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What is Islamic finance?

Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending
institutions, raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are
permissible under this form of law.

What is meant by Islamic banking?


Islamic banking or Islamic finance (Arabic: ) or sharia compliant finance is banking or financing activity
that complies with sharia (Islamic law) and its practical application through the development of Islamic economics.

How does Islamic financing work?


To begin with, in Islamic finance, one must work for profits, and simply lending money to someone who needs
it does not count as work. ... Instead, a bank must provide some service to earn its profits. Thus, instead of traditional
accounts with given interest rates, Islamic banks provide accounts which offer profit/loss.

How does Islamic bank make money?


Islamic Finance is based on the Profit-Sharing principle. ... Thus, instead of traditional accounts with given interest
rates, Islamic banks provide accounts which offer profit/loss. The bank in turn purchases assets with your money, which
generate returns for the bank.

What is a conventional bank?


One key difference is that conventional banks earn their money by charging interest and fees for services, whereas
Islamic banks earn their money by profit and loss sharing, trading, leasing, charging fees for services rendered, and using
other sharia contracts of exchange.

What is a Murabaha?
Murabaha is an Islamic financing structure in which an intermediary buys a property with free and clear
title. Murabaha is not an interest-bearing loan, which is considered riba (or excess), and is an acceptable form of credit
sale under Sharia (Islamic religious law).

What is the meaning of Islamic finance?


Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending
institutions, raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are
permissible under this form of law.

What does it mean to be Shariah compliant?


Shariah-compliant funds are investment funds which meets all of the requirements of Shariah law and the principles
articulated for "Islamic finance."

What is the meaning of Sukuk?


Definition of sukuk (Islamic bonds) Islamic bonds, structured in such a way as to generate returns to investors without
infringing Islamic law (that prohibits riba or interest). Sukuk represents undivided shares in the ownership of tangible
assets relating to particular projects or special investment activity.

What is the mudarabah?


Mudarabah is an Islamic contract in which one party supplies the money and the other provides management expertise to
undertake a specific trade. The party supplying the capital is called owner of the capital. The other party is referred to as
an agent who actually runs the business.

What is the definition of riba?


Riba is a concept in Islamic banking that refers to charged interest. It is forbidden under Sharia, Islamic religious law,
because it is thought to be exploitive. Depending on the interpretation, riba may only refer to excessive interest; however
to others, the whole concept of interest is riba, and thus is unlawful.

What is the conventional finance?


A conventional mortgage refers to a loan that is not insured or guaranteed by the federal government. A conventional, or
conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have either a fixed or
adjustable rate.

What is the meaning of traditional banking?


Traditional banks were THE original banks, the financial depository institutions first to offer checkable
deposits. Traditional banks invariably have the word "bank" in their names and are charted by either the Comptroller of
the Currency or one of the fifty state corporation commissions.

What is a commodity Murabaha?


In murabaha agreements, a commodity is sold for cost plus profit, and both the buyer and seller know the cost and the
profit involved. Basically, this product is a kind of trade financing instrument used by Islamic banks.
What is the meaning of Tawarruq?
A tawarruq is an Islamic financial product which allows clients to raise money quickly and easily, in theory without
breaking Muslim bans on interest. A customer buys an easily saleable asset from an Islamic bank at a marked up price, to
be paid at a later date, and quickly sells the asset to raise cash.

What is the Islamic financial system?


Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore,
sharia-compliant. Just like conventionalfinancial systems, Islamic finance features banks, capital markets, fund
managers, investment firms, and insurance companies.

What is the meaning of musharakah?


Musharakah is a joint enterprise or partnership structure with profit/loss sharing implications that is used in Islamic
finance instead of interest-bearing loans.Musharakah allows each party involved in a business to share in the profits and
risks.

What is the meaning of Shariah compliance?


Investments which are in accordance with the Islamic Principles are called Shariah-compliant. There are three principal
rules which need to be adhered to when analyzing an investment from the standpoint of Shariah permissibility. The first
is the absence of interest (riba) in the investment.

What is Shariah investment?


Sharia (other variations Shariah, Shari'ah) is the Muslim or Islamic law which regulates many aspects of a Muslim's life
including the type of investments allowed. For instance, interests are considered usury according to the Riba rule
therefore bonds are prohibited to investors following the Sharia law.

What is Ijarah Sukuk?


Ijarah sukuk (singular: ijarah sakk) are certificates of equal value which are issued by the owner of an existing property
or asset either on his own or though a financial intermediary, for the purpose of leasing it against a rental from the
subscription proceeds.

What is a bond in finance?


A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which
borrows the funds for a defined period of time at a variable or fixed interest rate.

What is the meaning of mudarabah?


In Islamic finance, Mudarabah is a distinct type of partnership, wherein one partner provides the capital to an
entrepreneur (another partner) for investing in a commercial initiative, with the objective of sharing profit from the
commercial entity.

What is a Mudarib?
The manager with whom the profits are shared once the work is undertaken by the individual contracted in the mudaraba.
This manager is usually the entrepreneur rather than the financier, and he provides the management, business acumen, and
the products/services the business entails.

What is the difference between interest and usury?


Interest refers to the fee a lender charges when she allows your business to borrow money. Most lenders
calculate interest based on a percentage of the amount you owe on the loan. ... Usury refers to interest that is higher than
the maximum rate that the state allows lenders to charge.

What is the definition of interest in Islam?


In classical Islamic jurisprudence the definition of riba was "surplus value without counterpart." ... Definitions of riba
include: Unjustified increment in borrowing or lending money, paid in kind or in money above the amount of loan, as a
condition imposed by the lender or voluntarily by the borrower.

What do you mean by Shariah?


Sharia is an Islamic religious law that governs not only religious rituals, but aspects of day-to-day life in Islam. Sharia,
literally translated, means "the way." ... Also known as "Shariah" or "Shari'a"

What is Sahara law?


Sharia law is Islam's legal system. It is derived from both the Koran, Islam's central text, and fatwas - the rulings of
Islamic scholars. Sharia literally means "the clear, well-trodden path to water".