Islamic Financial System ©

The structure of the Islamic financial system is similar to the structure of the conventional financial system. In other words, the Islamic financial system comprises financial institutions (Islamic banks, Islamic insurance (takaful) companies, Islamic mutual funds and other finance companies) and markets that also bring lenders and borrowers together. Likewise, Islamic financial institutions (IFIs) and markets facilitate the channelling of investable funds from surplus fund units (SFUs) to deficit fund units (DFUs). However, under the Islamic financial system, Islamic financial markets, institutions and instruments operate in line with Shari'ah rules and principles. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Shari'ah Frameworks & Principles

Shari’ah principles are the foundation of the practice of Islamic finance through the observance of the tenets, conditions and principles espoused by the Shari’ah. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Literally, the word 'aqd (contract) is derived from the Arabic verb 'aqada which means to tie, to conclude or to ratify. Al-'aqd as a verbal noun means al-rabt which denotes tying or correlating. Muhammad Qadri Basha defines 'aqd technically as the connection of an offer (ijab) emanating from one of the two contracting parties with the acceptance (qabul) of the other party in such a way that constitutes an implication on the subject matter. As a result of this connection, both parties fall under obligation to one another. Muhammad Abu Zahran defines it as a connection between two sayings (of the two contracting parties) from which arises a legal ruling which is applicable to one party or both of them. It can be said that the above two definitions emphasise that 'aqd is made of a connection between the words of the offeror and the words of the offeree which thereafter creates legal consequences on the subject matter and constitutes contractual obligations binding upon the contracting parties.

