust receipt. The IAB is drawn to finance the trading of tangible halal goods and formulated based on the Islamic principles of murabahah (deferred lump-sum sale or cost-plus) and bay’ al-dayn (debt-trading). For further details see: ISRA, Islamic Financial System; Principles and Operations.

Islmic Letter of Credit (ILC) is a written undertaking given by the Islamic bank, to the seller (the beneficiary) at the request and on the instructions of the buyer (the applicant), to pay at sight or at a determinable future date, a stated sum of money within a prescribed time limit and against stipulated documents which must comply with terms and conditions. An Islamic bank may offer ILC under several shari'ah contract, namely wakalah (agency), murabahah (cost-plus profit) and musharakah (partnership).

The Purchaser Opens an LC for Delayed Payment in a Foreign Currency; the Bank Gives a Better Rate for Holding the Money till the Payment
Can the Guarantor Charge for the Guarantee?
LCs: Partial Coverage
Letter of Credit
Obtaining LCs Without Adequate Funds
Should an Islamic Bank Refuse to Open a Letter of Credit for a Buyer Who Is Planning to Resell the Purchased Commodity to the Government at a Huge Mark-up?
Should the Bank’s Fee for an LC Opened for an Estimated Sum Be Based on the Estimated or Actual Value?
Taking Commission On Issuance and/or Confirmation Of LCs
The Bank Charges a Fee for an LC as Compensation for Missing out on the Difference in Currency Exchange Rates
Is an Exporter’s Acknowledgement of the Opening of the LC Qabd? Can the Goods Then be Resold?
Is It Permissible for KFH to Open a Letter of Credit to Import Women’s Clothes That May Not Be Modest?
Is It Permissible for KFH to Deduct Expenses from the Customers’ Accounts After the Value of Goods Has Been Already Assessed in Murabahah Letters of Credit?
Is an Application for Documentary Credit That Lacks Detail Valid?
Who Has the Right to Profits Earned on Investment of Funds Sequestered to Secure an LC?
A Correspondent Bank Wants to Charge the Islamic Bank a Fee for Its Part in Issuing a Letter of Guarantee. Can the Islamic Bank Tell It to Charge the Customer?
Is It Permissible in a Murabahah Contract to Add a Condition That KFH Shall Not Pay the Producer the Price for the Goods Until After They Have Been Tested and Approved?
Would KFH Be Held Responsible in Case the Shipping Company Acknowledged That the Goods Were Sound But Then Failed to Make the Delivery?
A Murabahah Sale in Which the Intermediate Seller Stipulates That the Original Seller Will not Be Paid until the End Buyer Tests It
An L.C. Application Missing Details about the Goods to Be Purchased
Can an Islamic Bank Facilitate the Import of Meat That Is Not Islamically Slaughtered?
Can an Islamic Bank Sequester Funds in the Account of a Customer Who Applies to Open an L.C.?
Can the Murabahah Seller Raise the Markup if the Deal Involves Advance Payment That Will Extend the Deal’s Timeline?
Can the Seller in a Murabahah Sale Retain the Goods as Security until the Buyer Pays for Them?
Damage to or Loss of the Purchased Good
Delay In Receiving The Goods
How to Terminate a Pre-Existing Contract in Order to Effect a Murabahah Sale?
If the Goods Arrive before the Documents, and the Intermediate Seller Doesn’t Know the Actual Price, Can the Deal Be Switched to Musawamah?
Informing the Customer of LC Expenses after the Sale Contract Has Been Signed
Insurance Compensation for Damaged Goods Exceeds the Actual Loss; What to Do with the Excess?
Period Of Verification
The Buyer Guarantees the Reliability of a Fraudulent Exporter. Who Is Liable?
The Buyer Pre-Signs a Murabahah Contract and Deposits an Advance Payment before the Seller Buys the Goods
The Purchase Undertaker Requests the Intermediate Seller to Pass on Insurance Compensation for Damaged Goods
The Purchase Undertaker Wants to Avoid the Expense of a Third-Party Inspector of the Goods before Shipment
التعامل مع شركات التأمين التقليدي
Murabahah With Exporting And Importing Companies
Using Murabahah In Cigarette-Related Sales
Various Issues
When the Goods Arrive before Their Shipping Documents
When the Purchase Undertaker Is a Distribution Agent for the Exporter
If Some of the Goods Are Damaged, Must the Price Be Adjusted?
Buying a Good When the Importer Can’t Pay for It; Then Selling it to Him
Trading in Statues
The Agent Buys the Good Back from the Principal
Can an Islamic Bank Charge a Fee for Changes to the LC Made by Telex?
How Should an Amount Transferred from a Savings Account to an Insurance Account Be Considered?
Is It Allowed to Set a Minimum Fee for Opening a Documentary Credit?
Is it Allowed for a Nominated Bank to Take a Commission for Opening a Documentary Credit?
Issues in Deferred Payment Documentary Credits
Is It Allowed to Take a Commission on Issuing Letters of Guarantee and Confirmation of Documentary Credits when Dealing with Foreign Banks?
Is It Allowed to Enter in a Murabaha Contract as an Agent?

