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What is Islamic Banking?

Ask a conventional banker exactly what is Islamic banking. He will probably mumble something about
religion. defferentHe will then say well they cannot charge interest but they use something else which is
the same thing. This 'something

What is Islamic Banking?

Ask a conventional banker exactly what is Islamic banking. He will probably mumble
something about religion. He will then say well they cannot charge interest but they use
something else which is the same thing. This 'something else', incidentally, is never
defined. He will then move on to describe Islamic banking as being about smoke and
mirrors. To conclude he will then profoundly announce that, with a few tweaks, it is what
he does every day anyway. And that, to him, is the end of it. But, more realistically, what
exactly is Islamic banking all about?

Islamic financial institutions are those that are based, in their objectives and operations, on
Qur'anic principles. They are thus set apart from 'conventional' institutions, which have no
such religious preoccupations. Islamic banks provide commercial services which comply
with the religious injunctions of Islam. Islamic banks provide services to their customers
free from interest, (the Arabic term for which is riba), and the giving and taking of interest
is prohibited in all transactions. This prohibition makes an Islamic banking system differ
fundamentally from a conventional banking system.

This rejection of interest poses the central question of what replaces the interest rate
mechanism in an Islamic framework. Financial intermediation is at the heart of modern
financial systems. If the paying and receiving of interest is prohibited, how do Islamic
banks operate? Here Profit and Loss Sharing (PLS) comes into play, substituting profit-
and-loss-sharing for interest as a method of resource allocation and financial

Why Study Islamic Banking and Finance?

Islamic banking is now one of the fastest growing sectors of the financial market place, largely driven by
the new wealth of the Middle East and by the need for Muslims, representing one-fifth of the worlds
population, to find islamically acceptable financial products.

At the centre of the demand for expertise in Islamic financing lies the long term wealth
represented by the future oil and gas earnings of the Middle East. The oil and gas reserves for
several of the large Middle East countries are conservatively estimated to last for well over 100 years, a
figure which is being continuously revised upwards. The wealth of the region is increasingly being
channelled into Islamically structured financing.

Islamic financial institutions currently operate in more than 75 countries with assets exceeding US$ 800
billion. This represents a 65 fold growth rate since 1982. However Islamic finance, based as it is on the
fact that financial activities have to be interest free, poses many challenges for anyone seeking to unravel
its workings.

Despite the rapid growth the pace at which Islamic banking and finance training courses are being
developed, to match this growth in demand, is slow, very slow, with the availability of world class quality
training in the subject area lagging far behind that of demand.

The training courses listed below are designed to break through the mysteries and complexities of what,
to an outsider, can sometimes be seen as a myriad of puzzling banking principles.
1. Introduction
A significant development in the Muslim World in the seventies and
eighties was the pan-Islamic movement. This movement aimed to
revive the glory of Islam and began to demand the application of
Shariah in all aspects of life. The effort to establish in Islamic
Banking is one manifestation of this movement. The Muslim
countries began to rediscover Islam and wanted to mould their
economic and financial activities in accordance with Islamic values.
The seventies and eighties of the present century has
witnessed the emergence of a number of Islamic banks and financial
institutions whose modes of operation are distinct from those of
conventional banks. The establishment of these institutions is one
of the several manifestations of the 'back to religion' movement
which is fast gaining strength in present day muslim societies
(quoted in Abulhasan et al. 1991: 155)
The Muslim world has been over-burdened for too long by
western modes of social and economic thought. A large portion of
the Muslim world had been subjugated culturally, economically and
politically by the colonial powers. Even though they have achieved
independence from their colonial masters, the colonial principles
are still deep rooted in the social, economic, political and cultural
life of Muslim communities. Thus, the emergence and expansion of
an Islamic banking system is the starting point of a new path
breaking change in the Muslim world. It is a process of liberating
the Muslims from the yoke of domination by western thought,
values and institutions and remodeling their social and economic
life in accordance with shariah.
The issue of Riba has long been a problem for Muslims. Even
what constituted Riba itself has been a subject under serious
discussion. The existence of Riba has been argued to be a major
factor for the low participation of the Malays in the economic
activities of Malaysia. The establishment of BIMB is a major step
towards an interest-free financial system in Malaysia. This marked
the establishment of more Islamic commercial institutions under the
new mode of the Islamization Policy of Dr. Mahathir Muhammad.

2. The Emergence of Islamic Banks

The elementary concepts of modern Islamic banking date back
to the mid 1940s. Models for Islamic banking appeared in the mid-
1950s, but comprehensive and detailed concepts for interest-free
banking only appeared in the late 1960s. The political environment
during that time almost all Muslim countries was hardly favorable
for a change in the entire system of banking and finance. In fact,
the first experiment in Islamic banking was set up undercover in Mit
Ghamr, Egypt in 1963. The model for the experiment was the
German Savings bank modified to comply with Islamic principles,
i.e. it was barred from charging and paying interest. Nevertheless,
the charter of the Bank did not refer to Shariah.
The second Islamic Conference of Foreign Ministers in 1973
adopted a document on the "Institution of an Islamic Bank,
Economics and Islamic Doctrines". In 1974, the Islamic Development
Bank (IDB) was established as a result of this conference. The
member states of the OIC became members of the IDB. The IDB
helped to establish a number of Islamic banks in various countries.
Beginning in 1974, several Islamic banks have been established
which include: Dubai Islamic Bank in 1975, Faisal Islamic Bank of
Sudan in 1977, Faisal Islamic Egyptian Bank and Islamic Bank of
Jordan in 1978, Islamic Bank of Bahrain in 1979, the International
Islamic Bank of Investment and Development, Luxembourg in 1980
and BIMB in 1983. Today, there are more than a hundred financial
institutions which claim to be operating partially or fully on an
interest-free basis in 34 countries.
Islamic banking has been adopted at the national level in
Pakistan, Sudan, and Iran, and they have decided to Islamize the
whole banking system. Iran enacted a new banking law in August
1983 requiring complete abolition of interest by March 1985 (M.N.
Siddiqi 1988: 48). Sudan opted for a total change when a
presidential decree was issued in 1984, directing all banks to stop
dealing with interest. The Central Bank of Sudan, on 10 December
1984, directed all commercial banks to stop dealing with interest
with immediate effect, and to negotiate conversion of existing
deposit into investment deposits or any other kind of deposits in
accordance with shariah. All outstanding interest bearing advances
were either to be settled through repayment or they had to be
converted into one of the Islamic modes of financing. Foreign
transactions were to continue on the basis of interest till an
alternative way as available.

