An Introduction to Islamic Banking and Finance

One ndash Day Work ShopThe Central School Dubai01-01-2009

Organized By SKSSF UAE National Committee

Presented by Faisal M Niyaz Hudawi

Introduction

Islam the Divine religionA Comprehensive way of lifeIt is the only religion that forwards alternative system of economics

Islamic Economic System

Three Economic Systems that prevails today

CapitalismSocialismIslam

CapitalismAbsolute right of Private PropertyWealth concentration in few handsMaterialist Oriented

Qaroon the Best Example

SocialismTotally Denies Private PropertyThus hinders Human ProgressWorking Class Oriented

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

Introduction

Islam the Divine religionA Comprehensive way of lifeIt is the only religion that forwards alternative system of economics

Islamic Economic System

Three Economic Systems that prevails today

CapitalismSocialismIslam

CapitalismAbsolute right of Private PropertyWealth concentration in few handsMaterialist Oriented

Qaroon the Best Example

SocialismTotally Denies Private PropertyThus hinders Human ProgressWorking Class Oriented

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

Islamic Economic System

Three Economic Systems that prevails today

CapitalismSocialismIslam

CapitalismAbsolute right of Private PropertyWealth concentration in few handsMaterialist Oriented

Qaroon the Best Example

SocialismTotally Denies Private PropertyThus hinders Human ProgressWorking Class Oriented

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

CapitalismAbsolute right of Private PropertyWealth concentration in few handsMaterialist Oriented

Qaroon the Best Example

SocialismTotally Denies Private PropertyThus hinders Human ProgressWorking Class Oriented

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

SocialismTotally Denies Private PropertyThus hinders Human ProgressWorking Class Oriented

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

Islamic Concept

ولا تنس نصيبك من الدنيا وابتغ فيما آتاك الله الدار الآخرة إن ولا تبغ الفساد في الأرض وأحسن آما أحسن الله إليك

)77سورة القصص (الله لا يحب المفسدين But seek with the (wealth) which Allah has bestowed on thee the Home of the Hereafter nor forget thy portion in this world but do thou good as Allah has been good to thee and seek not (occasions for) mischief in the land for Allah loves not those who do mischief (Al Qasas 77)

Islam

Property is Amanah (trusteeship) From Allah the Almighty Admits the right of Private Property but not absoluteDecentralization of wealth Should not create economical anarchySuccess in both worlds

Basic Concept of Islamic Economy

Prohibition of RibaProhibition of GamblingProhibition of Garar

Riba (Interest)

م الذي يتخبطه الذين يأآلون الربا لا يقومون إلا آما يقو وأحل ا ذ لك بأنهم قالوا إنما البيع مثل الرب الشيطان من المس

275)سورة البقرة ( الله البيع وحرم الربا ldquoThose who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness That is because they say Trade is like usury but Allah hath permitted trade and forbidden usuryrdquo (Al Baqara 275)All Semitic religions prohibited interest In 15th Century Church Approved Usury

Gambling

والأنصاب والأزلام يا أيها الذين آمنوا إنما الخمر والميسر لحونرجس من عمل الشيطان فاجتنبوه لعلكم تف

)90المائدة (ldquoO ye who believe Intoxicants and gambling (dedication of) stones and (divination by) arrows are an abomination- of Satans handwork eschew such (abomination) that ye may prosperrdquo (Al Maida 90)

Garar

Jabir b Abdullah (Allah be pleased with them) is reported to have said that Allahs Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is unknown in accordance with the known weight of dates(Bukhari - Book 010 Hadith 3654)

Basic Concept of Islamic Economy

Prohibition of RibaProhibition of GamblingProhibition of Garar

Riba (Interest)

م الذي يتخبطه الذين يأآلون الربا لا يقومون إلا آما يقو وأحل ا ذ لك بأنهم قالوا إنما البيع مثل الرب الشيطان من المس