Islamic trust receipt (ITR) is a financing facility to finance domestic or international trade documents drawn against ILC or wakalah inward bills for collection. Islamic banks issue the ITR facility to the customer based on the murabahah principle for financing the purchase of goods. It is a document of trust signed by the customer (importer); the strength on which the Islamic bank allows the customer (importer) to obtain release of the merchandise but makes a lump-sum payment at a later date. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Islamic Shipping Guarantee is an indemnity document issued by a bank that allows the importer to take possession of shipped goods from a shipping company in the absence of the original transport document (bill of lading or airway bill). This indemnity document is presented by the importer to the carrier or the agent so that the goods can be released in the event that the cargo arrives prior to the shipping documents. The document indemnifies the shipping company for any financial consequences incurred due to the release of the cargo without the presentation of a bill of lading. It helps importers to quickly collect goods and thus avoid high port demurrage charges, which facilitates smooth running of the business and minimises damage to goods due to delays.

Islamic Bank Guarantee (IBG) is an indemnity letter issued by an Islamic bank to the customer in the form of a guarantee under the principles of kafālah in which the bank becomes liable if the customer fails to perform his obligation to the third party. It is a binding written obligation issued by the bank to assure the beneficiary the due payment as specified in the letter of guarantee if any form of default occurs by its customer. This facility usually functions to protect beneficiaries (e.g., government departments and statutory bodies) against non-fulfillment of the bank customer’s obligations. Thus, the issuing bank undertakes the risk and liability on behalf of the beneficiary. In return, the customer pays a certain amount charged by the bank. If the customer fails to fulfill his obligation, the issuing bank will pay the beneficiary and claim accordingly from the customer to reimburse the payment made.

Can an Islamic Bank State in an L.C. or Letter of Guarantee That the Fee Charged by a Conventional Bank Shall Be Obtained from the Beneficiary?
Resolution No. 12 (2/12): Letter of Guarantee
Can an Islamic Bank Issue a Guarantee for a Contractor Doing Work for a Conventional Bank?
Can the Murabahah Seller Take a Mortgage from the Purchase Undertaker before It Buys the Subject of the Contract?

Mezzanine financing


Treasury Securities

Money market enables Islamic financial institutions to maintain optimal liquidity thereby allowing them to meet the demand of their customers at any time.

Hibah In Inter-Bank Mudharabah Investment Contract

The market in which participants are able to buy, sell, exchange and speculate on currencies. The forex markets is made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors.