3. The Theory of Islamic Banking

3.1 Economic Impact of Interest
At the outset, the most important departure of Islamic banking from
conventional banking is the prohibition of Riba, and promoting
Profit and Loss Sharing (PLS) as an alternative to Riba. The
prohibition of interest is obvious in the Quran as well as in the
Sunnah. Riba originally meant 'increase and growth'. This meaning
is taken from the Quran (22:5). Increase means the increase over
capital or nominal amount, the increase being either large or small.
According to Islamic law, Riba technically refers to the premium that
must be paid by the borrower to the lender along with the principal
amount as a condition for an extension in its maturity. In 1992, the
Pakistan Federal Shariah Court ruled that:
It makes no difference whether the loan is for consumption purpose
or for commercial purposes. It does not matter if the rate of
interest is low or high, simple or compound for short or long times,
between the two Muslims or between a citizen and a state or
between two states. Any excess which is pre-determined over the
principal sum in a loan transaction will constitute Riba in all
circumstances (quoted in K. Zaheed 1994: 83)
This immediately leads us to the essence of Islamic banking; an
Islamic bank is a financial institution that conducts its operations in
accordance with Shariah principles. If we have to contrast the
Islamic bank to an existing conventional bank, we may say that
while the latter earns the major portion of its revenues and
expenses on the basis of interest, the former earns the same on the
profits. In the operation of an Islamic bank, profits therefore
assume the place of interest in a conventional bank. 'Usury', the
original name for modern interest.


BIMB was established after the enacting of the Islamic Banking Act
(IBA) in 1983, the IBA permitted the establishment of the first
Islamic Bank in Malaysia. BIMB with a paid up capital of RM 100
million and an authorised capital of RM 500 million is carrying out
its activities on an interest free basis. Tengku Razaleigh , the then
Finance Minister described the Islamic bank as the:
First step in the government's efforts to instill Islamic values into
the country's economic and financial systems as a replacement for
the current Western-base economic system (NST 6 July 1982)

Takaful Malaysia
Syarikat Takaful Malaysia Berhad was incorporated on 29 November
1984, has an authorised capital of RM 500 million and a paid up
capital of RM 55 million. It has been converted into a public quoted
company with the listing of its shares on the Main Board of the
Kuala Lumpur Stock Exchange since 31 July 1996. As a subsidiary
company of BIMB Holdings Berhad, 65.5% of its equity is held by the
Other major shareholders are the State Islamic Religious Councils /
Baitulmals of Terengganu, Pahang, Negeri Sembilan and Amanah
Saham Bank Islam (ASBI).
The company objectives is to provide takaful services (Islamic
Insurance) at the highest standard of efficiency and professionalism
to all Muslims and the population in Malaysia.

Lembaga Tabung Haji (Pilgrims Fund Board)

In line with the concept of Islam as Ad-deen, a way of life in this
world and the Hereafter, every ibadah commanded by Allah S.W.T.
is of benefit in this and the next world. To fulfill this desire to
perform the Hajj pilgrimage, Muslims have to find enough money for
the journey to the Holy Land. To avoid riba' (usury), which is haram
(forbidden) in Islam, Muslims resort to various traditional methods
of saving. Of course, there are those who dispose their animals or
inherited properties for cash to cover their Hajj expenses, a practice
which ultimately imposes economic burden on themselves and their
families while they are on the pilgrimage or when they return from
the pilgrimage. Such practice also does not augur well for the rural
economy, besides retarding the country’s economic growth.
Realising this as well as to help Muslims to save enough money
without involving in activities deemed haram in Islam, Perbadanan
Wang Simpanan Bakal-Bakal Haji was set up in November 1962, and
began its operation on 30 September 1963. The corporation to
manage the savings of Muslims, intending to perform the Hajj
pilgrimage, was the result of a working paper entitled "Rancangan
Membaiki Ekonomi Bakal-Bakal Haji" presented by Royal Professor
Ungku Aziz in 1959 to improve the economy of intending pilgrims.
Enable Muslims to gradually save enough money to meet the cost of
performing the Hajj or other beneficial expenses; Enable Muslims,
through the use of their savings, to take active part in capital
investment in a way, halal to Islam, and Provide protection,
supervision and welfare to Hajj pilgrims.

Pusat Pungutan Zakat (Zakat Collection Center)

Established by The Federal Territory Islamic Council, Kuala Lumpur
(known as MAIWP). It started its operations in 1991. PPZ uses a
corporate style of management through the setting up by the
Council of a company called Hartasuci Sdn. Bhd. which is placed
under a foundation called Yayasan Taqwa Wilayah Persekutuan
Berhad controlled by the Council. PPZ's basic responsibility is to
collect zakat for the Council. It is not responsible for zakat
distribution which is done by other agencies/sections of the Council.
Organization Structure Externally, PPZ is placed under the
foundation which is responsible to the Council. Internally, PPZ has a
Board of Directors which supervises management headed by a
General Manager. There are two divisions, namely the Operations
Division (headed by a Manager), and the Finance & Administration
Division. Each division in turn has various functional units. Basic
functions of PPZ :
To explain to the public about zakat and the responsibility of paying
zakat. To help payers, both individuals and companies, calculate
their zakat. To collect zakat and to increase the collection, both in
terms of amount and payers.
All Collection is immediately bank-in into the Baitulmal account (of
the Federal Territory Islamic Council). Apart from the above
mentioned responsibilities PPZ is also responsible in producing
daily, monthly, quarterly and yearly reports, both for the
management and Council use.
Style of Operation: The guiding philosophy in doing work at PPZ is
to make the zakat payers feel that zakat payment is an ibadah or
duty that is easy to perform; that helps to purify their wealth and
soul; and can give them a great feeling of satisfaction and relief.
PPZ focuses on reaching out to the Muslim community and
reminding them of their religious duty. Talks, pamphlets, posters,
explanations and reminders through the media or through direct
mailing to prospects are some of the methods being used by PPZ.
PPZ relies more on educating the Muslim public as opposed to using
force or the law. Self awareness is more effective and more
appealing to the educated public.
Payer's Preference: Most of the payers prefer to pay zakat in the
month of Ramadhan so that they can pay both their zakat mal
(zakat on wealth) and zakat fitr (zakat on self); and in the month of
January, since a person could get their rebate from income tax
payment for that particular year. These 2 months constitute 65% of
yearly collections. Normally prayers prefer to come to the zakat
counter to pay zakat because they like the act of akad
(solemnisation) even though it is not a must. Other would pay
through the mail, salary deduction, sending a representative to the
zakat center and paying at selected bank counters where major
banks in the country have been appointed as agents by the Islamic

