UNDERSTAND ISLAMIC FINANCE

A blog which provide articles on Islamic banking and Finance

Istijrar

Istijrar (supply contract) Overview: Meaning Examples Types Uses Area of Application Meaning: Istijrar refers to an agreement where the buyer purchases commodities under a single agreement from a supplier in part by part from time to time in different quantities and each time there is no offer or acceptance or bargain required. The deal will Read more about Istijrar[…]

Wadiah

WADIAH Overview: Meaning Legality of Wadia Important principles Types Meaning ‘Wadia’ is an Arabic word which means ‘Deposit’. It is derived from the verb wada’a, which means to leave, lodge or deposit.  It is a type of Contract ( akad )  between owner (Muwdi) of the goods and custodian (Mustawde) of the goods where owner Read more about Wadiah[…]

Sukuk

Sukuk Overview: Meaning Definition Advantage of Sukuk over Conventional bonds Categories Distinction between Sukuk and Conventional bonds Meaning The word ‘Sukuk’ is the plural of an Arabic word ‘Sakk’, which means ‘certificate’.  Sukuk is a financial certificate which reflects participation rights in an underlying asset. Sukuk is the same as the conventional bond but the Read more about Sukuk[…]

5 Ways to stay away from Riba

5 Ways to stay away from Riba Riba(usuary) is prohibited in Islam. It is clearly stated that Allah’s Messenger (peace be upon him) cursed the acceptor of interest and its payer, and one who records it, and the two witnesses it. So, we should try to stay away from riba as much as he can. Read more about 5 Ways to stay away from Riba[…]

10 Reasons Behind Prohibition of Riba

10 Reasons Behind Prohibition of Riba Riba reflects greed and selfishness Riba results in trauma and depression Riba is disliked and Prohibited in religions Riba results in injustice and exploitation Riba results in idleness and promotes unearned income Riba Corrupts Society Riba results in Inflation Riba-based market fails Riba causes negative economic growth Riba widen Read more about 10 Reasons Behind Prohibition of Riba[…]

Riba

Riba Overview: What is Riba? Forms of Riba Prohibition of Riba in Quran Prohibition of Riba in Hadith Types of Riba What is Riba? Riba is an Arabic word which is derived from the verb Raba, which means ‘to increase’, ‘to grow’, and ‘to exceed’. It can be translated as usury or interest. It refers Read more about Riba[…]

Wakalah

Wakalah Overview: Meaning Permissibility Types Important Principles Mechanism Application Differences and similarity between wakalah and Mudarabah Meaning The word “wakalah” has literally several meanings including looking after, delegation, authorization, preservation and performing a task on behalf of other. Wakalah is a contract of agency where a person (the principal) appoints another person (the agent) to do Read more about Wakalah[…]

Istisna

Istisna (Manufacturing Contract) Overview: Meaning Important principles Permissibility Application Mechanism Difference between Salam and Istisna Meaning The word ‘Istisna’ is a derivative from the root word ‘Sa na’a, which means to manufacture or to construct something. Istisna is a contract of sale where one party agrees to deliver specified items at a pre-determined future time Read more about Istisna[…]

Prohibition of Interest (Riba) in Holy Scriptures

Prohibition of Interest (Riba) in Holy Scriptures The Holy Qur’an is the book of Allah (swt). Allah mentions in many places in His glorious book that, Riba is Haram (forbidden). “Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever” (Quran 2:276). Allah has also declared war against Interest. Read more about Prohibition of Interest (Riba) in Holy Scriptures[…]