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?
Is an Exporter’s Acknowledgement of the Opening of the LC Qabd? Can the Goods Then be Resold?
Who Bears the Loss in a Mudarabah Venture?
Hibah In Inter-Bank Mudharabah Investment Contract
Dual Promise in Commodity Murabaha
Sale And Buy-back Agreement (Repo)
Contract Of Sale And Currency Trading
Deposit And Financing Products Based On Tawarruq
Can a Fee Be Charged to Transfer a Lease Agreement from One Tenant to Another?
Can a Tenant Cancel a Lease Agreement before Using the Usufruct?
A Promise to Buy or Sell Gold or Silver at a Future Date
Can the Bank Use Two Different Rates to Sell Foreign Currency?
Charging One Price for a Simple Sale of Foreign Currency and another Price for a Foreign Exchange plus Remittance
Forward Foreign Currency Transaction
Is the Exchange of Two Different Currencies Considered Like an Exchange of Gold for Gold?
Leasing an Asset to Someone Who May Use It for Unlawful Acts
Insurance Expenses Paid by Lessee
Who Bears the Expenses for Executing New Building Code Requirements Imposed after the Construction Contract Has Been Signed between the Subcontractor and the Bank?
Who Bears the Expenses for Inadvertent Mistakes in Administering a Building Contract?
Entry of the bank's real estate administration beside others into a tender offered by the bank for bidding
The conditional change in case works are not completed
Is It Permissible for KFH to Sell Goods Before Settling Their Invoice and Even Before They Reach KFH Providing That the Ownership of Goods is Recorded in KFH Name?
Is It Permissible to Oblige a Client to Buy a Car from KFH in Exchange for the Purchase of His Used Car by a Third Party?
Stipulating Conditions In An Agency Contract
Is It Permissible to Buy Photographic Equipment from a Company and Stipulate That the Company Should Take the Old Photographic Equipment That Is in Our Possession?
Is It Permissible to Buy Commodities by Cash from a Number of Commercial Firms And After Receiving Them Keep These Purchased Goods Separately in the Seller’s Warehouse?
Is It Allowed for KFH to Sell Gold to Its Customers After It Has Purchased It and Credited to the Owner’s Account?
Is It Permissible for KFH to Enter into a Contract with an Option Clause?
Is It Permissible for KFH to Enter into a Foreign Currency Contract with a Client Who Also Ordered KFH to Purchase Goods from a Foreign Seller and Sells them to Him on Deferred Basis?
Is It Permissible for KFH to Purchase Goods from an Exporter By Using the Commercial License of an Authorized Person Who Has Permitted KFH to Use His License?
A Stipulation That Doesn’t Impede the Legal Implication of the Deal
Can a Seller Stipulate That the Buyer Lease the Property to Him after Purchasing It?
Can an Islamic Bank Sell by Murabahah to a Usurious Institution That Will Probably Sell the Goods by Interest-Based Deals?
Is It Permissible for KFH to Enter into a Sale Contract with a Party Who Stipulates That KFH Should Not Sell the Commodity It Purchases to Other Whole Sale Companies?
What Is the Rule on Purchasing Gold Jewelry Set with Gems on a Deferred Basis?
Is It Permissible for Any Party of the Contract to Increase the Value of the Contract After Signing It and Concluding the Sale?
Is It Permissible to Specify a Period of a Binding Selling Offer Made By KFH to a Client?
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?
Is It Permissible to Buy Goods Which Are on a Ship at Sea by the Testimony of the Carrier and Then to Sell These Goods by Making the Carrier an Agent?
What Is the Date That Is Given Consideration in Determining the Conclusion of the Contract from a SharÊÑah Point of View?
Is It Permissible to Make a Contract on Goods with a Stipulation That the Seller Is Free From Responsibility for Any or All Defects?
Will Shipping the Goods on the Request of the Purchase Undertaker Be Considered as Only Taking Possession Without Ownership?
Is It Permissible to Sell a Good Calculated to Be of a Certain Amount on the Condition That If There Is Any Shortfall Then It Will Be Deducted from the Agreed Price?
What Is the Rule Regarding When the Buyer Does Not Accept Any Defect Upon Delivery?
Is It Permissible to Buy Imported Goods of Defined Specifications Which Are Still at Sea and Sell Them to a Trader? And Does Ijarah Cover All Types of Goods and Commodities?
What Are the Rules Regarding Conditions Governing Murabahah Contract?
Is It Permissible to Stipulate a Penalty in a Sale Contract?
What’s the Shariah Ruling Regarding Buying a Specific Commodity Based Upon a Customer’s Promise to Buy the Commodity by Deferred Payment?
The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 166th Meeting
The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 156th Meeting
RESOLUTION No. 103 (6/11): MAINTENANCE CONTRACT
Does Islam Place a Limit on Profits?
Giving a Rebate for Early Payment in a Deferred Purchase Sale
How Does Resale Affect the Buyer’s Option to Annul the Original Sale?
A Customer Approaches the Bank for Murabahah after Having Concluded an Agreement with the Exporter
Resolution No. 105: The permissibility of borrowing in deutsche marks and lending in US dollars to avoid price volatility
Resolution No. 159: The Corporation selling gold, silver and currencies to its clients
Resolution No. 161: The permissibility of the seller of a commodity to Al Rajhi providing a guarantee of the party purchasing from Al Rajhi
Additional Conditions In A Murabahah Contract
Buying Commodities in One Currency and Selling it in Another Currency
Can a Murabahah Deal Be Combined with a Foreign Currency Exchange?
Can the Bank Sell the Murabahah Goods to the Purchase Orderer after They Are Loaded on the Ship?
Can the Primary Seller Give a Performance Award to the Murabahah Buyer for Retail Sales of Its Products and Ignore the Middleman?
Damage to or Loss of the Purchased Good
Deferred Guarantee in A Murabahah
Delay In Receiving The Goods
If the Party That Promises to Buy a Good and Resell It to a Customer Does Not Buy It, Is Any Compensation Due?
Increasing the Profit Rate on Subsequent Murabahah Deals Due to Late Payments in Earlier Deals
Is the Importer’s Acceptance of Some Items on the Exporter’s Quotation List a Contract That Prevents Effecting a Murabahah Contract
Joint Purchase Followed by a Murabahah Resale to One of the Partners
Making the Original Seller the Bank’s Agent to Sell the Purchased Products to a Previous Prospective Customer
Seller Free From Guaranteeing Any Defect?
The Murabahah Purchaser Returns Goods to the Original Seller