Can the Bank Inform the Investor of His Expected Profit in Commodity Murabahah with Variations Based on the Currency Used?
A Forex Option
An Islamic Bank Has an Account in Foreign Currency with a Foreign Bank and Vice Versa. Can They Treat Each Other’s Deposits as Non-Interest Loans for Investment?
Changing a Check in a Foreign Currency; What Day’s Price Should Be Recorded?
Dollars Are Purchased at Different Prices on the Same Day; Which Price Should the Customers Be Charged?
The Customer Requests a Bank Draft to Cash It with a Foreign Bank, which Will Charge a Fee for Cashing It. Does the Issuing Bank Have to Inform the Customer about the Fee?
RESOLUTION No. 84/1/9: GOLD TRADE, SHARI'A SOLUTIONS FOR COMBINED CASH AND TRANSFER PAYMENTS
Resolution No. 105: The permissibility of borrowing in deutsche marks and lending in US dollars to avoid price volatility
Resolution No. 110: Selling foreign currencies to clients for less than the market price in order to encourage them to deal with the Corporation
The Exchange Rate to Be Used on an Unexpected Deposit by a Third Party for a Customer in a Correspondent Bank When Knowledge of the Deposit is Delayed
اعتماد عمولة تغطية قيمة الحوالة وعمولة تنظيم تعهد قطع تصدير/ كتاب مسبق وعمولة تسديد تعهد
انخفاض قيمة العملة
دفع الأرباح المستحقة للودائع بالعملات الصعبة
أرباح الودائع بالعملة الصعبة
استثمار البنك ودائع العملاء بالعملة الصعبة وردها بالعملة نفسها
عمولة صرف عملة
مشروعية شراء دولار الحوالات بالدولار النقدي
مشروعية تداول العملات في عمليات الصرف قبل تقييدها حقيقة في الحساب
الصرف المؤجل للعملات المختلفة الجنس
بيع البنك عملة أجنبية لجهة ما بسعر يحدد مسبقًا
قيام البنك بإيداع وديعة لدى أحد البنوك الذي يبيعه أجنبية بسعر شراء البنك المركزي
What is the Investment Procedure in Case an Investment Savings Account is Opened in a Foreign Currency?
Revisiting the Ruling on Terminating an International Murabahah Deal before Its Term
Is it Allowed for a Partner to Replace his Customer in a Foreign Currency Investment?

Can an Islamic Bank Take Treasury Bills as Payment for Goods Purchased from It?
Taking Bonds or Bills as Payment for Debts

Wealth Management


Asset Management


Islamic Banking Facilities

Islamic Credit Card Based On Bai' 'Inah
Resolution No. 108 (2/12): "Credit Cards"
RESOLUTION No. 102/4/10: CREDIT CARDS
Is It Allowed to Charge a Late Penalty on a Credit Card Holder if He Misses a Payment?
RESOLUTION No. 78/9/8: CREDIT CARDS
Resolution No. 179: The Corporation issuing a free Iyābā card for subscribers to the Visa gold card
مشروعية تعامل البنك مع شركة الماسترد كارد لبطاقات الائتمان
بطاقة الائتمان الإسلامية وفقاً لصيغة القرض الحسن
Can a Credit Cardholder Refuse the Life Insurance Contract That Comes with It?
When the Award for Personal Accident Insurance Exceeds the Diyah
Resolution No. 139 (5/15): Credit Cards
Can an Islamic Bank Give a Credit Card as a Prize to Murabahah Buyers and Add the Cost of the Card to the Murabahah Base Price?
What is the Rule on an Islamic Bank Issuing Credit Cards or Acting as an Intermediary to Issue Them?
Can a Bank Take a Commission from Merchants Who Accept Its Debit Card for Payment?
Is It Allowed to Charge a Fee for Foreign ATM Withdrawals in Addition to the Currency Exchange Fee?
What Is the Shari‘ah Ruling on Enabling Visa Electron Cardholders to Make Withdrawals from KFH’s ATM Machines?
What Is the Shari‘ah Ruling on Enabling Holders of Visa Cards Issued by Other Banks to Make Withdrawals Using KFH’s ATM Machines?
What Is the Ruling on Enabling Holders of Visa Cards Issued by other Banks to Make Withdrawals Using KFH’s ATM Machines? (2)
What is the Ruling on Providing Additional Services That Include Life Insurance to Visa Gold-Card Holders?
Some Conditions for Issuing a Visa Card

