Islamic finance is governed by the Islamic law (shari’ah) and the sources from Quran and Sunnah. Islamic finance is the financial framework that comprise the activities according to Islamic law that known as Shariah principle. In Islamic law, any activities involved must be prohibiting from riba. Riba means extra or excess interest in payment made by buyer or customer to the seller or bank. Besides riba, Shariah Law also prohibits any transactions that contain gharar (uncertainty) and maysir (gambling). In Islam, any business activities must be clear and based on Quran. For example, Islam prohibit from investing business in unlawful and haram like run business in producing media such as gossip column which are contrary to Islamic values. The sources of Shariah Law is come from Quran, Sunnah, Ijmaa’ and Qiyas. Quran is refer to the words of Allah revealed to Prophet Muhammad s.a.w. Ijmaa’ is the opinion and agreement between Muslim jurisconsults while Qiyas is application and extension of law established by binding authority to a particular case and compare a new case with Divine text with same and common effective cause (illahi). Islamic finance also can be categories into three sections, there are about faith and belief, practice and activities and moralities and ethic. Under practice and activities, it can be divide into two which is ibadat (relationship with God) and mu’amalat (relationship with others human). In mu’amalat, it separate to political, economic and social activities.
ISLAMIC FINANCE HISTORY
First effort of Islamic finance is in 1960’s. In 1963, Mit Ghamr Local Saving Bank was established in Eygpt. The operation is based on German Saving Bank. The purpose of the bank is to mobilize the idle saving of Musl...
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...ribute profit to the customer which is can be calculated based on gross profit is permissible. In current practice in Islamic financial system, they used to calculate the gross profit between institution and customer by deducted whole operation profit and investment finds to direct expense. After getting the value, the institution will get the actual value to the customer. Based on SAC meeting, they conclude that the method is permissible. It is because the institution have aim to safeguard the customer as the depositor and investor in their institution. In musyarakah contract, all partners were agreed about the proportion of gross profit and net profit. But in mudharabah case, majority consulters agreed that the mudarib must responsible to bear the whole operating cost include indirect cost. Therefore, the method to distribute gross profit is must meet the need.
Islamic law may be hard to understand from a western perspective. There are many similarities, such as the way trials convene, but also many differences. The structure of Islamic Law and what they base their law on is vastly different than our own. In this essay, I am going to cover some of the major topics of Islamic Law. This includes Sharia, and how laws are derived from it. What is Fatwa, and why it is needed. How family practice law works and how it pertains to women. I will then finish with Islamic jurisprudence. Let us begin with Sharia.
Saudi Arabia is one of largest Muslim populated Countries in the world, which follows the Islamic culture. The laws are called “Laws of God”, which are apparently interpreted from the Quran. The “Laws of God” is also known as the Sharia laws. The Sharia laws have great impact on Saudi Arabian women, Muslim citizens and Non-Muslim expatiates. Women of Saudi Arabia have limited rights based on the countries Islamic beliefs. However, they are gradually making progress to uplifting some restrictions. Muslim citizens have rigorous rules set in place as well. Furthermore, Non- Muslim citizens are stripped of their rights to Freedom of Religion.
The book I’m reading is Fundamentals of Islam by Sayyid Abul A’la Maududi. My impression : 1. Title – the title itself (without reading the book) suggests that by reading this book I will get to know Islam better and I target that after finishing this book I will be a much better Muslim, with a better range of understanding of this religion. 2.
Zaidon, S. (2008). Satu Tinjauan Literatur Penggunaan Portfolio Kanak-Kanak. Kampus Pendidikan Islam, Maktab Perguruan Islam.
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.
The Five Pillars of Islam are a guide for the followers of the Islamic religion. The original Arabic translations of the Five Pillars of Islam are Shahadah, Salat, Zakat, Sawm, and Hajj.
Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. However, these entities are governed both by Islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process. It would based on two sources which are Al-Quran and As-Sunnah.
would be as if he slew the whole of mankind. And if anyone saved a
Islam is the second largest religion in the world, possessing over 1.6 billion followers’ worldwide. Established in the Middle East in 7th century C.E., this religion was founded on the basic principles and teachings of the Prophet Muhammad. Similar to most, if not all organized faiths, Muslims are required to adhere by a strict moral code and expected to fulfill a multitude of religious obligations that reflect one’s dedication to the supreme Allah. In order to satisfy all Islamic traditions, one must practice the Five Pillars of Islam, one of the most significant core beliefs embedded within the faith. The pillars provide a framework and criteria for Muslim believers, unifying all members across cultural and geographical boundaries. These specific ideals personify the duties that each individual needs to practice such as: testimony (Shahadah), prayer (Salat), charity (Zakat), fasting (Swam), and pilgrimage (Hajj). The Islam religion emphasizes the vitality of physically engaging in acts of worship, ultimately impacting and dictating the routine of a Muslim’s daily life.
As Mudharabah applies the concept of profit- sharing, the probability of attainment of profits or suffering of losses is resultant from economic activities. The maturity of Mudarabah Interbank Investment in the Islamic Interbank Money Market is possible to be an overnight basis, but yet Mudarabah Interbank Investment, within this short-term period can help contribute to the economic condition. The Islamic Interbank Money Market is destined for managing short-time period liquidity to support activities banks carry out, which is the usage of funds from the excess unit, to fund the shortage units, and to match or equalize the socioeconomic and financial needs between the two units. Mudarabah Interbank Investment, may actually indirectly contribute to economic growth as a part of the entire organization of the Islamic Financial Institutions needs Islamic Interbank Money Market to guarantee the continuousness of their businesses, and Mudarabah Interbank Investment is as a tool for this purpose. (Saiti, Hasan, & Adawiah, Islamic Capital Markets: Volatility, Performance and
1. Islamic banks functions and operating modes are based on the fully manmade and risk transfer principles. 1. Islamic banks functions and operating modes are based on the rules of Shariah, which is as a divine guidelines as given by the holy quran and the al-Sunnah (Hadith) of the prophet Mohammad and embodies all aspect of the Islamic faith, belief and practice.
First of all, let us outline how Islamic banks actually work and what their main differences are in comparison with conventional banks. In this banking system, banks are operated by Islamic laws (known as Sharia), so Islamic economic principles are considered as primary guidance. Two basic doctrines behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest . Hence unlike conventional commercial banks, Islamic banks do not pay or charge interest on lending or borrowing of money. This is because the Sharia’s strictly prohibits, among other things, the receipt and payment of riba (interest) /. The interpretations to clarify the meaning behind this restriction suggests that earning or charging extra amount of money from debtor has to be seen something as immoral behavior, because making pressure on your borrower is actually unfair from the view point of Islam. To make it clear, the religion of Islam basically promote the principle of justic...
According to Shari’ah, which is the guidelines underlined by Islam, there is several principles of Islamic Banking that are in accordance to its practices. They are :-
Islam the second largest monotheistic religion worldwide which began in the seventh century when Prophet Muhammad received the first revelation from angel Gabriel at the age of forty. One of the most important task of a Muslim is to be able to perform the 5 pillars in their lifetime which are the overall framework of Islam which were revealed to the prophet Muhammad (PBUH). The Five pillars include: Shahadah, the profession of faith Salat, prayers, Zakat, charity, Sawm, fasting and lastly, Hajj, pilgrimage to the Mecca.
Muslim scholars also confess the important of Islamic work ethics in the modern age; therefore it became part of Islamic thought which is useful to every generation. According to Ali and Al Owaihan (2008) and cited by Yousef (2001), the work that which associated with the sayings of Prophet Mohammad SAW is classified into eleven branch, that are practicing lawful business, transparency, the importance of earning wealth, quality of work, wages, self-dependence, monopoly, bribery, and intentions deeds, kindness and greed. They said that Prophet Mohammad SAW in a pure manner train...