Islamic Banking Concepts

Al-Wadiah Yad Dhamanah (savings with guarantee)
Al-Mudharabah (profit-sharing)
Al-Musyarakah (joint venture)
Al-Murabahah (cost plus)
Bai’ Bithaman Ajil (deferred payment sale)
Bai’ al-Dayn (debt trading)
Al-Ijarah Thumma al-Bai’ (leasing and subsequently purchase)
Al-Ijarah (leasing)
Al-Qardhul Hassan (benevolent loan)
Bai’ as-Salam (future delivery)
Bai’ Al-Istijrar (supply contract)
Al-Kafalah (guarantee)
Ar-Rahnu (collateralised borrowing)
Al-Wakalah (nominating another person to act)
Al-Hiwalah (remittance)
As-Sarf (foreign exchange)
Al-Ujr (fee)
Al-Hibah (gift)

List of Financial Institutions Offering Islamic Banking

Islamic Banks
1.Bank Islam Malaysia Berhad
2.Bank Muamalat Malaysia Berhad
Commercial Banks
1.Affin Bank Berhad
2.Alliance Bank Malaysia Berhad
3.Arab-Malaysian Bank Berhad
4.Bank Utama (Malaysia) Berhad
5.Citibank Berhad
6.EON Bank Berhad
7.Hong Leong Bank Berhad
8.HSBC Bank Malaysia Berhad
9.Malayan Banking Berhad
10.OCBC Bank (Malaysia) Berhad
11.Public Bank Berhad
12.RHB Bank Berhad
13.Southern Bank Berhad
14.Standard Chartered Bank Malaysia Berhad
Finance Companies
1.Affin-ACF Finance Berhad
2.Alliance Finance Berhad
3.Arab-Malaysian Finance Berhad
4.EON Finance Berhad
Merchant Banks
1.Affin Merchant Bank Berhad
2.Alliance Merchant Bank Berhad
3.Arab-Malaysian Merchant Bank Berhad
4.Aseambankers Malaysia Berhad
5.Malaysian International Merchant Bankers Berhad

Discount Houses
1.Abrar Discounts Berhad
2.Affin Discount Berhad
3.Amanah Short Deposits Berhad
4.CIMB Discount House Berhad
5.KAF Discounts Berhad
6.Malaysia Discount Berhad
7.Mayban Discount Berhad

Main article: Islamic economics in the world

Further information: Early reforms under Islam and Islamic capitalism

During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the Caliphate,
where an early market economy and an early form of mercantilism were developed between the 8th-12th
centuries, which some refer to as "Islamic capitalism".[2] A vigorous monetary economy was created on the
basis of the expanding levels of circulation of a stable, high-value currency (the dinar) and the integration
of monetary areas that were previously independent.

A number of economic concepts and techniques were applied in early Islamic banking, including bills of
exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest
forms of capital (al-mal), capital accumulation (nama al-mal),[3] cheques, promissory notes,[4] trusts (seeWaqf)
, transactional accounts, loaning, ledgers and assignments.[6] Organizational enterprises independent from

the state also existed in the medieval Islamic world, while the agency institution was also introduced during that
time.[7][8] Many of these early capitalist concepts were adopted and further advanced inmedieval Europe from
the 13th century onwards.[3]


The word "Riba" means excess, increase or addition, which according to Shariah terminology, implies any
excess compensation without due consideration (consideration does not include time value of money). The
definition of riba in classical Islamic jurisprudence was "surplus value without counterpart", or "to ensure
equivalency in real value", and that "numerical value was immaterial." During this
period, gold and silver currencies were the benchmark metals that defined the value of all other materials being
traded. Applying interest to the benchmark itself (ex natura sua) made no logical sense as its value remained
constant relative to all other materials: these metals could be added to but not created (from nothing).
Applying interest was acceptable under some circumstances. Currencies that were based on guarantees by a
government to honor the stated value (i.e. fiat currency) or based on other materials such as paper or base
metals were allowed to have interest applied to them.[9] When base metal currencies were first introduced in the
Islamic world, the question of "paying a debt in a higher number of units of this fiat money being riba" was not
relevant as the jurists only needed to be concerned with the real value of money (determined by weight only)
rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back
as 1050 dinars of equal aggregate weight (i.e., the value in terms of weight had to be same because all makes
of coins did not carry exactly similar weight).

[edit]Modern Islamic banking

Interest-free banking seems to be of very recent origin. The earliest references to the reorganisation of banking
on the basis of profit sharing rather than interest are found in Anwar Qureshi (1946), Naiem Siddiqi (1948) and
Mahmud Ahmad (1952) in the late forties, followed by a more elaborate exposition by Mawdudi in 1950.[citation
The writings of Muhammad Hamidullah 1944, 1955, 1957 and 1962 should be included in this category.
[citation needed]
They have all recognised the need for commercial banks and their perceived "necessary evil," have
proposed a banking system based on the concept of Mudarabha - profit and loss sharing.[citation needed]

In the next two decades interest-free banking attracted more attention, partly because of the political interest it
created in Pakistan and partly because of the emergence of young Muslim economists. Works specifically
devoted to this subject began to appear in this period. The first such work is that of Muhammad Uzair (1955).
[citation needed]
Another set of works emerged in the late sixties and early seventies. Abdullah al-Araby (1967),
Nejatullah Siddiqi (1961, 1969), al-Najjar (1971) and Baqir al-Sadr (1961, 1974) were the main contributors.
[citation needed]

The early 1970s saw institutional involvement. The Conference of the Finance Ministers of the Islamic
Countries held in Karachi in 1970, the Egyptian study in 1972, the First International Conference on Islamic
Economics in Mecca in 1976, and the International Economic Conference in London in 1977 were the result of
such involvement. The involvement of institutions and governments led to the application of theory to practice
and resulted in the establishment of the first interest-free banks. The Islamic Development Bank, an inter-
governmental bank established in 1975, was born of this process.[10]

The first modern experiment with Islamic banking was undertaken in Egypt under cover without projecting an
Islamic image—for fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the
political regime.[citation needed] The pioneering effort, led by Ahmad Elnaggar, took the form of a savings bank based
on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready 1981),
by which time there were nine such banks in country.[11]

This section
requires expansion.

In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, currently, is still in business in
Egypt. In 1975, the Islamic Development Bank was set-up with the mission to provide funding to projects in the
member countries. The first modern commercial Islamic bank, Dubai Islamic Bank, opened its doors in 1975. In
the early years, the products offered were basic and strongly founded on conventional banking products, but in
the last few years the industry is starting to see strong development in new products and services.