When securing a loan, the fi rm and the bank negotiate the amount, the maturity, and the interest rate, as well as any binding covenants that might be included. Aft er an agreement is reached, both parties sign the debt contract, which is sometimes referred to as a promissory note. For further details, see Fundamentals of Corporate Finance.

Resolution No. 152: The Trade Line Scheme that the Corporation wishes to use in dealing with its clients
Is it Permissible to Charge a Fee for Cashing a Check in a Foreign Currency?
Which Day’s Exchange Rate Should Be Used in Repaying the Bank for Withdrawals on a Bounced Foreign Check?
Who Should Bear the Exchange Difference when Cashing a Check in a Foreign Currency?
Is it Lawful to Ask the Guarantor for a Guaranteed Check as a Security Deposit?
Changing a Check in a Foreign Currency; What Day’s Price Should Be Recorded?
Charging a Fee for Travelers’ Checks in a Foreign Currency
Is the Conventional Procedure for Dealing with Lost Checks Acceptable?
Selling Traveler’s Checks
The Customer Requests a Bank Draft to Cash It with a Foreign Bank, which Will Charge a Fee for Cashing It. Does the Issuing Bank Have to Inform the Customer about the Fee?
Can a Customer Islamically Transfer a Traveler’s Check to Another Person in the Same Currency?
Can an Islamic Bank Charge a Customer for Writing a Bounced Check?
Resolution No. 155: The permissibility of the Corporation charging commissions for selling or collecting back traveller’s checks
Resolution No. 184: Gifts offered by the Corporation to its clients for purchasing traveller’s checks
Can the Seller in a Murabahah Sale Retain the Goods as Security until the Buyer Pays for Them?
Delay In Receiving The Goods
بيع البنك عملة أجنبية لجهة ما بسعر يحدد مسبقًا
If a Customer Cashes a Cheque Drawn on a Foreign Bank, Should the Exchange Rate Be from the Day of Cashing or the Day the Cheque Clears?
Can an Islamic Bank Charge a Fee for Issuing a Bank Draft?
Who Bears Liability When a Cheque Is Lost in the Clearing Process?
Is a Customer Allowed to Transfer Funds from His Savings Account to His Current Account?
Is It Allowed to Charge a Fee for Foreign ATM Withdrawals in Addition to the Currency Exchange Fee?
Is It Allowed, When Issuing a Bank Draft, to Include the Cost of a Procedure the Customer Might Not Use When Cashing It?
What Is the Ruling on Buying Currencies?
What Is the Shari‘ah Ruling on Charging a Fee to Issue a Bank Draft?
Charging Fees on Services
What is the ruling on charging a nominal fee for withdrawing an investment deposit before the end of its period?

Resolution No. 53/4/6: Possession: its different forms, especially its modern forms and their rules

Islamic Money Market

The tenure in money market transactions is from overnight to 12 months, although the most common tenure is three months or less. Hence, the money market is often characterised as the market for short-end debts. In many countries, transactions in the primary and secondary money markets take place over-the-counter (OTC) via electronic telecommunication but some are done in an exchange market. Capital market caters for long-term financial transactions with maturities longer than 12 months. The financial instruments in the capital market vary more than the money market and they include sukuk, bonds, and equities. Transactions in capital market instruments are either exchange traded or OTC. For further details see: ISLAMIC FINANCIAL SYSTEM: Principles and Operations.