275)سورة البقرة ( الله البيع وحرم الربا ldquoThose who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness That is because they say Trade is like usury but Allah hath permitted trade and forbidden usuryrdquo (Al Baqara 275)All Semitic religions prohibited interest In 15th Century Church Approved Usury

Gambling

والأنصاب والأزلام يا أيها الذين آمنوا إنما الخمر والميسر لحونرجس من عمل الشيطان فاجتنبوه لعلكم تف

)90المائدة (ldquoO ye who believe Intoxicants and gambling (dedication of) stones and (divination by) arrows are an abomination- of Satans handwork eschew such (abomination) that ye may prosperrdquo (Al Maida 90)

Garar

Jabir b Abdullah (Allah be pleased with them) is reported to have said that Allahs Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is unknown in accordance with the known weight of dates(Bukhari - Book 010 Hadith 3654)

Riba (Interest)

م الذي يتخبطه الذين يأآلون الربا لا يقومون إلا آما يقو وأحل ا ذ لك بأنهم قالوا إنما البيع مثل الرب الشيطان من المس

275)سورة البقرة ( الله البيع وحرم الربا ldquoThose who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness That is because they say Trade is like usury but Allah hath permitted trade and forbidden usuryrdquo (Al Baqara 275)All Semitic religions prohibited interest In 15th Century Church Approved Usury

Gambling

والأنصاب والأزلام يا أيها الذين آمنوا إنما الخمر والميسر لحونرجس من عمل الشيطان فاجتنبوه لعلكم تف

)90المائدة (ldquoO ye who believe Intoxicants and gambling (dedication of) stones and (divination by) arrows are an abomination- of Satans handwork eschew such (abomination) that ye may prosperrdquo (Al Maida 90)

Garar

Jabir b Abdullah (Allah be pleased with them) is reported to have said that Allahs Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is unknown in accordance with the known weight of dates(Bukhari - Book 010 Hadith 3654)

Gambling

والأنصاب والأزلام يا أيها الذين آمنوا إنما الخمر والميسر لحونرجس من عمل الشيطان فاجتنبوه لعلكم تف

)90المائدة (ldquoO ye who believe Intoxicants and gambling (dedication of) stones and (divination by) arrows are an abomination- of Satans handwork eschew such (abomination) that ye may prosperrdquo (Al Maida 90)

Garar

Jabir b Abdullah (Allah be pleased with them) is reported to have said that Allahs Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is unknown in accordance with the known weight of dates(Bukhari - Book 010 Hadith 3654)

Garar

Jabir b Abdullah (Allah be pleased with them) is reported to have said that Allahs Messenger (may peace be upon him) forbade the sale of a heap of dates the weight of which is unknown in accordance with the known weight of dates(Bukhari - Book 010 Hadith 3654)

Necessity of Banking

Banking is a necessity in the present economyPooling of the fund to provide for the requiredSaves time and effortTrustable institution controlled by central monitory system

Conventional Banks and Islamic Banking

Banking is not alien to Islam mode of operation that mattersConventional Banks are receiving and providing money on interest basisIslamic Banks are receiving and providing money on profit and loss sharing basis

In conventional banking either the client or the bank facing injusticeIslamic banks involves only those industries accepted by Islamic Shariha

History of Islamic BankingMost see Islamic banking as the Islamized form of conventional banking but we find different forms of banking among early MuslimsUse of cheques in the period of Omar (R) Zubair Awam used to receive funds from the people

Medieval Period

Sayarifa and JahabizaBasara Wall-street of Middle agesCentral Banking System of Abbasid state Diwan-e-Jahabiz in AD 929 (H316)Dar-al-mal in Egypt by Fatimid StateMudaraba in medieval periodApproval of Usury by Church in 15th

Century

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Conventional Banks and Islamic Banking

Banking is not alien to Islam mode of operation that mattersConventional Banks are receiving and providing money on interest basisIslamic Banks are receiving and providing money on profit and loss sharing basis

In conventional banking either the client or the bank facing injusticeIslamic banks involves only those industries accepted by Islamic Shariha