Islamic Banking is growing at a rate of 10-15% per year and with signs of consistent future growth.[12] Islamic
banks have more than 300 institutions spread over 51 countries, including the United States through
companies such as the Michigan-based University Bank, as well as an additional 250 mutual funds that comply
with Islamic principles. It is estimated that over US$822 billion worldwide sharia-compliant assets are managed
according to The Economist.[13] This represents approximately 0.5% of total world estimated assets as of 2005.
According to CIMB Group Holdings, Islamic finance is the fastest-growing segment of the global financial
system and sales of Islamic bonds may rise by 24 percent to $25 billion in 2010.[15]

The World Islamic Banking Conference, held annually in Bahrain since 1994, is internationally recognized as
the largest and most significant gathering of Islamic banking and finance leaders in the world.[citation needed]

The Vatican has put forward the idea that "the principles of Islamic finance may represent a possible cure for
ailing markets."[16]

[edit]Largest Islamic banks


Types of bank

Central bank

Advising bank

Commercial bank

Community development bank

Credit union

Custodian bank

Depository bank

German public bank

Investment bank

Industrial bank

Islamic banking

Merchant bank
Mutual bank

Mutual savings bank

National bank

Offshore bank

Private bank

Savings bank

Swiss bank

Deposit accounts

Savings account

Transactional account

Money market account

Time deposit

ATM card

Debit card

Credit card

Electronic funds transfer

Automated Clearing House

Electronic bill payment


Wire transfer

Banking terms

Anonymous banking

Automatic teller machine


Money creation

Substitute check

List of banks

Finance series
Financial market

Financial market participants

Corporate finance

Personal finance

Public finance

Banks and Banking

Financial regulation

v • d • e

See also: Islamic Development Bank

Shariah-compliant assets reached about $400 billion throughout the world in 2009, according to Standard &
Poor’s Ratings Services, and the potential market is $4 trillion.[17][18] Iran, Saudi Arabia and Malaysia have the
biggest sharia-compliant assets.[19]

In 2009 Iranian banks accounted for about 40 percent of total assets of the world's top 100 Islamic banks. Bank
Melli Iran, with assets of $45.5 billion came first, followed by Saudi Arabia's Al Rajhi Bank, Bank Mellat with
$39.7 billion and Bank Saderat Iran with $39.3 billion.[20][21]


Islamic banking has the same purpose as conventional banking except that it operates in accordance with the
rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic
banking is the sharing of profit and loss and the prohibition of riba (usury). Common terms used in Islamic
banking include profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus
(Murabahah), and leasing (Ijarah).

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy
the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in
installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties
for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is
registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha.
Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for
vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining
ownership of the vehicle until the loan is paid).

An innovative approach applied by some banks for home loans, called Musharaka al-Mutanaqisa, allows for a
floating rate in the form of rental. The bank and borrower form a partnership entity, both providing capital at an
agreed percentage to purchase the property. The partnership entity then rents out the property to the borrower
and charges rent. The bank and the borrower will then share the proceeds from this rent based on the current
equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's
share of the property at agreed installments until the full equity is transferred to the borrower and the
partnership is ended. If default occurs, both the bank and the borrower receive a proportion of the proceeds
from the sale of the property based on each party's current equity. This method allows for floating rates
according to the current market rate such as the BLR (base lending rate), especially in a dual-banking system
like in Malaysia.

There are several other approaches used in business transactions. Islamic banks lend their money to
companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's
individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's
profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This
practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides
labor while financing is provided by the bank so that both profit and risk are shared. Such participatory
arrangements between capitaland labor reflect the Islamic view that the borrower must not bear all the risk/cost
of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.

Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork,
gambling, etc. The aim of this is to engage in onlyethical investing, and moral purchasing.

In theory, Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio.
However, in practice, this is not the case, and no examples of 100 per cent reserve banking are observed.[23]

Islamic banks have grown recently in the Muslim world but are a very small share of the global banking
system. Micro-lending institutions founded by Muslims, notablyGrameen Bank, use conventional lending
practices and are popular in some Muslim nations, especially Bangladesh, but some do not consider them true
Islamic banking. However, Muhammad Yunus, the founder of Grameen Bank and microfinance banking, and
other supporters of microfinance, argue that the lack of collateraland lack of excessive interest in micro-lending
is consistent with the Islamic prohibition of usury (riba).[24][25]

[edit]Shariah Advisory Council/Consultant

Islamic banks and banking institutions that offer Islamic banking products and services (IBS banks) are
required to establish a Shariah Supervisory Board (SSB) to advise them and to ensure that the operations and
activities of the banking institutions comply with Shariah principles. On the other hand, there are also those who
believe that no form of banking that involves interest payments can ever comply with the Shariah.[26]
In Malaysia, the National Shariah Advisory Council, which has been set up at Bank Negara Malaysia (BNM),
advises BNM on the Shariah aspects of the operations of these institutions and on their products and services.
(See: Islamic banking in Malaysia). In Indonesia the Ulama Council serves a similar purpose.

A number of Shariah advisory firms have now emerged to offer Shariah advisory services to the institutions
offering Islamic financial services. Issue of independence, impartiality and conflicts of interest have also been
recently voiced. The WDIBF World Database for Islamic Banking and Finance has been developed to provide
information about all the websites related to this type of banking [27].

[edit]Fundamentals of Islamic finance

The term “Islamic banking” refers to a system of banking or banking activity that is consistent with Islamic law
(Shariah) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection
and payment of interest, also commonly called riba in Islamic discourse. In addition, Islamic law prohibits
investing in businesses that are considered unlawful, or haraam (such as businesses that sell alcohol or pork,
or businesses that produce media such as gossip columns or pornography, which are contrary to Islamic
values). In the late 20th century, a number of Islamic banks were created to cater to this particular banking

[edit]Usury in Islam

The criticism of usury in Islam was well established during the Prophet Mohammed's life and reinforced by
several of his teachings in the Holy Qur’an dating back to around 600 AD. The original word used for usury in
this text was Riba, which literally means “excess or addition”. This was accepted to refer directly to interest on
loans so that, according to Islamic economists Choudhury and Malik (1992), by the time of Caliph Umar, the
prohibition of interest was a well-established working principle integrated into the Islamic economic system. It is
not true that this interpretation of usury has been universally accepted or applied in the Islamic world. Indeed, a
school of Islamic thought which emerged in the 19th Century, led by Sir Sayyed, still argues for an
interpretative differentiation between usury, which it is claimed refers to consumptional lending, and interest
which they say refers to lending for commercial investment (Ahmed, 1958). Nevertheless, there does seem to
be evidence in modern times for what Choudhury and Malik describe as “a gradual evolution of the institutions
of interest-free financial enterprises across the world” (1992: 104). They cite, for instance, the current existence
of financial institutions in Iran, Pakistan and Saudi Arabia, the Dar-al-Mal-al-Islami in Geneva and Islamic trust
companies in North America. This growing practice of Islamic banking will be discussed more fully in a later
section as a modern application of usury prohibition.