The term money market instruments refers to short-term investment papers including long-term instruments such as government securities that have almost reached their maturity date. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Bai' 'Inah Transactions In The Money Market
Hibah In Inter-Bank Mudharabah Investment Contract

Bai' 'Inah Transactions In The Money Market
Hibah In Inter-Bank Mudharabah Investment Contract
The Shari’ah Ruling On Currency Trading
‘When Issue’ Transaction
Sale Of The Tawarruq Asset By The Customer To The Third Party: Issue Of Delivery And Payment

Islamic Capital Market

The Islamic Capital Market (ICM) has been expanding worldwide, from the Middle East and Asia Pacific regions in the 1990s to include other geographical regions like Europe, the Americas and the global offshore markets in the 2000s. While some countries are at an advanced stage of development, others still find themselves at an early stage putting into place the appropriate infrastructural set-up for ICM operations to kick off. For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.

Sukuk: The most common Arabic term used for Islamic securities in the market today is sukuk (plural for sakk). Literally, sukuk means certifications. Some have defined sukuk as papers representing financial obligations arising from trade and other commercial activities while others have defined sukuk as similar to trust certificates which represent a share in an asset or business venture. AAOIFI defined sukuk as "certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services, assets of particular projects or special investment activity". IFSB defined sukuk as "certificates that represent the holder's proportionate ownership in an undivided part of an underlying asset where the holder assumes all rights and obligations to such asset". Securities Commission Malaysia (SC) defined sukuk as "document or certificate which represents the value of an asset".

Resolution No. 137 (3/15): Sukuk Al-ijarah
قرار 188 (3/20) بشأن استكمال موضوع الصكوك الإسلامية
What Is the Ruling on the Islamic Lease Sukuk for the Government of Bahrain?
Is It Allowed to be a Lead Manager for Sukuk that are not Tradable in the Secondary Market?

Although sukuk are generally viewed as a contemporary class of Islamic financial instruments, their usage can be traced back to the 1st Century AH during the Umayyad Caliphate. For further details see: ISRA, Islamic Financial System; Principles and Operations.

قرار 188 (3/20) بشأن استكمال موضوع الصكوك الإسلامية

The regulatory framework for Islamic banking focuses primarily on regulating the banking and financial institutions as licensed entities, on the broad presumption of a debtor-creditor relationship between the industry players and the participating public. The ICM, however, focuses primarily on regulating activities, on the broad presumption of an investor-investee or investor-investment manager relationship between the industry players and the participating public. For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.

AAOIFI Shari’ah Resolutions: Issues On Sukuk
قرار 188 (3/20) بشأن استكمال موضوع الصكوك الإسلامية
قرار رقم 178 (4/19) بشأن الصكوك الإسلامية ( التوريق ) وتطبيقاتها المعاصرة وتداولها
Is It Allowed to Subscribe to The Sukuk of the National Central Cooling Company (Tabrid) in the United Arab Emirates?

One of the most common sukuk classifications is based on the underlying Shari'ah contracts. These include BBA, murabahah, salam, istisna’, ijarah, musharakah, mudarabah and wakalah. For further details see: ISRA, Islamic Financial System; Principles and Operations.

AAOIFI Shari’ah Resolutions: Issues On Sukuk
Sukuk Murabahah of a Company That Mines Gold
Resolution No. 156 (5/17): The Completion Of Sukuk Al-Musharakah: The Components Of Its Assets
The Final Statement And Decision Of the 22nd Al-Baraka Forum On Islamic Economics: Kingdom of Bahrain, 1423 H.A., 2002
قرار رقم: 196 (2/21) بشأن استكمال موضوع الصكوك الإسلامية
قرار 188 (3/20) بشأن استكمال موضوع الصكوك الإسلامية
قرار رقم 178 (4/19) بشأن الصكوك الإسلامية ( التوريق ) وتطبيقاتها المعاصرة وتداولها
آلية أخذ الموافقة الشرعية للعمل بالصكوك الإسلامية
إمكانية صياغة صكوك مشاركة تمويل محفظة
Resolution No. 181 (19/7): Regarding endowing shares, sukuk, material rights and benefits
Is it Allowed to Securitize the Assets owned by The State?
Is it Allowed to Manage the Surplus Liquidity of the Islamic Financial Institutions by Purchasing Government Sukuk that are Approved By Bank Negara Malaysia?
Is It Allowed to be a Lead Manager for Sukuk that are not Tradable in the Secondary Market?
Is it Allowed to Trade in Sukuk Istisna’ when the Project Becomes a Tangible Asset?
Is it Allowed to Enter in a Diminishing Partnership with a Party Appointed as an Agent to Manage the Asset?

