Sharing is the literal meaning of Musharakah and it came from an Arabic word ‘Shirkah’ which means being a partner. The term ‘shirk’ is also used in the same context which bring the meaning partner of Allah. Under Islamic jurisprudence, Musharakah is defined as a partnership or enterprise structure with profit or loss which sharing implication that is used in Islamic banking rather than interest bearing loans. Basically, the nature of Musharakah is the allocation of profits must be determined and specified beforehand by a profit and loss sharing partnership. The evidence that shows the nature of Musharakah can be seen in Al-Quran which says “But if they are more than two, they share a third”. It also stated in Al-Quran that “Many partners oppress one another, except those who believe and do righteous deeds, and very few they are” . In hadith it is stated that the Prophet S.A.W said “Allah had said that: “I am the third of the partners, as long as any one of them does not betray the other. If he/she …show more content…
Musharakah financing are the structure of project financing, syndicated financing, asset financing, working capital financing, contract financing, trade financing and structured products. One of the frequent Musharakah applications in asset financing is Musharakah Mutanaqisah which well known as diminishing partnership. Musharakah Mutanaqisah is a contract of partnership between two parties, where one partner step by step buys the whole parts of the property. The transaction will start with the formation of partnership where the buying and selling of the equity will occur between the two partners. It is necessary that buying and selling should not be stipulated in the partnership contract. Furthermore, the buying and selling agreement must be independent of the partnership contract where it is not allowed that one contract should be entered into as a condition for ultimate the
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
Islam is a monotheistic and Abrahamic religion alongside Judaism and Christianity. It is currently the second largest religion in the world today. Its beliefs come from the Qur'an which literally means "the recitation" which is believed to be a literal transcription of the word of God. Its main prophet is named Muhammad who began Islam by speaking with the angel Gabriel in a cave during his meditation and then acting as an instrument of God to help write the Qur’an. Muhammad then spread Islam to the scattered tribes of Arabia by becoming the leader of Yathrib and using his wonderful leadership abilities to then grow his influence over virtually all of Arabia. Muhammad is known by Muslims to be the seal of the profits because no profits after Muhammad should be considered legitimate. Muhammad also left behind the Hadith or “tradition” which is a collection of writings compiled of reports of Muhammad’s actions as leader of Yathrib. These reports are used as a more specific code of ethics in day to day life and from these reports the 5 Pillars of Islam are derived (Smith 160). Although Islam shares many similarities to Judaism and Christianity it is often viewed in the US with hate derived from preconceived notions following the attack on September 11th 2001. This paper seeks to provide an overview of Islam’s history as well as its two major sects and 5 main pillars to remove preconceived notions and provide a glance into the minds of the Islamic people.
Coins are an important way for Islamic empires to express what is important to them. Over the decades of Islamic expansion coins were used with designs. These were coins remained in use from the Byzantine and Sasanian empires. Coins began to evolve as Muslims started to depict their own designs from the Byzantine and Sasanians. During the Umayyad dynasty things started to change with the appearance of coins. New designs were implemented during this time that were not the norm. An Umayyad caliph by the name of ‘Abd al-Malik was the one to start this alternation of the design for these coins. This was something that was important for him to strike and to maintain as the coin usage. The importance was because of religion, government, and change
A business partnership is associations between two to twenty persons called partners who are in business jointly whose aims are make investment return. Those persons can be individuals, companies or trusts. Each partner contributes capital, labour, belongings or expertise to the partnership. It is imperative that all members involved in the partnership formalize the relationship through a written agreement in order to avert future disputes. The agreement dictates the share of profits and losses. The associates are correspondingly liable for the amount overdue, on the business. Features of a partnership; it can be formed for an unknown time, every member is viewed as an agent of every other member of the partnership. Partner's private assets are attached to the business obligations, equality of shares or interest unless otherwise and ownership interest cannot be transferred without the consent of all the owners (Aronsohn, 1957 p 100).