[edit]Islamic financial transaction terminology

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standards. Please improve this section if you can. (February 2010)

[edit]Bai' al 'inah (sale and buy-back agreement)

Bai' al inah is a financing facility with the underlying buy and sell transactions between the financier and the
customer. The financier buys an asset from the customer on spot basis. The price paid by the financier
constitutes the disbursement under the facility. Subsequently the asset is sold to the customer on a deferred-
payment basis and the price is payable in instalments. The second sale serves to create the obligation on the
part of the customer under the facility. There are differences of opinion amongst the scholars on the
permissibility of Bai' al 'inah, however this is practised in Malaysia and the like jurisdictions.[28][29]

[edit]Bai' bithaman ajil (deferred payment sale)

This concept refers to the sale of goods on a deferred payment basis at a price, which includes a profit margin
agreed to by both parties. Like Bai' al 'inah, this concept is also used under an Islamic financing facility. Interest
payment can be avoided as the customer is paying the sale price which is not the same as interest charged on
a loan. The problem here is that this includes linking two transactions in one which is forbidden in islam. The
common perception is that this is simply straightforward charging of interest disguised as a sale

[edit]Bai' muajjal (credit sale)

Literally bai' muajjal means a credit sale. Technically, it is a financing technique adopted by Islamic banks that
takes the form of murabahah muajjal. It is a contract in which the bank earns a profit margin on the purchase
price and allows the buyer to pay the price of the commodity at a future date in a lump sum or in installments. It
has to expressly mention cost of the commodity and the margin of profit is mutually agreed. The price fixed for
the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price.
Bai' muajjal is also called a deferred-payment sale. However, one of the essential descriptions of riba is an
unjustified delay in payment or either increasing or decreasing the price if the payment is immediate or delayed.


Musharakah (joint venture) is an agreement between two or more partners, whereby each partner provides
funds to be used in a venture. Profits made are shared between the partners according to the invested capital.
In case of loss, each partner loses capital in the same ratio. If the Bank provides capital, the same conditions
apply. It is this financial risk, according to the Shariah, that justifies the bank's claim to part of the profit. Each
partner may or may not participate in carrying out the business. A working partner gets a greater profit share
compared to a sleeping (non-working) partner. The difference between Musharaka and Madharaba is that, in
Musharaka, each partner contributes some capital, whereas in Madharaba, one partner, e.g. a financial
institution, provides all the capital and the other partner, the entrepreneur, provides no capital. Note that
Musharaka and Madharaba commonly overlap.[30]


"Mudarabah" is a special kind of partnership where one partner gives money to another for investing it in a
commercial enterprise. The investment comes from the first partner who is called "rabb-ul-mal", while the
management and work is an exclusive responsibility of the other, who is called "mudarib".

The Mudarabah (Profit Sharing) is a contract, with one party providing 100 percent of the capital and the other
party providing its specialist knowledge to invest the capital and manage the investment project. Profits
generated are shared between the parties according to a pre-agreed ratio. Compared to Musharaka, in a
Mudaraba only the lender of the money has to take losses.


Main article: Murabahah

This concept refers to the sale of goods at a price, which includes a profit margin agreed to by both parties. The
purchase and selling price, other costs, and the profit margin must be clearly stated at the time of the sale
agreement. The bank is compensated for the time value of its money in the form of the profit margin. This is a
fixed-income loan for the purchase of a real asset (such as real estate or a vehicle), with a fixed rate of profit
determined by the profit margin. The bank is not compensated for the time value of money outside of the
contracted term (i.e., the bank cannot charge additional profit on late payments); however, the asset remains
as a mortgage with the bank until the default is settled.

This type of transaction is similar to rent-to-own arrangements for furniture or appliances that are common
in North American stores.


Musawamah is the negotiation of a selling price between two parties without reference by the seller to either
costs or asking price. While the seller may or may not have full knowledge of the cost of the item being
negotiated, they are under no obligation to reveal these costs as part of the negotiation process. This difference
in obligation by the seller is the key distinction between Murabaha and Musawamah with all other rules as
described in Murabaha remaining the same. Musawamah is the most common type of trading negotiation seen
in Islamic commerce.

[edit]Bai salam
Bai salam means a contract in which advance payment is made for goods to be delivered later on. The seller
undertakes to supply some specific goods to the buyer at a future date in exchange of an advance price fully
paid at the time of contract. It is necessary that the quality of the commodity intended to be purchased is fully
specified leaving no ambiguity leading to dispute. The objects of this sale are goods and cannot be gold, silver,
or currencies based on these metals. Barring this, Bai Salam covers almost everything that is capable of being
definitely described as to quantity, quality, and workmanship.

[edit]Basic features and conditions of Salam

1. The transaction is considered Salam if the buyer has paid the purchase price to the seller in full at the
time of sale. This is necessary so that the buyer can show that they are not entering into debt with a
second party in order to eliminate the debt with the first party, an act prohibited under Sharia. The idea
of Salam is to provide a mechanism that ensures that the seller has the liquidity they expected from
entering into the transaction in the first place. If the price were not paid in full, the basic purpose of the
transaction would have been defeated. Muslim jurists are unanimous in their opinion that full payment
of the purchase price is key for Salam to exist. Imam Malik is also of the opinion that the seller may
defer accepting the funds from the buyer for two or three days, but this delay should not form part of
the agreement.

2. Salam can be effected in those commodities only the quality and quantity of which can be specified
exactly. The things whose quality or quantity is not determined by specification cannot be sold through
the contract of salam. For example, precious stones cannot be sold on the basis of salam, because
every piece of precious stones is normally different from the other either in its quality or in its size or
weight and their exact specification is not generally possible.

3. Salam cannot be effected on a particular commodity or on a product of a particular field or farm. For
example, if the seller undertakes to supply the wheat of a particular field, or the fruit of a particular
tree, the salam will not be valid, because there is a possibility that the crop of that particular field or
the fruit of that tree is destroyed before delivery, and, given such possibility, the delivery remains
uncertain. The same rule is applicable to every commodity the supply of which is not certain.

4. It is necessary that the quality of the commodity (intended to be purchased through salam) is fully
specified leaving no ambiguity which may lead to a dispute. ALl the possible details in this respect
must be expressly mentioned.

5. It is also necessary that the quantity of the commodity is agreed upon in unequivocal terms. If the
commodity is quantified in weights according to the usage of its traders, its weight must be
determined, and if it is quantified through measures, its exact measure should be known. What is
normally weighed cannot be quantified in measures and vice versa.

6. The exact date and place of delivery must be specified in the contract.

7. Salam cannot be effected in respect of things which must be delivered at spot. For example, if gold is
purchased in exchange of silver, it is necessary, according to Shari'ah, that the delivery of both be
simultaneous. Here, salam cannot work. Similarly, if wheat is bartered for barley, the simultaneous
delivery of both is necessary for the validity of sale. Therefore the contract of salam in this case is not
[edit]Hibah (gift)
This is a token given voluntarily by a debtor to a creditor in return for a loan. Hibah usually arises in practice
when Islamic banks voluntarily pay their customers a 'gift' on savings account balances, representing a portion
of the profit made by using those savings account balances in other activities.