History of Islamic BankingMost see Islamic banking as the Islamized form of conventional banking but we find different forms of banking among early MuslimsUse of cheques in the period of Omar (R) Zubair Awam used to receive funds from the people

Medieval Period

Sayarifa and JahabizaBasara Wall-street of Middle agesCentral Banking System of Abbasid state Diwan-e-Jahabiz in AD 929 (H316)Dar-al-mal in Egypt by Fatimid StateMudaraba in medieval periodApproval of Usury by Church in 15th

Century

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

In conventional banking either the client or the bank facing injusticeIslamic banks involves only those industries accepted by Islamic Shariha

History of Islamic BankingMost see Islamic banking as the Islamized form of conventional banking but we find different forms of banking among early MuslimsUse of cheques in the period of Omar (R) Zubair Awam used to receive funds from the people

Medieval Period

Sayarifa and JahabizaBasara Wall-street of Middle agesCentral Banking System of Abbasid state Diwan-e-Jahabiz in AD 929 (H316)Dar-al-mal in Egypt by Fatimid StateMudaraba in medieval periodApproval of Usury by Church in 15th

Century

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

History of Islamic BankingMost see Islamic banking as the Islamized form of conventional banking but we find different forms of banking among early MuslimsUse of cheques in the period of Omar (R) Zubair Awam used to receive funds from the people

Medieval Period

Sayarifa and JahabizaBasara Wall-street of Middle agesCentral Banking System of Abbasid state Diwan-e-Jahabiz in AD 929 (H316)Dar-al-mal in Egypt by Fatimid StateMudaraba in medieval periodApproval of Usury by Church in 15th

Century

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Medieval Period

Sayarifa and JahabizaBasara Wall-street of Middle agesCentral Banking System of Abbasid state Diwan-e-Jahabiz in AD 929 (H316)Dar-al-mal in Egypt by Fatimid StateMudaraba in medieval periodApproval of Usury by Church in 15th

Century

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Modern Islamic Banking

Ahmed Al Najjar in Mith Gamar Egypt in 1963 ndash A Savings BankIslamic Development Bank ndash 1974 by OICIn 1975 the first Commercial Islamic Bank ndash Dubai Islamic BankFaisal Islamic Bank- Egypt amp Sudan (1977)Bahrain Islamic Bank ndash (1979)

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Sources of Islamic Banking

QuranHadith Ijma QiyasHanafi Shaifi Maliki amp HanbaliSchools of thoughtsFiqh ndashal- Muaamalaat

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Islamic Banking tools

Asset Side ndash Financing tools

Liabilities Side ndash Deposit tools

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Financing Tools

Fund Collection for Business ndashMusharaka or MudarabaPurchase of GoodsServices ndashMurabahaUtilize usufruct of Assets for Certain period ndash IjaraProduction of natural Products -SalamProduction of Industrial Products -Istisnaa

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Musharka

Equity ndash BasedShirka ndash SharingMusharaka means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Management of Musharaka

All Partners are agent of others and every one has right to participate in the ManagementThey may appoint some of them as Managers The right will be delegated to them to carry entire business activities

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Profit and Loss Sharing

Profit ratio shall be determined at the time of ContractProfit should be determined in proportion to the actual profit earnedNo lump sum amount to be fixed as profitAn active investor can get more Profit than a Sleeping PartnerLoss is distributed exactly according to the ratio of investment

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Issues in MusharakaLiquidity of the CapitalMixing of the CapitalTenure of MusharakaSpecial Conditions ndash regarding liquidity in case of withdrawal one PartnerLimited Liability

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Application of Musharaka

Project FinancingSmall amp Medium Enterprise FinancingImportExport FinancingCompany FormationSaving Investment AccountsInvestment Certificates

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Difference BetweenInterest based financing

1A fixed rate of return on a loan advanced by the financier is predeterminedirrespective of the profit earned or loss suffered by the debtor2The financier cannot suffer loss3Results in injustice either to the creditor or to the debtor If the debtor suffers a loss it is unjust on the part of the creditor to claim a fixed rate of profit Also if the debtor earns a very high rate of profit it is injustice to the creditor to give him only small proportion of the profit leaving the rest for the debtorad