The Five Pillars of Islam is what is needed to be accepted and followed in Islam. They are in the Qur’an, which a sacred book of Islam. Each pillar of the Five Pillars is a commandment that must be followed. The pillars are: Creed (Shahadah), Prayer (Salat), Charity to the Poor (Zakat), Fasting during Ramadan (Sawm), and Pilgrimage to Mecca (Hajj.) Whether you obey the five commandments of the Five Pillars is dependent on one's faith, and it determines how God will judge you after your death.
.... If the Islamic finance needs to imposed higher risk to their customers, but still follow the rules and regulations that include in Al-Quran and Al-Sunnah. From this, the Islamic finance still can focus on the well being of their customers and wealth.
Capital is the principal feature of Mudarabah forming the substance of the contract. The capital shall be contributed by the capital provider only. The capital shall be managed by the manager to generate income. The capital of Mudarabah may be in the form of monetary or non-monetary
On the board on Monday morning, there were numbers one through five and they each had a religion written next to them. 1 was Hinduism, 2 was Christianity, 3 was Judaism, 4 was Buddhism, and I was lucky enough to get 5: Islam. Oh, I know so much about Islam culture and their religion, are you kidding? I don’t even know where Islam is. I’m just kidding, it’s not a country. There are many differences between Islam and the United states like our religion, clothes, and food, and becoming a Christian or a Muslim, but Islam is the second largest religion in the world, so it’s important to a lot of people. The followers of Islam are called Muslims. Becoming a Muslim is not an easy process. You must do a long list of tasks. After you become a Muslim you must do everything in your power to try to have a good Muslim lifestyle.
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
The word “Takaful” is derived from the Arabic verb “Kafala” which simply means to jointly guarantee. Therefore the pact between at least two parties agreeing to jointly guarantee one another in the event of a loss, as a consequent of being afflicted by a calamity defines the term “Takaful”. Technically Takaful defines a mutual; guarantee or assurance based on the principle of al-aqad (contract) provide by group of people living in the same society, against a defined risk or catastrophe befalling life, property or any form of valuable asset. According to Islamic Financial Services Act 2013 Takaful means an arrangement based on the mutual assistance under which Takaful participants agree to contribute to a common fund providing for
1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the bank’s 25th Anniversary.
Religion is an important factor in many lives in today’s society. A particular western religion that is taken very seriously by many is known as Islam. Essentially, Islam means “submission”, or in other words a person is to abide by God and peace will follow. In order to comprehend the Islamic religion, it is consequential to view the major themes associated with this religion. By going through the central themes of Islam it could help others comprehend what is involved with this specific religion.
The overall discussion of risk management based on the Islamic law or maqasid al-shariah. Chapra quotes al-Ghazali in defining maqasid as promotion of “the well-being of the people, which lies in safeguarding their faith, self, intellect, posterity, and wealth (ISRA, 2011). Economic activities are not judged by their inherit risks, but by whether they add value and/or create wealth from an islamic perspective. To makes risk management an imperative for a flourishing financial system, wealth protection is being one of the major shariah objectives.
Our group have been assinged to discuss on the topic above but in Islamic Banking perspectives. Therefore, before going any further, let us clarify definition of the Principles of Islamic Banking and clarify what are the elements involve in the Principles of Islamic Banking. Beside, we will also do some comparison of product or services offered by both banks which are conventional and Islamic banking. Apart from that, we will also clarify the problems or challenge faced by the agency which practices the Islamic banking in their agency.
In Islamic banking, there are still five main concepts which are profit and sharing, Wadiah, Musharakah, Murabaha and Ijarah. Profit and loss principle is actually based on mudarabah principle. Under this principle, profits will be shared between owner of capital (financier) and the entrepreneur on the basis of contractual agreement. However, financier will lost it money invest if the business fail. This means that, income from the money invest by financier is not guarantee. For wadiah, refund of the principal is guarantee by the bank. Depositor under this principle might receive a share on profit of the bank’s business. Wadiah is safekeeping as their principal is guarantee in full of demand although the profit of investment by bank is not guarantee. Musharakah is a joint enterprise or partnership business which both parties will manage the business together. Under this principle, ratio of profit or loss pre-determined basic. After a certain periods, a party can terminate the joint venture gradually. Murabaha is another principle of Islamic ban...