The Purchase Undertaker Wants to Avoid the Expense of a Third-Party Inspector of the Goods before Shipment
قرار رقم 132 (6/14) بشأن عقود الإذعان
التمويل العقاري
الصرف المؤجل للعملات المختلفة الجنس
ربط تقديم مساعدة مالية لمدرسة المكفوفين بتسديد ديون العميل المستحقة للبنك
توزيع الجوائز النقدية لودائع الاستثمار
Resolution No. 65/2/7: Deferred Instalment Sale
Delayed Payments In A Murabahah Contract
Double Guarantee in Murabahah
Issuance Of An LG Under A Murabahah Transaction
Pre-murabahah Transaction
Ensuring Proper Separation Of Contracts
A Service Warranty Agreement for a Car
If Some of the Goods Are Damaged, Must the Price Be Adjusted?
Deferring the Ownership Transfer of Shares Sold
Guaranteeing the Shares of Participants of Profit-Sharing Funds and Clearance Funds
Dual Promise in Commodity Murabahah
Hibah In Loan (Qardh)
Parallel Salam
A Penalty Clause for Late Payment
A Difference in Profit Share of Jointly Owned Property
A Sale and Buy Back without Collusion or Prior Agreement
Resolution No. 136 (15/2): Al-musharakah Al-mutanaqisah And Its Shari’ah Rules
Allocating Profit For Expenses Borne By One Of The Partners in a Musharakah
An Islamic Bank Paying a Customer’s Credit Card Bill from His Deposited Funds
Trading in a Used Car for a New One by Selling the Used Car to a Third Party Who Transfers the Payment to the New Car Seller
The Seller Stipulates That the Buyer Lease Back the Purchased Item to the Seller
The Issue Of The Original Ruling Of Contracts And The Permissibility Of Using Terms That Are Not Mentioned In The Sources Of Islamic Law
The Buyer Discovers a Defect or Shortfall in the Purchased Good
Stipulating No Liability for Defects in a Sale
Special Investment Account
Paying for Real Estate with a Combined Payment of Cash and Real Estate
Can Real Estate That Is Bought and Resold Be Registered Directly in the Final Buyer’s Name?
Swapping Two Pieces of Real Estate in a Single Contract
Selling a Sheep but Excluding the Skin from the Sale
Stipulating an Option to Annul a Sale after the Buyer Has Accepted the Original Offer
A Discrepancy is found in Murabahah Goods That Were Sold before Possessing Them
Selling a Sheep but Excluding the Skin from the Sale
Stipulating an Option to Annul a Sale after the Buyer Has Accepted the Original Offer
Can a Muslim Company Agree to a Non-Muslim Employee’s Demand for Comprehensive Life Insurance as a Condition of Employment?
Can an Islamic Bank Charge a Car Seller for the Vehicle Inspection if He Cancels the Sale after the Inspection?
Who Is Liable for Goods Damaged after Reaching the Port if the End Buyer Did Not Delay in Trying to Claim Them?
Is It Lawful for the Buyer to Lease an Asset to the Seller after the Sale?
Is it Allowed to Sell Material on A Deferred-Payment Sale Before the Manufacturing Process is Completed?
Can the Buyer in an Istisna Contract Sell to the Manufacturer the Raw Material That Will Be Used to Manufacture the Finished Product?
A House-Buyer Approaches an Islamic Bank Seeking to Cancel an Existing Contract in Order to Enter into a MurÉbaÍah Sale with the Bank
Can the Islamic Bank Buy Goods from the Retailer and Make It Its Agent to Resell Them to Customers but Stipulate That the Retailer Buy Back Unpurchased Goods?
Can the Buyer of a Commodity Lease It Back to the Seller with a Promise to Sell It Back to Him at the End of the Lease Term?
Can Earnest Money Be Paid before the Contract?
What Is the Ruling on a Payment before the Down Payment, to Reserve the Right to Buy?
What if an Islamic Bank Gives a Rebate to a Customer Who Pays a Debt Early, and Other Customers Expect the Same Treatment?
Can a Dealer Buy Back Cars from Customers and Pay the Bank the Outstanding Balances, on the Condition that the Customers Buy New Cars from the Dealer?
If a Customer Cancels the Sale of His Used Car to the Bank after the Title Has Been Transferred, and the Bank Allows It, Can the Bank Charge Him for the Inspection Expenses It Incurred?
Can the Bank Take a Non-Refundable Deposit from a Buyer before the Actual Sale?
What Parameters Can Make It Lawful to Pay Earnest Money to a Car Dealer to Book a Sale?
Can the Lessor Charge the Lessee a Fee for Transferring the Lease to His Name?
After Buying Real Estate, Is It Allowed to Appoint the Seller as an Agent to Lease It Out?
Can a Lessor Stipulate that the Lessee Must Bear the Maintenance Costs?
Is It Allowed To Lease to the Seller through a Separate Contract from the Sale Contract?
Who Is Liable for Damages Caused to Material and Previous Workmanship in a Construction Contract?
Is It Allowed To Agree To Omit or Add New Tasks in a Construction Contract?
Can the Bank (as the Contractor) Avoid Liability for Defects in a Parallel Construction Contract?
Is It Allowed for a Customer To Be the Executor of His Own Construction Contract?
Is It Allowed To Keep the Difference between the Agreed and Actual Construction Costs, or Must This Amount Be Returned to the Customer?
Is KFH Considered a Mudarib or an Agent for Customers in a Currency Portfolio?
Is It Allowed for One Partner to Stipulate a Priority Right to Partnership Profits?
If One Partner Injects Additional Capital after the Initial Capitalization, Should the Shares of Profit Be Adjusted?
Is It Allowed for a Partner to Stipulate a Fixed Salary for Managing the Company and Then Distribute the Profits According to Agreement?
What are the Valid Conditions of a Contract?
Is Someone Entrusted with a Deposit Liable if It Gets Lost or Stolen?
Is it Islamically Lawful for an Employer to Decline to Transfer the Work Permit of an Employee Who Resigns to Take a Better Offer?
Can an Islamic Bank Give Some Current Account Holders Special Privileges?
Can an Islamic Bank Give Gifts to Holders of Accounts Having Funds above a Certain Amount?
Can a Parent Nominally Transfer a Piece of His Property to One of His Heirs to Facilitate Financing?
Can an Islamic Bank Take Treasury Bills as Payment for Goods Purchased from It?
How to Treat a Customer Who Withdraws his Deposit from an Unrestricted Investment Account before the Agreed Time?
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?
What Is the Shari‘ah Ruling on Charging Bank Service Fees?
Can an Adult Open an Account for a Minor with Restrictions on the Right to Withdraw from It?
What is the Ruling on Terminating an International Murabahah Deal before Its Term?
Revisiting the Ruling on Terminating an International Murabahah Deal before Its Term
What Is the Ruling if a Debtor, After Late Payment of a Debt, Voluntarily Loans the Same Amount to the Creditor for the Same Period?

