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islamic banking
islamic banking

... a: Commercial Interest is charged from wealthy persons whereas usury is charged from the poor. It does not exploit the poor while consumption interest or usury exploit the poor. Ans. Validity of a transaction is not based on the financial status of a party, like sale, leasing etc. Law does not diffe ...
AL-MAQALAH - Bank Muamalat
AL-MAQALAH - Bank Muamalat

... finance. Thus, the prohibition of interest, in payment or receipt, is the nucleus of Islamic banking and its financial instruments, while the charging of interest in all modes of transaction whether it is in loan, advances or leasing is the core in the conventional banking. ...
Download attachment
Download attachment

... financed by the customer himself. Non-real transactions (derivatives) are essentially speculative in nature and do not add value to an economy ⇒ restriction on short selling - you cannot sell what you don’t posses/own ⇒ Islamic banks are more involved / concerned about the profitability/viability of ...
Introduction. Conventional Banking System. Global Financial Crisis
Introduction. Conventional Banking System. Global Financial Crisis

... that the global economy was in trouble. At that point, economists, even non-Muslims, became more interested in the Islamic Financial System (IFS) and Shari’a compliant transactions. ...
Downlaod File
Downlaod File

... The System of Islamic banking is based on the Shari' a and it must not pass the limits of Shari' a law in all of dealings. Shari' a is an Arabic word and it means "the moral code and religious law of Islam" this term become known for Muslims and non-Muslims. Shari' a control Muslim life all the time ...
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Murabaha

Murabaḥah, murabaḥa or murâbaḥah (Arabic مرابحة) is an Islamic term for a sale where the buyer and seller agree on the markup for the item(s) being sold. In recent decades it has become a term for ""the most prevalent financing mechanism"" in Islamic (i.e. ""shariah compliant"") finance, based on murabaḥa purchases. As an Islamic financing structure, the seller is the ""lender"", typically selling something the borrowing person or company needs for their business. The buyer/borrower pays in periodic installments, and at a higher price than the seller/lender paid for the item(s), but with a profit margin agreed on by both parties. The profit made by the seller/lender is not regarded as interest on a loan, (or any kind of compensation for the use of the lender's capital), as this would be forbidden as riba. Instead it is seen as ""a profit on the sale of goods"". Murabaha is similar to a rent-to-own arrangement, with the intermediary retaining ownership of the property until the loan is paid in full.As the requirement includes an ""honest declaration of cost"", Murâbaḥah is one of three types of bayu-al-amanah (fiduciary sale). The other two types of bayu-al-amanah are tawliyah (sale at cost) and wadiah (sale at specified loss). If the exact cost of the item(s) cannot be or are not ascertained, they are sold on the basis of musawamah (bargaining). Different banks use this instrument in varying ratios. Typically, banks use murabahah in asset financing, property, microfinance and commodity import-export. The seller may not use Murâbaḥah if profit-sharing modes of financing such as mudarabah or musharakah are practicable. Since those involve risks, they cannot guarantee banks any income. Murabahah, with its fixed margin, offers the seller (i.e. the bank) a more predictable income stream. A profit-sharing instrument, conversely, is preferable as it shares the risks more equitably between seller and buyer.There are, however, practical guidelines in place which aim to ensure that the Murâbaḥah transaction between the bank and the customer is one based on trade and not merely a financing transaction. For instance, the bank must take constructive or actual possession of the good before selling it to the customer. Whilst it can be justified to charge an additional margin to the customer to reflect the time value of money in terms of actual payment not being received from the customer at time zero, the bank can only impose penalties for late payment by agreeing to purify them by donating them to charity.The accounting treatment of Murâbaḥah, and its disclosure and presentation in financial statements, vary from bank to bank.
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