It is important to note that while it appears similar to interest, and may, in effect, have the same outcome, Hibah
is a voluntary payment made (or not made) at the bank's discretion, and cannot be 'guaranteed.' However, the
opportunity of receiving high Hibah will draw in customers' savings, providing the bank with capital necessary to
create its profits; if the ventures are profitable, then some of those profits may be gifted back to its customers
as Hibah.[31]


Ijarah means lease, rent or wage. Generally, Ijarah concept means selling the benefit of use or service for a
fixed price or wage. Under this concept, the Bank makes available to the customer the use of service of
assets / equipments such as plant, office automation, motor vehicle for a fixed period and price.

[edit]Advantages of Ijarah

Ijarah provides the following advantages to the Lessee:

Ijarah conserves the Lessee' capital since it allows up to 100% financing.

Ijarah gives the Lessee the right to access the equipment on payment of the first installment. This is important
as it is the access and use (and not ownership) of equipment that generates income.

Ijarah arrangements aid corporate planning and budgeting by allowing the negotiation of flexible terms

Ijarah is not considered Debt Financing so it does not appear on the Lessee' Balance Sheet as a Liability. This
method of "off-balance-sheet" financing means that it is not included in the Debt Ratios used by bankers to
determine financing limits. This allows the Lessee to enter into other lease financing arrangements without
impacting his overall debt rating.

All payments towards Ijarah contracts are treated as operating expenses and are therefore fully tax-deductible.
Leasing thus offers tax-advantages to for-profit operations.

Many types of equipment (i.e computers) become obsolete before the end of their actual economic life. Ijarah
contracts allow the transfer of risk from the Lesse to the Lessor in exchange for a higher lease rate. This higher
rate can be viewed as insurance against obsolescence.
If the equipment is used for a relatively short period of time, it may be more profitable to lease than to buy.

If the equipment is used for a long period but has a very poor resale value, leasing avoids having to account for
and depreciate the equipment under normal accounting principles.

[edit]Ijarah thumma al bai' (hire purchase)

Parties enter into contracts that come into effect serially, to form a complete lease/ buyback transaction. The
first contract is an Ijarah that outlines the terms for leasing or renting over a fixed period, and the second
contract is a Bai that triggers a sale or purchase once the term of the Ijarah is complete. For example, in a car
financing facility, a customer enters into the first contract and leases the car from the owner (bank) at an
agreed amount over a specific period. When the lease period expires, the second contract comes into effect,
which enables the customer to purchase the car at an agreed to price.

The bank generates a profit by determining in advance the cost of the item, its residual value at the end of the
term and the time value or profit margin for the money being invested in purchasing the product to be leased for
the intended term. The combining of these three figures becomes the basis for the contract between the Bank
and the client for the initial lease contract.

This type of transaction is similar to the contractum trinius, a legal maneuver used by European bankers and
merchants during the Middle Ages to sidestep the Church's prohibition on interest bearing loans. In a
contractum, two parties would enter into three concurrent and interrelated legal contracts, the net effect being
the paying of a fee for the use of money for the term of the loan. The use of concurrent interrelated contracts is
also prohibited under Shariah Law.


A contract under which an Islamic bank provides equipment, building, or other assets to the client against an
agreed rental together with a unilateral undertaking by the bank or the client that at the end of the lease period,
the ownership in the asset would be transferred to the lessee. The undertaking or the promise does not
become an integral part of the lease contract to make it conditional. The rentals as well as the purchase price
are fixed in such manner that the bank gets back its principal sum along with profit over the period of lease.

[edit]Musharakah (joint venture)

Musharakah is a relationship between two parties or more, of whom contribute capital to a business, and divide
the net profit and loss pro rata. This is often used in investment projects, letters of credit, and the purchase or
real estate or property. In the case of real estate or property, the bank assess an imputed rent and will share it
as agreed in advance.[30] All providers of capital are entitled to participate in management, but not necessarily
required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by
each partner strictly in proportion to respective capital contributions. This concept is distinct from fixed-income
investing (i.e. issuance of loans).[citation needed]
[edit]Qard hassan/ Qardul hassan (good loan/benevolent loan)
This is a loan extended on a goodwill basis, and the debtor is only required to repay the amount borrowed.
However, the debtor may, at his or her discretion, pay an extra amount beyond the principal amount of the loan
(without promising it) as a token of appreciation to the creditor. In the case that the debtor does not pay an
extra amount to the creditor, this transaction is a true interest-free loan. Some Muslims consider this to be the
only type of loan that does not violate the prohibition on riba, since it is the one type of loan that truly does not
compensate the creditor for the time value of money.[32]

[edit]Sukuk (Islamic bonds)

Main article: Sukuk

Sukuk, plural of ‫ صك‬Sakk, is the Arabic name for financial certificates that are the Islamic equivalent of bonds.
However, fixed-income, interest-bearing bonds are not permissible in Islam. Hence, Sukuk are securities that
comply with the Islamic law (Shariah) and its investment principles, which prohibit the charging or paying of
interest. Financial assets that comply with the Islamic law can be classified in accordance with their tradability
and non-tradability in the secondary markets.

[edit]Takaful (Islamic insurance)

Main article: Takaful

Takaful is an alternative form of cover that a Muslim can avail himself against the risk of loss due to
misfortunes. Takaful is based on the idea that what is uncertain with respect to an individual may cease to be
uncertain with respect to a very large number of similar individuals. Insurance by combining the risks of many
people enables each individual to enjoy the advantage provided by the law of large numbers. See Takaful for

[edit]Wadiah (safekeeping)
In Wadiah, a bank is deemed as a keeper and trustee of funds. A person deposits funds in the bank and the
bank guarantees refund of the entire amount of the deposit, or any part of the outstanding amount, when the
depositor demands it. The depositor, at the bank's discretion, may be rewarded with Hibah (see above) as a
form of appreciation for the use of funds by the bank.

[edit]Wakalah (power of attorney)

This occurs when a person appoints a representative to undertake transactions on his/her behalf, similar to
a power of attorney.

[edit]Islamic equity funds

Islamic investment equity funds market is one of the fastest-growing sectors within the Islamic financial system.
Currently, there are approximately 100 Islamic equity funds worldwide. The total assets managed through
these funds currently exceed US$5 billion and is growing by 12–15% per annum. With the continuous interest
in the Islamic financial system, there are positive signs that more funds will be launched. Some Western majors
have just joined the fray or are thinking of launching similar Islamic equity products.