قرار رقم 140 (6/15) بشأن الاستثمار في الوقف وفي غلاته وريعه

Islamic Financial Markets

Islamic banking refers to a system of banking activities that operates within the realms of Shari'ah teachings. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Islamic banks which consist of their own capital and equity will also rely on two other main sources of funds. The first is transactional deposits which are mainly risk-free and provide no return. The second is the investment deposits which carry the risk of loss in capital for the investments made. There are a total of four main types of deposits. For further details see: ISRA, Islamic Financial System; Principles and Operations.

The uses of funds, namely, the types of financial instruments offered by the bank to generate revenues. The most common feature of any Islamic commercial bank involves two main sectors, namely, the personal or retail sector and the corporate or trade sector. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Trade Financing: The financing of international trade. Trade finance includes such activities as lending, issuing letters of credit, factoring, export credit and insurance.

Wealth Management: A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee.

The money market can be described as the financial market for transactions in wholesale short-term funds. 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
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

An Islamic capital market, as is the case of a conventional capital market, constitutes an integral part of the Islamic financial system. In general, an Islamic capital market comprises two main components: the debt market and the equity market. They are indispensable for the efficient mobilisation of resources and their optimal allocation. For further details see: ISRA, Islamic Financial System; Principles and Operations.

What Would the Transactions of Global Stock Market Be Called?

Takaful is Verily, selling the asset on condition that its transfer of ownership to the buyer will not be done until after its (asset) value was paid in order to be the purpose from that is to not endorse transfer of ownership to the buyer until after the payment of the value, so this is permissible and there is nothing wrong in that (from the Shariah point of view). It is also Mutual guaranteeing through mutual support and shared responsibility whereby a group of people agree to jointly guarantee one another against a defined loss. Takaful is an alternative to contemporary insurance. Re-takaful is an agreement among takaful operators to contribute into a larger fund (re-takaful fund) which assumes the task of covering part of the risks encountered by the participating takaful operators.

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
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?

Regulation, Supervision and Governance

In some countries, Islamic finance is at an advanced stage of development, while in others, more meaningful progress is yet to be made. As of now, Islamic finance is largely concentrated in a few regions, namely Southeast Asia and the Middle East, with a few Western countries taking an active role in promoting Islamic finance. Hence, the penetration of Islamic finance into other regions and countries is both a challenge and opportunity for Islamic finance. In order to do this, a robust Islamic financial system consisting of the banking and the non-banking Islamic financial intermediaries, the Islamic financial markets, a wide range of Islamic financial products, and a developed Islamic financial infrastructure is needed. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Internationally accepted standards and best practices form major reference points for any regulatory and supervisory framework established by regulatory and supervisory authorities. For further details see: ISRA, Islamic Financial System; Principles and Operations.