MusharakahMusharakah does not envisage a fixed rate of return The return is based on the actual profit earned by the joint ventureThe financier can suffer loss if the joint venture fails to produce fruitsThe returns of the creditor are tied up with the actual profits accrued through the enterprise The greater the profits of the enterprise the higher the rate of return to the creditor If the enterprise earns enormous profits all of it cannot be secured by the debtor exclusively but will be shared by common people eg Depositors in the bank

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Mudaraba

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise The investment comes from the first partner who is called Rab-ul-Maal while the management and work is an exclusive responsibility of the other who is called Mudarib and the profits generated are shared in a predetermined ratio

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Terminology

Mudarib Working Partner (brings effort)Ras-ul-Maal InvestmentRab-ul-Maal Investor (brings capital)Known as Qirad in Books of Fiqh

Types of Mudaraba

Mudaraba Muqayyada (Restricted Mudraba)

Mudarab Mutlaqa (Unrestricted Mudaraba)

Profit and Loss in Mudaraba

Profit Share shall be determined at the time of ContractNo lump Sum Amount as profitNo Salary for Mudarib In case of Mudaraba fasid only Ujrat-mithl(ordinary Pay)Loss on Investor Mudarib loses his administrative effort

Difference BetweenMusharaka amp Mudaraba

All partners investAll partners participate in the management of the business and can work for itAll partners share the loss to the extent of the ratio of their investmentThe liability of the partners is normally unlimited If the liabilities of business exceed its assets and the business goes in liquidation all the exceeding liabilities shall be borne pro rata by all partners As soon as the partners mix up their capital in a joint pool all the assets become jointly owned by all of them according to the proportion of their respective investment All partners benefit from the appreciation in the value of the assets even if profit has not accrued through sales

Only Rab-ul-Maal investsRab-ul-maal has no right to participate in the management which is carried out by the Mudarib onlyOnly Rab-ul-maal suffers loss because the Mudarib does not invest anything However this is subject to a condition that the Mudarib has worked with due diligenceThe liability of Rab-ul-maal is limited to his investment unless he has permitted the Mudarib to incur debts on his behalfThe goods purchased by the Mudarib are solely owned by Rab-ul-maal and the Mudaribcan earn his share in the profit only in case he sells the goods profitably

Applications Issues

Just Like MusharakahA Case Study of National Bonds

Musharaka Muthanaqqisa(Diminishing Partnership)

A Modern ConceptCombination more than one transactionMostly Used in House FinanceUsed in Combination with IjarahJoint ownership ndash Gradually one of Partner sells his share to the other and it becomes his Sole Property

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Profit and Loss in Mudaraba

Profit Share shall be determined at the time of ContractNo lump Sum Amount as profitNo Salary for Mudarib In case of Mudaraba fasid only Ujrat-mithl(ordinary Pay)Loss on Investor Mudarib loses his administrative effort

Difference BetweenMusharaka amp Mudaraba

All partners investAll partners participate in the management of the business and can work for itAll partners share the loss to the extent of the ratio of their investmentThe liability of the partners is normally unlimited If the liabilities of business exceed its assets and the business goes in liquidation all the exceeding liabilities shall be borne pro rata by all partners As soon as the partners mix up their capital in a joint pool all the assets become jointly owned by all of them according to the proportion of their respective investment All partners benefit from the appreciation in the value of the assets even if profit has not accrued through sales

Only Rab-ul-Maal investsRab-ul-maal has no right to participate in the management which is carried out by the Mudarib onlyOnly Rab-ul-maal suffers loss because the Mudarib does not invest anything However this is subject to a condition that the Mudarib has worked with due diligenceThe liability of Rab-ul-maal is limited to his investment unless he has permitted the Mudarib to incur debts on his behalfThe goods purchased by the Mudarib are solely owned by Rab-ul-maal and the Mudaribcan earn his share in the profit only in case he sells the goods profitably