The Islamic Capital Market (ICM) operates alongside the conventional financial system in which many of its supportive institutions either do not exist or are underdeveloped. For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.

The equity market is a market where company shares, securities, and other instruments are traded under a stock exchange or in the over-the-counter (OTC) market. The market facilitates the fl ow of funds from individuals and institutional investors to corporations, as well as between investors. The market allows those with surplus funds to put their money into investments which give them returns and enables corporations to fi nance investments and new business ventures. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Similar to conventional Structured Investment Products (SIPs), Islamic SIPs are also structured such that they are linked to or benchmarked against the performance of certain underlyings, which include equities, commodities and real estate. For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.

What are the Shari‘ah Conditions that Allow Purchasing Shares of Companies?

Corporations and government agencies use a primary market to raise funds from initial buyers of a security, such as a bond or a stock. For further details see: ISRA, Islamic Financial System; Principles and Operations.

A secondary market is a financial market where existing securities are bought and sold. For further details see: ISRA, Islamic Financial System; Principles and Operations.

A contra transaction is defined as a transaction where a participating organisation allows its client to settle outstanding purchase positions against outstanding sale positions of the same securities where the orders in respect of the purchase and sale transactions are transacted within the period stipulated by the Fixed Delivery Settlement System (FDSS). For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.

No industry can be completely immunised from issues and problems. These problems may either stem from internal faults which need to be improved over time or from external factors which require some reforms. For further details see: ISLAMIC CAPITAL MARKETS: Principles & Practices.


What Would the Transactions of Global Stock Market Be Called?

Takaful and Retakaful

The essence of takaful could be seen in the system of mutual help in relation to the custom of blood money under the ancient Arab tribal custom, and eventually was approved by the Prophet (p.b.u.h.). The basis of shared responsibility in the system of “aqila”, as practised between Muslims of Mecca (muhajirin) and Medina (ansar) laid the foundation of mutual insurance. This practice was then followed by the Prophet’s companions. Aqila is non-commercial in nature and is aimed at helping those in need without demanding contractual payments. Instead, it is motivated by the sense of brotherhood and mutual responsibility to help fellow members of the tribe who are in need of contribution. For instance, in case of unintentional murder involving two different tribes, the accused person’s paternal relatives will bear the responsibility of paying the blood money which is pooled from the group members’ contributions to the victim’s relatives. For further details see: Islamic Financial System; Principles and Operations.

Takaful stakeholders are the takaful operator, participants, nominees and beneficiaries. All these parties are dependent on each other to ensure the smooth running of a takaful practice. The main parties to a takaful contract are the operator and participants. For further details see: Islamic Financial System; Principles and Operations.

In general, there are two types of takaful: general takaful and family takaful, which is comparable to life insurance.