A term used by the classical Muslim jurists to describe the function carried out by the state or appropriate Islamic authority to regulate the marketplace (ombudsman). It includes whatever steps may be needed in order to maintain fair and orderly market operation. For further details see: ISRA, Islamic Financial System; Principles and Operations.

The concept of corporate governance in Islam refers to a set of organisational arrangements on how a corporation is directed, managed, governed and controlled. This provides the governance structure through which all stakeholders’ interests are protected, the company’s objective is achieved and the principles of Shari’ah are complied with. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Can an Islamic Bank Fund Recreational Activities for Its Workers Using Depositor or Shareholder Funds?

Islamic Governance & Ethics: The Shari'ah governance framework is a set of institutional and organisational arrangements to oversee Shari'ah compliance aspects of Islamic financial institutions. Shari'ah governance is particular to Islamic finance, as it is the mechanism which determines the "Islamicity" of any particular Islamic business or financial institution as well as the system as a whole. The significance of Shari'ah governance transpires via its role of ensuring the confidence of the Islamic finance industry in the eyes of the public. More importantly, Shari'ah governance ensures that the industry is at all times in accordance with the wishes and laws of the Almighty by ensuring the legitimacy of the products offered.

Buying an Asset That Is Leased to a Third Party
*بيع العقار في جنوب أفريقيا
Is It Permissible to Import Christmas Greeting Cards? Can KFH Open Letters of Credit for This Purpose?
Can a Financial Penalty Be Levied on Late Payment of a Loan?
The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 141st Meeting
The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 134th Meeting
Resolution No. 115(9/12): "Inflation and Change of Currency Value"
Resolution No. 112 (6/12): "Establishing Legal Proofs on Inferences and Signs"
قرار رقم 190 (5/20) بشأن دور المجامع الفقهية في ترشيد مسيرة المؤسسات المالية الإسلامية: آليات وصيغ
قرار رقم 177 (3/19) بشأن دور الرقابة الشرعية في ضبط أعمال البنوك الإسلامية أهميتها ، شروطها ، طريقة عملها
إمكانية مساهمة البنك في بعث صندوقين مشتركين للتوظيف
آلية أخذ الموافقة الشرعية للعمل بالصكوك الإسلامية
Application Of Man-Made Laws In Islamic Finance
Trading in Meat Imported from Non-Muslim Lands

Every independent country in the world is recognised for its sovereignty, and therefore is free to decide what legal system, legal institutions and laws to establish or adopt. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Looking into various impediments in the legal framework, Islamic fi nance may need to relocate its interest of sett ling disputes to Alternative Dispute Resolution (ADR). Alternative dispute resolution may be defi ned as procedures that serve as alternatives to litigation for the resolution of disputes. It generally involves the intervention and assistance of a neutral and impartial third party. It can be formal (e.g., arbitration) or informal (negotiation and mediation), and is a private and binding process where disputes are resolved by an award made by an independent tribunal (third party or parties, mediator, negotiator, or the arbitrator). The tribunal
is either agreed by the party or nominated by an independent body, e.g., a court or a professional institution such as the Chartered Institute of Arbitrators. For further details see: ISRA, Islamic Financial System; Principles and Operations.

RESOLUTION No. 91/8/9: THE PRINCIPLE OF ARBITRATION IN ISLAMIC FIQH
التحكيم الوارد بالعقود
Is it Lawful to Financially Penalize a Rich Debtor Who Delays Payment?

The Arabic word means reconciliation between people and to remove any alienation between them. Technically it is a contract that remove a disagreement between opponents by consent. For further details see ISRA Compendium.

