Articles

  • KAFALA

    November 26, 2019 by

    The Literal Meaning Kafala is joining or merging. Simply put, the term means to guarantee. The guarantee may relate to a person, finance or action to be performed. Kafala relating to a person involves the production of the person for whom the guarantee (bail) has been given. Kafala relating to finance implies to guarantee to… Read more

  • WADI’AH DEPOSIT TAKING INSTRUMENT

    May 4, 2019 by

    The term wadi’ah is derived from the verb “Wada’a”. It means to keep, lodge, store, entrust, leave, or deposit. It means to leave something in someone’s custody. In technical terms, it refers to the act of keeping or the property that is being kept. It has also been used to refer to assets given to… Read more

  • WAKALAH AGREEMENT

    February 25, 2019 by

    Wakalah means; to look after, to delegate, to authorize, doing a task on behalf of another party. it is a contract of agency where a person (the principal – Muwakkil) appoints another person (the agent – Wakil) to do a certain well-defined tasks on behalf of him or her for a specified time for an… Read more

  • QARDH-HASAN (BENEVOLENT LOAN)

    January 7, 2019 by

    Qardh-Hasan is a form of interest-free loan that is extended by a lender to a borrower on the basis of benevolence. It means the lender does not expect any form of return from the borrower. It is a gratuitous loan extended to those in need, for a specified period of time. At the end of… Read more

  • TAWARRUQ

    December 11, 2018 by

    As discussed in our previous articles, Islamic banks solve customer needs through number of ways. All Islamic banking contracts entail buying or selling of goods or services. But what if the customer needs liquid cash for his miscellaneous personal use? Remember that money is not a commodity which can be bought or sold. And what… Read more

  • WHAT IS MUSHARAKA?

    October 23, 2018 by

    The term Musharaka is derived from the Arabic word Sharikah which mean partnership. It refers to all form of sharing and partnership. Musharaka was practiced by many civilizations long before the advent of Islam. When Islamic principles were introduced during the time of the Prophet ﷺ, Musharaka was approved as a valid means of financing.… Read more

  • WHAT IS MUSHARAKA?

    October 23, 2018 by

    The term Musharaka is derived from the Arabic word Sharikah which mean partnership. It refers to all form of sharing and partnership. Musharaka was practiced by many civilizations long before the advent of Islam. When Islamic principles were introduced during the time of the Prophet ﷺ, Musharaka was approved as a valid means of financing.… Read more

  • Operationalization of Mudharaba Contract in Present Day Islamic Banking

    October 15, 2018 by

    To make Mudharaba contract valid and in line with Shariah, the following guidelines between Rabb ul Maal (capital owner) and Mudarib (fund manager) have been laid down by scholars: The amount of capital must be specified from the inception, uncertain amount of capital leads to uncertainty when it comes to profit sharing. The currency of… Read more

  • MUDHARABA AS A MODE OF DEPOSIT TAKING

    September 30, 2018 by

    In our previous articles we looked at deposit taking instruments and classified them into two categories; Profit and Loss Sharing (PLS) such as Mudaraba and Musharaka and Debt based modes of deposit taking. We will today commence with Mudaraba, the first instrument under the Profit and Loss Sharing (PLS) category. Mudharaba is a profit-and-loss sharing… Read more

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