Applications Issues

Just Like MusharakahA Case Study of National Bonds

Musharaka Muthanaqqisa(Diminishing Partnership)

A Modern ConceptCombination more than one transactionMostly Used in House FinanceUsed in Combination with IjarahJoint ownership ndash Gradually one of Partner sells his share to the other and it becomes his Sole Property

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Difference BetweenMusharaka amp Mudaraba

All partners investAll partners participate in the management of the business and can work for itAll partners share the loss to the extent of the ratio of their investmentThe liability of the partners is normally unlimited If the liabilities of business exceed its assets and the business goes in liquidation all the exceeding liabilities shall be borne pro rata by all partners As soon as the partners mix up their capital in a joint pool all the assets become jointly owned by all of them according to the proportion of their respective investment All partners benefit from the appreciation in the value of the assets even if profit has not accrued through sales

Only Rab-ul-Maal investsRab-ul-maal has no right to participate in the management which is carried out by the Mudarib onlyOnly Rab-ul-maal suffers loss because the Mudarib does not invest anything However this is subject to a condition that the Mudarib has worked with due diligenceThe liability of Rab-ul-maal is limited to his investment unless he has permitted the Mudarib to incur debts on his behalfThe goods purchased by the Mudarib are solely owned by Rab-ul-maal and the Mudaribcan earn his share in the profit only in case he sells the goods profitably

Applications Issues

Just Like MusharakahA Case Study of National Bonds

Musharaka Muthanaqqisa(Diminishing Partnership)

A Modern ConceptCombination more than one transactionMostly Used in House FinanceUsed in Combination with IjarahJoint ownership ndash Gradually one of Partner sells his share to the other and it becomes his Sole Property

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Applications Issues

Just Like MusharakahA Case Study of National Bonds

Musharaka Muthanaqqisa(Diminishing Partnership)

A Modern ConceptCombination more than one transactionMostly Used in House FinanceUsed in Combination with IjarahJoint ownership ndash Gradually one of Partner sells his share to the other and it becomes his Sole Property

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Musharaka Muthanaqqisa(Diminishing Partnership)

A Modern ConceptCombination more than one transactionMostly Used in House FinanceUsed in Combination with IjarahJoint ownership ndash Gradually one of Partner sells his share to the other and it becomes his Sole Property

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Musharaka Muthanaqqisa(Diminishing Partnership)

According to this concept a financier and his client participate either in the joint ownership of a property or an equipment or in a joint commercial enterprise The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property or the commercial enterprise

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

House Financing A ModelCreates a Joint Ownership in the Property (Eg 80 bank - 20 Client)Bank Lease his share in the House to his Client and Charges rentBank Divides his share of 80 into 8 equal unitsClient Purchase each unit monthlyRent Reduces as Banks Share reduceFinally House becomes Property of the Client

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Mushraka Muthanaqqisa

Joint PurchaseLeasingSelling different units of SharesDifferent transactions not to tied up in Single ContractCan be used for Auto and Trade Finance

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Murabaha (Cost Plus)

Widely used in Islamic BankingFixed return as it is a Sale It is a Sale where the seller expressly mentions the cost of sold Commodity he has incurred and sells it to another person by adding some profitIt is not a loan on interest But sale of Commodity

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Murabaha (Cost Plus)

All the rules of Basic Sale applicableBank discloses its Cost and Profit Margin to the ClientThe Client Pays on Deferred Payment basisSome criticize it as it technically replaces the word ldquointerestrsquo with profit

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Issues in Murabaha

Securities against MurabahaPenalty of DefaultCompensation or Donation to CharityNo increment or decrement in price once the sale contract is executed

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Applications of Murabaha

Auto FinancingEquipmentsImportExportHouseLandConsumer Goods

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Salam

A kind of Forward Salethe seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot The price is in cash but the supply of purchased goods is deferredTo meet the need of farmers who need money to grow their crops and to meet the need of traders for import and export business