RESOLUTION No. 91/8/9: THE PRINCIPLE OF ARBITRATION IN ISLAMIC FIQH
Accounting Arrangements for Recording Collection of Doubtful Debts
Is It Permissible to Record and Distribute the Profits According to the Years of Payment in Accord with the Precise Rules of Accounting?
How Does the Bank Record the Profits of a Delayed-Payment Murabahah Sale?
مشروعية تداول العملات في عمليات الصرف قبل تقييدها حقيقة في الحساب
توزيع أرباح الصكوك في أثناء فترة عمل المشروع وقبل الفراغ منه
When Does an Agent Record the Profit from Murabahah on Behalf of His Principal?
When the Purchase Undertaker Is a Distribution Agent for the Exporter
احتساب نتائج المشاركة
If the Bank Drops the Outstanding Balance Due on a Car Destroyed in a Traffic Accident, Does the Buyer Have a Right to Ask for the Insurance Compensation?
Charges for Expenses of an Offering
Business Expenses in Musharakah based on Percentage of Capital
Selling Goods Recorded as Accounts Receivable before the Invoice is Settled
Can a Muslim Work as Visiting Specialist in a Commercial Corporation Involved in Usurious Transactions?
an Islamic Bank “Loan” Employees to Another Institution When the Cost of Their Salaries Brings No Direct Benefit to the Bank’s Shareholders?
Are Operational Leases and Finance Leases Both Considered Valid Lease Agreements?
Is it Shari‘ah Compliant to Make an Accounting Distinction between Prices of Short-Term and Long-Term Corporate Assets?
When Should Profits Earned Be Credited to the Accounts of Investment Account Holders?
Is It Allowed to Distribute Mudarabah Profits on the Basis of Gross Profits Rather Than Net Profits?
What Principle Should Be Used to Calculate Banking Sector Profit?
How to Treat a Customer Who Withdraws his Deposit from an Unrestricted Investment Account before the Agreed Time?
Is It Allowed to Buy Shares of a Conventional Insurance Company in Order to Convert It into a Cooperative Insurance Company?

Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between information and the established criteria. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Is It Permissible to Record and Distribute the Profits According to the Years of Payment in Accord with the Precise Rules of Accounting?
Charges for Expenses of an Offering
Can a Muslim Work as Visiting Specialist in a Commercial Corporation Involved in Usurious Transactions?

Money laundering is the process of transforming the proceeds of illegal activities into legitimate capital. In principle, any financial transaction could be an act by which unlawfully acquired money is laundered. There are consequently an infinite number of mechanisms whereby money, commonly, is laundered. For further details see: MONEY LAUNDERING LAW: Forfeiture, Confiscation, Civil Recovery, Criminal Laundering and Taxation of the Proceeds of Crime.


*بيع العقار في جنوب أفريقيا
اعتماد عمولة تغطية قيمة الحوالة وعمولة تنظيم تعهد قطع تصدير/ كتاب مسبق وعمولة تسديد تعهد

Islamic Economics

The modern industrial environment has brought with it unprecedented socioeconomic problems affecting human wellbeing well beyond the traditional Shari'ah scholarship, even though the core principles of Islamic economics originated in the works of early Shari'ah scholars who laid down the foundations of maqasid and utility theory (e.g., Ghazali, Ibn Taymiyyah, Shatibi). Islamic economics is therefore, a newly emerging discipline that takes the lead in resolving newly arising economic issues from the viewpoint of maqasid. In other words, Islamic economics has emerged to satisfy new Needs in relation to the Mind, the productive human resource. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Islamic economics is based on a paradigm which is not secularist and value-neutral. It treats all human beings as vicegerents of God and brothers unto each other. All resources at the disposal of human beings are trust and must be used for the well-being of all in conformity with the values provided by the Shari'ah. However, well-being in Islam is not a function of just material possessions and unlimited consumption. It is rather a function of the balanced satisfaction of both the material and the spiritual needs of the human personality. This can be done by actualising the maqasid al-shari'ah (goals of Shari'ah). For further details see: ISRA, Islamic Financial System; Principles and Operations.

قرار رقم 171 (9/18) بشأن حقوق الارتفاق وتطبيقاته المعاصرة في الأملاك المشتركة

Microeconomics The branch of economics that studies the behavior of individual decision- making units such as house holds and business firms. For further details see: THE FINANCIAL SYSTEM AND THE ECONOMY: Principles of Money and Banking.

The branch of economics that studies the aggregate, or total, behavior of all house holds and firms. For further details see: THE FINANCIAL SYSTEM AND THE ECONOMY: Principles of Money and Banking.

