An introduction to Islamic finance / Muhammad Taqi Usmani.

Format:

Book

Author/Creator:

ʻUs̲mānī, Muḥammad Taqī, author.

Series:

Arab and Islamic laws series.

Arab and Islamic laws series

Language:

English

Subjects (All):

Finance--Islamic countries.

Finance.

Finance--Religious aspects--Islam.

Financial institutions--Islamic countries.

Financial institutions.

Physical Description:

1 online resource.

Place of Publication:

The Hague, The Netherlands ; London ; New York : Kluwer Law International, [2002]

Summary:

Although the principles of Shari'ah require banks and financial institutions to be structured on an interest-free basis, this does not mean that such institutions are charitable concerns. As long as a person advancing money expects to share in the profits earned (or losses incurred) by the other party, a stipulated proportion of profit is legitimate. The philosophy is enshrined in the traditional Islamic concepts of musharakah and mudarabah, along with their specialized modern variants murabahah, ijarah, salam, and istisna'. This invaluable guide to Islamic finance clearly delineates the all-important distinctions between Islamic practices and conventional procedures based on interest. Justice Usmani of Pakistan, who chairs several Shari'ah supervisory boards for Islamic banks, clearly explains the various modes of financing used by Islamic banks and non-banking financial institutions, emphasizing the necessary requirements for their acceptability from the Shari'ah standpoint and the correct method for their application. He deals masterfully with practical problems as they arise in the course of his presentation, and offers possible solutions in each instance.

Contents:

Machine generated contents note: Some Preliminary Points

1. Belief in Divine Guidance

2. The Basic Difference Between Capitalist and Islamic Economy

3. Asset-backed Financing

4. Capital and Entrepreneur

5. Present Practices of Islamic Banks

Chapter 1. Musharakah

1. Introduction

2. The Concept of Musharakah

3. The Basic Rules of Musharakah

3.1 Distribution of Profit

3.2 Ratio of Profit

3.3 Sharing of Loss

3.4 The Nature of the Capital

3.5. Management of Musharakah

3.6. Termination of Musharakah

3.7. Termination of Musharakah without Closing the Business

4. The Concept of Mudarabah

4.1. Business of the Mudarabah

4.2. Distribution of the Profit

4.3. Termination of Mudarabah

5. Combination of Musharakah and Mudarabah

6. Musharakah and Mudarabah as Modes of Financing

6.1. Project Financing

6.2. Securitization of Musharakah

6.3. Financing of a Single Transaction

6.4. Financing of the Working Capital

6.5. Sharing in the Gross Profit Only

6.6. Running Musharakah Account on the Basis of Daily Products

7. Some Objections to Musharakah Financing

7.1. Risk of Loss

7.2. Dishonesty

7.3. Secrecy of the Business

7.4. Clients' Unwillingness to Share Profits

8. Diminishing Musharakah

8.1. Diminishing Musharakah for Carrying Business of Services:

8.2. Diminishing Musharakah in Trade:

Chapter 2. Murabahah

2. Some Basic Rules of Sale

2.1. Bai' Mu'ajjal (Sale on Deferred Payment Basis)

3. Murabahah

3.1. Murabahah as a Mode of Financing

4. Basic Features of Murabahah Financing

5. Some Issues Involved In Murabahah

5.1. Different Pricing for Cash and Credit Sales

5.2. The Use of The Interest-Rate as a Benchmark

5.3. Promise to Purchase

5.4. Securities Against Murabahah Price

5.5. Guaranteeing the Murabahah

5.6. Penalty of Default

5.7. An Alternative Suggestion

5.8. No Roll-Over in Murabahah

5.9. Rebate on Earlier Payment

5.10. Calculation of Cost in Murabahah

5.11. Subject-Matter of Murabahah

5.12. Rescheduling of Payments in Murabahah

5.13. Securitization of Murabahah

5.14. Some Basic Mistakes in Murabahah Financing

6. Conclusions

Chapter 3. Ijarah

2. Basic Rules of Leasing

3. Determination of Rental

4. Lease as a Mode of Financing

4.1. The Commencement of Lease

4.2. Different Relationships of the Parties

4.3. Expenses Consequent to Ownership

4.4. Liability of the Parties in Cases of Loss to the Asset

4.5. Variable Rentals in Long-Term Leases

4.6. Penalty for Late Payment of Rent

4.7. Termination of Lease

4.8. Insuranceof the Assets

4.9. The Residual Value of the Leased Asset

5. Sub-Lease

6. Assigning of the Lease

7. Securitization of Ijarah

8. Head-Lease

Chapter 4. Salam and Istina'

1.1. Meaning of Salam

1.2. Conditions of Salam

2. Salam as a Mode of Financing

2.1. Some Rules of Parallel Salam

3. Istisna'

3.1. Difference Between Istisna' and Salam

3.2. Difference Between Istisna' and Ijarah

3.3. Time of Delivery

4. Istisna' as a mode of financing

Chapter 5. Islamic Investment Funds

2. Equity Fund

2.1. Conditions for Investment in Shares

3. Ijarah Fund

4. Commodity Fund

5. Murabahah Fund

6. Bai'-al-dain

7. Mixed Fund

Chapter 6. The Principles of Limited Liability

1.1. Waqf

1.2. Baitul-Mal

1.3. Joint Stock

1.4. Inheritance under Debt

1.5. The Limited Liability of the Master of a Slave

Chapter 7. The Performance of Islamic Banks

Selected Bibliography

Index.

Notes:

Includes bibliographical references (pages 117-118) and index.

Description based on print version record.

ISBN:

90-04-47991-0

Publisher Number:

10.1163/9789004479913 DOI