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Salam - Conditions

Strict conditions as it is a forward saleSpot full paymentQuality and Quantity to be specifiedExact date and Place of Delivery to be specifiedNot to be effected on a Particular Commodity

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Benefits of Salam

Profit for Bank from a Parallel Salamwhere the bank gets payment in Advance for the future deliveryOr Bank can obtain a promise to purchase from a third party

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Istisnaa

It is an order to a manufacturer to manufacture a specific commodity for the purchaser The manufacturer uses his own material to manufacture the required goods

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Differences betweenIstisnaa and Salam

The subject on which transaction of Istisna is based is always a thing which needs to be manufacturedThe price in Istisna does not necessarily need to be paid in full in advance It is not even necessary to pay the full price at delivery It can be deferred to any time according to the agreement of the parties The payment may also be made in installments The time of delivery does not have to be fixed in Istisna The contract can be cancelled before the manufacturer starts the work

The subject can be anything that need manufacturing or not

The price has to be paid in full in advance

The time of delivery is an essential part of the sale

The contract cannot be cancelled unilaterally

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Uses of Istisnaa

House Financing (Land Provided by Client)PlantFactory Apartments BookingBOT of Bridges and Highways

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Ijarah (Leasing)

Transferring of usufruct to another person for an agreed period for a specified consideration Ownership remains with the lessorand all the liabilities of Ownership on himLessee is liable to compensate for any harm by misuse or negligence

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Ijarah

Rent should be charged after the delivery of the leased assetAfter the lease period expired the lessor may transfer the ownership to the lessee either free of charge or for a nominal priceThis is called Ijara wa iqthinaThis is also used in House Equipment financing

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Liabilities Side

Deposit Current Account is a Qard not AmanahAmana cannot be used by Bank for BusinessThe bank cannot be held liable in case of any damage or loss to amanahSavings and Investment accounts on Mudaraba basis

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Role of the Bank as Agent (Wakeel)

Payment receiving money on behalf of CustomerLC opening and acceptanceIssuance of CardsSafe KeepingRemittanceBank Can Charge Agency Fee for this

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Bank as a Guarantor (Kafeel)

Letter of GuaranteeNo fee to be charged for thisOnly Expenses to be chargedAdvisory Services can be provided on a charge basis

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Islamic Investment funds

Sukuk Islamic Alternative to Conventional bondsAAOIFI defines Sukuk as being ldquoCertificates of equal value representing after closing subscription receipt of the value of the certificates and putting it to use as planned common title to shares and rights in tangible assets usufructs and services or equity of a given project or equity of a special investment activityrdquo

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Comparison of Sukuk amp BondA bond is a contractual debt obligation whereby the issuer is contractually obliged to pay to bondholders on certain specified dates interest and principal whereas the sukuk holders claims an undivided beneficial ownership in the underlying assets Consequently sukuk holders are entitled to share in the revenues generated by the sukuk assets as well as being entitled to share in the proceeds of the realization of the sukuk assetsA distinguishing feature of a sukuk is that in instances where the certificate represents a debt to the holder the certificate will not be tradable on the secondary market and instead is held until maturity or sold at par

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Types Sukuk

Musharakah SukukMudaraba SukukIjraha SukukSalam SukukIstisnaa SukukMurabah Sukuk

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Takaful- Islamic way of Insurance

Takaful comes from the Arabic root-word lsquokafalarsquo mdash guaranteeTakaful means mutual protection and joint guaranteeOperationally takaful refers to participants mutually contributing to a common fund with the purpose of having mutual indemnity in the case of peril or loss

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Basic Elements of Takaful

Mutuality and cooperationTakaful contract pertains to Tabrrursquoat as against mursquoawadatin case ofconventional insurancePayments made with the intention of Tabarru (contribution)Eliminates the elements of Gharrar Maisir and RibaWakalahModarabah basis of operationsJoint Guarantee Indemnity amongst participants ndash shared responsibilityConstitution of separate ldquoParticipantsrsquo Takaful FundrdquoConstitution of ldquoShariah Supervisory BoardrdquoInvestments as per Shariah