As in the case of reinsurance, there are two types of ReT arrangement available for takāful companies: treaty retakāful and facultative retakāful. In treaty ReT, a TO is contractually bound to cede, and the RTO is bound to assume, a specified portion of a type or category of risks taken by the former. In this form of ReT, the retakāful companies do not separately evaluate each of the individual risks covered under their treaties and are dependent on the original risk underwriting decisions made by the ceding company’s primary policy writers. Therefore, the evaluation process and capability of the ceding companies are taken into account when pricing the treaty. Facultative retakāful, on the other hand, is negotiated separately for each takāful policy taken by the ceding TO. For further details see: ISRA Research Paper; Retakaful: Risk Sharing vs. Risk Transfer: An Examination from the Shari’ah Perspective

There are currently four takaful models operated worldwide which apply to several forms of contract governing the relationship between participants and the takaful operator. The most widely practised models are mudarabah and wakalah. Some takaful operators adopt a hybrid model either combining mudarabah and wakalah or wakalah with waqf model or even mudarabah and waqf. However, the most commonly used contracts are mudarabah (profit-sharing), wakalah (agency) and waqf (endowment). For further details see: Islamic Financial System; Principles and Operations.

Despite the takaful industry expanding at an exponential rate, and with a few models developed reflecting its versatility, there are still some fiqh issues which some Muslim jurists have raised. The fact that takaful operation differentiates itself on the premise of tabarru’ rather than premium, this raises some fiqh discussions. The nature of donations has been viewed with scepticism by some Muslim scholars as it is supposed to be a unilateral rather than bilateral contract, unlike the conventional insurance contract. For further details see: Islamic Financial System; Principles and Operations.


قرار رقم: 200 (6/21) بشأن: الأحكام والضوابط الشرعية لأُسس التأمين التعاوني
قرار رقم 143 (1/16) بشأن زكاة الحسابات المقيدة وشركات التأمين الإسلامية والتأمينات النقدية ومكافآت نهاية الخدمة
Resolution No. 9 (9/2): Concerning Insurance And Reinsurance

Others


Ta'widh On Judgement Debt
Any Link between the Insurance Settlement for Damaged Goods and the Seller’s Settlement with the Purchase Undertaker?
Overcompensation by the Insurance Company above the Actual Damage
The Purchase Undertaker Does Not Want the Intermediate Seller to Incur Added Expenses for Insurance against Certain Risks (1)
The Purchase Undertaker Does Not Want the Intermediate Seller to Incur Added Expenses for Insurance against Certain Risks (2)
The Purchase Undertaker Requests the Intermediate Seller to Pass on Insurance Compensation for Damaged Goods
عمولة شركات التأمين على السلع المبيعة مرابحة
استعمال العائد الذي يتلقاه بنك البركة من بنك الجزائر لتسديد حصة البنك في شركة ضمان الودائع المصرفية
بطاقة الائتمان الإسلامية وفقاً لصيغة القرض الحسن
عمولة شركات التأمين على السلع المبيعة مرابحة
إضافة الاستثمارات إلى الاحتياطي الأساسي
مسؤولية العميل عن التأمين في معاملات المشاركة
الجهة التي تتحمل تكاليف التأمين في المرابحة
التعامل مع شركات التأمين التقليدي
تحمل المشتري البضاعة المراد شراؤها بالمرابحة
قيام البنك عند تلف البضاعة المستوردة باستيفاء مبلغ من شركة التأمين يزيد عن المبلغ الذي دفعه البنك
تأمين البنك على أمواله وممتلكاته الخاصة
Insurance Premium
Hibah In The Takaful Industry
When the Customer Can Be Charged for Shipping and Insurance
An Insurance Company Pledges to Collect Debts and to Pay the Debts It Can’t Collect
Can a Credit Cardholder Refuse the Life Insurance Contract That Comes with It?
Transferring the Right to Benefit from Insurance to a Purchase Undertaker after the Sale
Islamic Financing Insured By Conventional Insurance
Can a Muslim Company Agree to a Non-Muslim Employee’s Demand for Comprehensive Life Insurance as a Condition of Employment?
Can a Buyer of Insurance Sell the Policy to a Third Party?
Is It Allowed To Require the Lessee To Get Comprehensive Insurance for the Car and Assign the Lessor as the Policy’s Beneficiary?
Is It Allowed to Buy Shares of a Conventional Insurance Company in Order to Convert It into a Cooperative Insurance Company?

Islamic Financial System ©

 

 


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