Islamic economics and the Islamic financial system operate and function in a way similar to the conventional system.  Consequently, the Islamic financial industry faces relatively similar challenges to those faced by the conventional system. Due to their distinct features encompassed in the teachings of the Shari’ah, the ideal Islamic economic and financial systems are faced with additional challenges and opportunities. For further details see: ISRA, Islamic Financial System; Principles and Operations.


Risk Management Principles

Hassan (2009) identifies three types of risks from the Islamic perspective. First, is the essential risk that is inherent in all business transactions. The second risk is the prohibited risk in the form of excessive gharar. The final form of risk identified by Hassan is the permissible risk that does not fall in the above two categories. For further details see: ISRA, Islamic Financial System; Principles and Operations.


How Does the Bank Record the Profits of a Delayed-Payment Murabahah Sale?
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)
قرار رقم: 195 (1/21) بشأن التحوط في المعاملات المالية
احتياطي معدل الأرباح
Legal Constraints on Buying Shares of Limited Liability Companies

General Issues and Challenges of IFS

Risk sharing is a "contractual or societal arrangement whereby the outcome of a random event is borne collectively by a group of individuals or entities participating in an exchange contract, or by individuals or entities in a community" (Askari et al. 2011). For further details on risk sharing see: SOCIAL CAPITAL AND RISK SHARING: An Islamic Finance Paradigm.

Resolution No. 67: Purchasing aviation fuel and selling it to Company S
Transferring The Balance Of Certain Current Accounts To Savings Accounts
Tawarruq With a Conventional Bank
Can an Islamic Bank Ask a Client to Provide a Conventional Bank as a Guarantor?
Issuing Kafalah In Relation To Conventional Banks
Issuing LGs For Soft Loans
LGs From Conventional Banks for Project Finance
Should an Islamic Bank Offer a Guarantee for a Contractor Doing a Job for a Riba Bank?
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?
Can a Conventional Bank Deposit be Used as Pawn for the Benefit of Islamic Banks
Can an Islamic Bank Let Companies That Deal With Usury Have Current Or Investment Accounts?
Entering Into A Construction Contract With A Conventional Bank
Giving Hibah As Compensation For Delayed Payments
Pawning For The Benefit Of A Conventional Bank
Resolution No: 13 (1/3)[1]: Concerning The Islamic Development Bank’s inquiries
Syndicated Financing Between Islamic And Conventional Institutions
Can a Muslim Contractor Build a Building for a Conventional Bank?
Can an Islamic Bank Issue a Guarantee for a Contractor Doing Work for a Conventional Bank?
Can an Islamic Bank Partner with a Conventional Bank in a Lawful Project?
Is It Allowed to Rent a Building to Employees of an Interest-Based Bank?
Is It Allowed to Rent a Property to an Interest-Based Bank?
Resolution No. 124: The impermissibility of paying the interest amounts accumulated from correspondent bank accounts to beneficiaries other than the poor and Islamic charities
Resolution No. 150: Paying or receiving interest from correspondent banks
تحويل رهن عقاري لفائدة بنك تقليدي
إيداع المسلم أمواله في البنوك التي تتعامل بالفائدة
الفوائد المصرفية التي يضطر البنك لإيداعها في المصارف الربوية
دفع الأرباح المستحقة للودائع بالعملات الصعبة
أرباح الودائع بالعملة الصعبة
LG from a Conventional Bank as Security in Murabahah
What Is to Be Done if the Supplier Is Unable to Deliver Some of the Sold Goods?
Trading In The Shares Of Shari’ah-Compliant Companies That Are Involved In Riba-Based Transactions With Conventional Banks
Islamic Financing Insured By Conventional Insurance
Can an Islamic Bank Take for Security Stocks Issued to a Conventional Bank as Security for an Interest-Based Loan?
Can an Islamic Bank Take a Deposit in a Conventional Bank as Security for a Loan?
Can an Islamic Bank Allow a Shareholder to Mortgage Its Shares as Security for an Interest-Best Loan?
May an Islamic Bank Deposit Money with a Commercial Bank without Interest?
May an Islamic Bank Deposit Money with a Foreign Bank and Give the Interest in Charity?
Is the Seller Responsible if the Buyer Sells the Purchased Good to a Sinner?
Can an Islamic Bank Buy Property in a Non-Muslim Country if Some Tenants Have Shari‘ah Non-Compliant Businesses?
How Can a Conventional Bank Be Converted into an Islamic Bank?
Is It Allowed to Lease Real Estate to Insurance Companies That Offer All Kinds of Insurance?
Can an Islamic Bank Make Regular Monthly Transfers from an Account holder’s Account to Pay a Riba-Based Loan?
Can an Islamic Bank Accept Assignment of Rights Requested by Usurious Banks of Their Customers?
Is It Allowed for an Islamic Bank to Place an Interest-Bearing Deposit in the Central Bank if the Law Requires It?
Is It Allowed to Buy the Shares of Companies Whose Activities Are Lawful but Have Usurious Loans?
Issues in Installing an Electronic Debit Machine
Claiming Legal Expenses From The Customers
Giving Hibah As Compensation For Delayed Payments
Ta'widh On Judgement Debt
Using Current Account Deposit as Pawn
A Discount for Accelerated Payment in a Delayed Payment Contract
Can a Bank Stipulate Up-Front That, if a Customer Misses a Payment, He Must Pay Two Instalments?
Can a Financial Penalty Be Levied on Late Payment of a Loan?
Can a Rich Debtor Who Delays Payment Be Made to Pay the Legal Costs of Recovering the Debt?
Can an Islamic Bank Charge a Customer for Writing a Bounced Check?
Resolution No. 109 (3/12): "Penalty Provision"
RESOLUTION No. 76/7/8: PROBLEMS OF ISLAMIC BANKS
Increasing the Profit Rate on Subsequent Murabahah Deals Due to Late Payments in Earlier Deals
قرار رقم 186 (1/20) بشأن أحكام الإعسار والإفلاس في الشريعة الإسلامية
التحكيم الوارد بالعقود
صيغة الشرط الذي يضمن بالعقود لإلزام العميل بالزيادة التي تضاف لحساب مخصص الديون المتعثرة
إنفاق حصيلة الإيرادات الناتجة من الفوائد المحرمة وغرامات المدينين المعسرين المماطلين
غرامة التأخير للعملاء في حالة المماطلة في سداد مبلغ الاعتماد
فرض عقوبات في حالة مماطلة المرابح
فرض غرامة تأخير على العميل الذي لا يفي بالتزاماته
غرامة التأخير والمماطلة في السداد
التأمين على الديون والحياة
Imposition Of Ta'widh In Islamic Finance
Can a Penalty Clause for Late Payment Be Added to an Islamic Banking Contract?
Is it Lawful to Financially Penalize a Rich Debtor Who Delays Payment?
What Can an Islamic Bank Do if a Debtor Who Can Afford to Pay Delays Payment?
What if an Unscrupulous Debtor Delays Payment to an Islamic Bank because It Doesn’t Charge Interest?
Resolution No. 1 (1/2): Concerning the Zakah of Debts
Can a Bank Put a Clause in an Installment Payment Contract Requiring the Buyer to Pay a Penalty for Late Payment?
Is it Allowed to Stipulate a Penalty Clause against the Defaulting Lessee in a Lease Contract?

