A banking activity that is based

on Syariah principles.
Does not allow the paying and
receiving of interest.
Promotes profit sharing in the
conduct of the banking business.
Prohibition of monopoly and
hoarding.

Operates according to Fiqh al-Muamalat:

- Sharing of profits and loss and the

prohibition of riba (interest)
- The common concepts are:
* Mudharabah (profit-sharing)
*Wadiah (safekeeping)
*Musyarakah (joint-venture)
*Murabahah (cost-plus)
*Ijarah (leasing)

For all banking institutions that offer Islamic

products
Objectives:
To advise and to ensure the operations and
activities of the bank comply with Syariah
principles;

To promote and develop the application

of Islamic principles, law and traditions to

business and commercial affairs;
To promote commercial activities that are
consistent with Syariah principles;
To safeguard the Islamic communities
from activities which are forbidden in
Islam;
To promote, foster and develop the
banking services and products based on
Islamic principles;

To promote the establishment of investment

companies or business enterprises (activities

which are not forbidden in Islam)

Do not deal with loans (except Qardh-hasan)

Practise the principles of Musharakah and

Mudharabah
Prohibition of interest in all transactions
Prohibition of monopoly and hoarding
(excessive collection of items)
Emphasize fair and legitimate profits in
business activities

To balance between earning and spending

- earning must be lawful

- spending for the welfare of the people
not for wasteful or pleasurable activities
Based on the principles of mudharabah
Free from usury (lending of money with an
interest charge for its use)
Making profit and conform to Islamic

business principles
Practice honesty, justice and equity

Trades that promote obscenity (Something

that is offensive or repulsive to the senses )

Prostitution and adultery
Manufacture, sale and transportation of liquor
Fortune-telling and drawing lots
Business involving usury
Making and sale of idols and services
rendered in or to pagan places of worship

Bribery
Misappropriation
Embezzlement (the act of wrongfully

appropriating funds that have been entrusted into

your care but which are owned by someone else)
Larceny (the unlawful taking of personal property
with intent to deprive the rightful owner of it
permanently)
Unfair use of property of an orphan
Gambling
Short weight and measure

Profit and loss sharing principles

Mudharabah
Musyarakah

Fees or charges based principles

Murabahah
Bai muazzal
Ijarah
Ijarah wa-iktina

Free service principle

Qard hassan

Ancillary principles

Wadiah
Rahn

Interest free vs. interest based

Goal oriented vs. profit maximization
Multipurpose banks vs. purely commercial

banks
Project manager-entrepreneur relationship vs.
debtor-creditor relationship

Long term financing and follow-up projects

Moral hazard questions
Risk of fraud
Problem of delays in payment and insolvency
Planning problems