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Comparison of Insurance amp TakafulConventional Insurance

Two parties Insurer (company)Insured (Policy holders)The premium comes in theownership of companyCovering of risk is duty of companyThere is only one contract

ieOnly insurance company is insurerSurplus is not returned to policyholders totally or partiallyPool of Insurance company is not alegal identityThere is one relation in insurance

TakafulThree parties company policy holderpoolTakaful company does not becomeowner of premiumCovering of risk is duty of companyThere is a bunch of contracts Takaful company is not insurer butpolicy Holders are insurers amp insured among themselves8 Surplus is returned to policy holders9 Pool of Takaful Company is a legal identity10 there are a different relations atdifferent stages in Takaful

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Takaful Models

Mudaraba Model

Wakala Model

Wakala-Waqaf Model

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Islamic Credit Cards

No interestMonthly Administrative FeeLate Payment ndash Penalty to Charity

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Growth of Islamic Banking

One Institution in one Country (1975)More than 300 institutions spread over 75 countries(2008)Total Sharia- Compliant assets $639 bnExpected - $ 1 Trillion by 2010Five Stand Alone Islamic Banks in UK

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Europe towards Islamic Finance

UK Govt launched Saharia-Compliant pension FundsUK Considering issue of Islamic Bonds to fund the building of Athletes village for London 2012 OlympicsGordon Brown Urges ldquoLondon to be gateway to Islamic Financerdquo

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

West looks towards Islam

US Treasury Deputy Secretary RoberKimmit ldquoThe US Govt is studying the salient features of Islamic banking to ascertain how far it could be useful in fighting the ongoing world economic crisisrdquo

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

Challenges Ahead

Standardisation of rules and regulationsScarcity of enough ScholarsSome Survey says there are only Nearly 260 Islamic scholars world wideQuality Education and Training required

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion

ConclusionOne of Biggest of Muslim Community in the world is denied of this right ndashIndian Muslims

We have to fill the gap

Let us work together

• An Introduction to Islamic Banking and Finance
• Introduction
• Islamic Economic System
• Capitalism
• Socialism
• Islamic Concept
• Islam
• Basic Concept of Islamic Economy
• Riba (Interest)
• Gambling
• Garar
• Necessity of Banking
• Conventional Banks and Islamic Banking
• History of Islamic Banking
• Medieval Period
• Modern Islamic Banking
• Sources of Islamic Banking
• Islamic Banking tools
• Financing Tools
• Musharka
• Management of Musharaka
• Profit and Loss Sharing
• Issues in Musharaka
• Application of Musharaka
• Difference Between
• Mudaraba
• Terminology
• Types of Mudaraba
• Profit and Loss in Mudaraba
• Difference Between Musharaka amp Mudaraba
• Applications Issues
• Musharaka Muthanaqqisa(Diminishing Partnership)
• Musharaka Muthanaqqisa(Diminishing Partnership)
• House Financing A Model
• Mushraka Muthanaqqisa
• Murabaha (Cost Plus)
• Murabaha (Cost Plus)
• Issues in Murabaha
• Applications of Murabaha
• Salam
• Salam - Conditions
• Benefits of Salam
• Istisnaa
• Differences betweenIstisnaa and Salam
• Uses of Istisnaa
• Ijarah (Leasing)
• Ijarah
• Liabilities Side
• Role of the Bank as Agent (Wakeel)
• Bank as a Guarantor (Kafeel)
• Islamic Investment funds
• Comparison of Sukuk amp Bond
• Types Sukuk
• Takaful- Islamic way of Insurance
• Basic Elements of Takaful
• Comparison of Insurance amp Takaful
• Takaful Models
• Islamic Credit Cards
• Growth of Islamic Banking
• Europe towards Islamic Finance
• West looks towards Islam
• Challenges Ahead
• Conclusion