Another hindrance to the development of the Islamic financial system is the different interpretations of Shari'ah among Shari'ah scholars on what is Shari'ah-compliant. The different opinions among Shari'ah scholars on relatively similar issues may create
confusion among the general public as well as practitioners of Islamic finance. In order to avoid the confusion among the market participants, there is a need for some sort of standardisation. In other words, standardising the rulings would make it easier for both companies and ordinary people to understand them better. In addition, the standardisation of the practices across the globe may bring about further growth and strength to the Islamic financial industry. For further details see: ISRA, Islamic Financial System; Principles and Operations.

RESOLUTION No. 98 (1/11): ISLAMIC UNITY
قرار رقم 190 (5/20) بشأن دور المجامع الفقهية في ترشيد مسيرة المؤسسات المالية الإسلامية: آليات وصيغ
قرار رقم: 202 (8/21) بشأن الحوار بين أتباع المذاهب الإسلامية
Revisiting The Rulings On Bai' 'Inah

The concept, financial inclusion, was initially referred to the delivery of financial services to low-income segments of society at affordable cost. However, during the past decade, the concept has evolved into four dimensions: (i): easy access to finance for all households and entreprises, (ii) sound institutions guided by prudential regulation and supervision, (iii) financial and institutional sustainability of financial institutions, and (iv) competition between service providers to bring alternatives to customers. Demirguc-Kunt, Bent and Honohan (2007). For further details see: FINANCIAL INCLUSION: Islamic Perspective.


Islamic Financial System ©

 

 


I-FIKR Sponsors