Despite these successes, this market has seen a record of poor marketing as emphasis is on products and not
on addressing the needs of investors. Over the last few years, quite a number of funds have closed down. Most
of the funds tend to target high net worth individuals and corporate institutions, with minimum investments
ranging from US$50,000 to as high as US$1 million. Target markets for Islamic funds vary, some cater for their
local markets, e.g., Malaysia and Gulf-based investment funds. Others clearly target the Middle East and Gulf
regions, neglecting local markets and have been accused of failing to serve Muslim communities.

Since the launch of Islamic equity funds in the early 1990s, there has been the establishment of credible equity
benchmarks by Dow Jones Islamic market index (Dow Jones Indexes pioneered Islamic investment indexing in
1999) and the FTSE Global Islamic Index Series. The Web site failaka.com monitors the performance of
Islamic equity funds and provide a comprehensive list of the Islamic funds worldwide.

[edit]Islamic derivatives

See also: Financial derivatives

With help of Bahrain-based International Islamic Financial Market and New York-based International Swaps
and Derivatives Association, global standards for Islamic derivatives were set in 2010. The “Hedging Master
Agreement” provides a structure under which institutions can trade derivatives such as profit-rate and currency

[edit]Islamic laws on trading

The Qur'an prohibits gambling (games of chance involving money) and insuring ones' health or property (also
considered a game of chance). The hadith, in addition to prohibiting gambling (games of chance), also
prohibits bayu al-gharar (trading in risk, where the Arabic word gharar is taken to mean "risk" or excessive

The Hanafi madhab (legal school) in Islam defines gharar as "that whose consequences are hidden."
The Shafi legal school defined gharar as "that whose nature and consequences are hidden" or "that which
admits two possibilities, with the less desirable one being more likely." The Hanbali school defined it as "that
whose consequences are unknown" or "that which is undeliverable, whether it exists or not." Ibn Hazm of
the Zahiri school wrote "Gharar is where the buyer does not know what he bought, or the seller does not know
what he sold." The modern scholar of Islam, Professor Mustafa Al-Zarqa, wrote that "Gharar is the sale of
probable items whose existence or characteristics are not certain, due to the risky nature that makes the trade
similar to gambling." Other modern scholars, such as Dr. Sami al-Suwailem, have used Game Theory to try
and reach a more measured definition of Gharar, defining it as "a zero-sum game with unequal payoffs"[33].

There are a number of hadith that forbid trading in gharar, often giving specific examples
of gharhar transactions (e.g., selling the birds in the sky or the fish in the water, the catch of the diver, an
unborn calf in its mother's womb etc.). Jurists have sought many complete definitions of the term. They also
came up with the concept of yasir (minor risk); a financial transaction with a minor risk is deemed to
be halal (permissible) while trading in non-minor risk (bayu al-ghasar) is deemed to be haram.[34]

What gharar is, exactly, was never fully decided upon by the Muslim jurists. This was mainly due to the
complication of having to decide what is and is not a minor risk. Derivatives instruments (such as stock options)
have only become common relatively recently. Some Islamic banks do provide brokerage services for stock


Microfinance is a key concern for Muslims states and recently Islamic banks also. Microfinance is ideologically
compatible with Islamic finance, capable of Shariah-compliancy, and possesses a sizeable potential market.
Islamic microfinance tools can enhance security of tenure and contribute to transformation of lives of the poor.
The use of interest found in conventional microfinance products and services can easily be avoided by
creating microfinance hybrids delivered on the basis of the Islamic contracts of mudaraba, musharaka, and
murabaha. Already, several microfinance institutions (MFIs) such as FINCA Afghanistan have introduced
Islamic-compliant financial instruments that accommodate sharia criteria.


In Islamabad, Pakistan, on June 16, 2004: Members of leading Islamist political party in Pakistan,
the Muttahida Majlis-e-Amal (MMA) party, staged a protest walkout from the National Assembly of
Pakistan against what they termed derogatory remarks by a minority member on interest banking:

Taking part in the budget debate, M.P. Bhindara, a minority MNA [Member of the National Assembly]...referred
to a decree by an Al-Azhar University's scholar that bank interest was not un-Islamic. He said without interest
the country could not get foreign loans and could not achieve the desired progress. A pandemonium broke out
in the house over his remarks as a number of MMA members...rose from their seats in protest and tried to
respond to Mr Bhindara's observations. However, they were not allowed to speak on a point of order that led to
their walkout.... Later, the opposition members were persuaded by a team of ministers...to return to the
house...the government team accepted the right of the MMA to respond to the minority member's remarks....
Sahibzada Fazal Karim said the Council of Islamic ideology had decreed that interest in all its forms
was haram in an Islamic society. Hence, he said, no member had the right to negate this settled issue.[36]
Some Islamic banks charge for the time value of money, the common economic definition of Interest (Riba).
These institutions are criticized in some quarters of the Muslim community for their lack of strict adherence to

The concept of Ijarah is used by some Islamic Banks (the Islami Bank in Bangladesh, for example) to apply to
the use of money instead of the more accepted application of supplying goods or services using money as a
vehicle. A fixed fee is added to the amount of the loan that must be paid to the bank regardless if the loan
generates a return on investment or not. The reasoning is that if the amount owed does not change over time, it
is profit and not interest and therefore acceptable under Sharia.

Islamic banks are also criticized by some for not applying the principle of Mudarabah in an acceptable manner.
Where Mudarabah stresses the sharing of risk, critics point out that these banks are eager to take part in profit-
sharing but they have little tolerance for risk. To some in the Muslim community, these banks may be
conforming to the strict legal interpretations of Sharia but avoid recognizing the intent that made the law
necessary in the first place.[citation needed]

The majority of Islamic banking clients are found in the Gulf states and in developed countries. With 60% of
Muslims living in poverty, Islamic banking is of little benefit to the general population. The majority of financial
institutions that offer Islamic banking services are majority owned by Non-Muslims. With Muslims working
within these organizations being employed in the marketing of these services and having little input into the
actual day to day management, the veracity of these institutions and their services are viewed with suspicion.
One Malaysian Bank offering Islamic based investment funds was found to have the majority of these funds
invested in the gaming industry; the managers administering these funds were non Muslim.[36] These types of
stories contribute to the general impression within the Muslim populace that Islamic banking is simply another
means for banks to increase profits through growth of deposits and that only the rich derive benefits from
implementation of Islamic Banking principles.

Hence, the controversy that surrounds Islamic Banking continues. Is Islamic Banking really Islamic? This is a
question that still is a matter of debate among the Muslim academia.

[edit]See also
 Contractum trinius

 Full-reserve banking

 Fractional-reserve banking

 Islamic economical jurisprudence

 Islamic banking in Malaysia

 Reserve requirement
 Green economics

 Micro venture capital

 Economy of the OIC

 Mont de Piété

 List of Islamic terms in Arabic

 Dow Jones Indexes


v • d • e

Islam topics


1. ^ The Cambridge economic history of Europe, p. 437. Cambridge University Press, ISBN 0521087090.

2. ^ Subhi Y. Labib (1969), "Capitalism in Medieval Islam", The Journal of Economic History 29 (1), p. 79-96
[81, 83, 85, 90, 93, 96].

3. ^ a b Jairus Banaji (2007), "Islam, the Mediterranean and the rise of capitalism", Historical
Materialism 15 (1), pp. 47–74, Brill Publishers.

4. ^ Robert Sabatino Lopez, Irving Woodworth Raymond, Olivia Remie Constable (2001), Medieval Trade in
the Mediterranean World: Illustrative Documents, Columbia University Press, ISBN 0231123574.

5. ^ Timur Kuran (2005), "The Absence of the Corporation in Islamic Law: Origins and Persistence", American
Journal of Comparative Law 53, pp. 785–834 [798–9].

6. ^ Subhi Y. Labib (1969), "Capitalism in Medieval Islam", The Journal of Economic History 29 (1), pp. 79–96

7. ^ Said Amir Arjomand (1999), "The Law, Agency, and Policy in Medieval Islamic Society: Development of
the Institutions of Learning from the Tenth to the Fifteenth Century", Comparative Studies in Society and

History 41, pp. 263–93. Cambridge University Press.

8. ^ Samir Amin (1978), "The Arab Nation: Some Conclusions and Problems", MERIP Reports 68, pp. 3–14
[8, 13].

9. ^ (Badr 1989, p. 424)

10. ^ 4.1 Historical development

11. ^ http://www.usc.edu/dept/MSA/economics/islamic_banking.html
12. ^ http://www.imf.org/external/pubs/ft/wp/2008/wp0816.pdf Islamic Banks and Financial Stability: An
Empirical Analysis pg. 5

13. ^ http://www.economist.com/world/europe/displaystory.cfm?story_id=14859353

14. ^ Slater, Joanna (2007-01-10). "World's Assets Hit Record Value Of $140 Trillion". The Wall Street Journal.

15. ^ a b http://www.iran-daily.com/1388/12/11/MainPaper/3630/Page/5/Index.htm

16. ^ Lorenzo Totaro (2009-03-04). "Vatican Says Islamic Finance May Help Western Banks in
Crisis". Bloomberg L.P.. Retrieved 2009-04-13.

17. ^ http://iran-daily.com/1386/2860/html/focus.htm

18. ^ http://www.payvand.com/news/09/nov/1122.html

19. ^ http://www.zawya.com/Story.cfm/sidZAWYA20091211065734/Iran%202nd%20in%20Islamic%20Banking

20. ^ http://www.presstv.com/detail.aspx?id=104662&sectionid=351020102

21. ^ http://www.presstv.com/detail.aspx?id=117077&sectionid=351020102

22. ^ http://faculty.capebretonu.ca/mchoudhu/money.htm

23. ^ http://web.archive.org/web/20070716151628/http://www.islamibankbd.com/page/ih_12.htm

24. ^ Gabriel Rozenberg, Nobel prizewinner using micro-credit for macro benefit, The Times, December 16,

25. ^ Zeeshan Hasan, The Redefinition of Islamic Economics, The Daily Star, August 27th, 1994.

26. ^ http://zakatpages.com/2007/01/19/alhamdulillah-for-lloyds-tsb-bank/

27. ^ World Database for Islamic Banking and Finance

28. ^ http://www.badralislami.com/glossary/a-h.asp

29. ^ http://www.azmilaw.com/Article/Article_8_&_9/Article_9_Tawarruq_00093603_.pdf

30. ^ a b Nomani, Farhad; Rahnema, Ali. (1994). Islamic Economic Systems. New Jersey: Zed books limited.
pp. 99–101. ISBN 1-85649-058-0.

31. ^ "Learn more about Islamic Banking - Returns on deposits are competitive". RHB Banking Group. 2006-
05-17. Retrieved 2009-03-26.

32. ^ http://www.irfi.org/articles/articles_301_350/is_islamic_banking_islamic.htm

33. ^ http://www.irti.org/irj/go/km/docs/documents/IDBDevelopments/Internet/English/IRTI/CM/downloads/IES_
34. ^ http://www.ruf.rice.edu/~elgamal/files/gharar.pdf

35. ^ Sait, 2006, p.175

36. ^ a b http://www.dawn.com/2004/06/17/top2.htm

 Sait, Siraj; Lim, Hilary (2006). Land, Law and Islam. New York: UN-HABITAT.
[edit]Further reading
 Partnership, Equity-Financing and Islamic Finance: Whither Profit-Loss Sharing? by Dr. Mohammad Omar

 Historic Judgment on Interest Given by the Supreme Court of Pakistan

 Guide to Islamic Banking

 Mufti Taqi Usmani's book on Islamic Finance

 Islamic Banking references (GDRC)

 Risk & Compliance Management in Islamic Banking

 Bringing morality into finance - an opinion piece by Dr. Hayat Khan of La Trobe University

 Mahlknecht, Michael (2009). Islamic Capital Markets and Risk Management. London: Risk
Books. ISBN 978-1-906348-17-5.

 Encyclopedia of Islamic Finance, by Dr Aly Khorshid, published by Euromoney PLC, July 2009

 Islamic Finance as a Progenitor of Venture Capital, by Benedikt Koehler in: Economic Affairs, December

 Rosly, Saiful Azhar (2006). Critical Issues on Islamic Banking and Financial Markets: Islamic Economics,
Banking and Finance, Investments, Takaful and Financial Planning. AuthorHouse.ISBN 978-1420837377.
[edit]External links
This article's use of external links may not follow
Wikipedia's policies or guidelines. Please improve this article by
removing excessive and inappropriate external links or by
converting links into footnote references. (December 2009)

 World Database for Islamic Banking and Finance

 Risk and Compliance Management in Islamic Banking - Kit

 Islamic Banks and Financial Institutions Information

 Islamic Financial Services Board

 AIBIM - Association of Islamic Banking Institutions Malaysia

 Islamic Finance at Deloitte

 Accounting and Auditing Organization for Islamic Financial Institutions

 Reviewing Islamic Banking

 Muslim Investor: A community site on Islamic investment, banking, finance and insurance

 Value matter of Money - Unfair to Islamic Banking & Finance by Qazi Irfan

 Riba and Islamic Banking

 Islamic Banking references

 Institute of Islamic Banking

 Islamic Banking and Finance symposium podcasts from La Trobe University on iTunes

 Islamic Banking / Finance / Takaful Directory

 Islamic Banks Directory

 University Islamic Financial / First Islamic Banking subsidiary in the US

 Directory of Islamic Banks / Takaful / Asset Management / ...

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