Islamic modes of finance

1,667 views

Published on

Published in: Business
0 Comments
4 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,667
On SlideShare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
62
Comments
0
Likes
4
Embeds 0
No embeds

No notes for slide

Islamic modes of finance

  1. 1. Group Members
  2. 2. Islamic Modes of Financing
  3. 3. Agenda
  4. 4. Introduction
  5. 5. Islamic Principles of Transactions
  6. 6. Cont‟d
  7. 7. Cont‟d
  8. 8. Cont‟d
  9. 9. History
  10. 10. History Cont‟d
  11. 11. History Cont‟d
  12. 12. Current Position:
  13. 13. Islamic Modes of Financing
  14. 14. Cont‟d
  15. 15. Mushaarakah • “Mushaarakah” literally means sharing • It is derived from “shirkah” which means “being a partner” • Joint enterprise formed for conducting business • Profit & loss
  16. 16. Rules of Mushaarakah • Assets of Mushaarakah are jointly owned in proportion to the capital of each partner. • loss [by general consensus] is always subject to the ratio of investment.
  17. 17. Cont‟d Ratio of profit: Must be equal to ratio of investment - Imam Malik & Imam Shaafi„ee Does not have to be equal – Imam Ahmad May differ, except that a sleeping partner cannot share the profit more than the percentage of his capital – Imam Abu Hanifah
  18. 18. Management of Mushaarakah • Each partner has a right to take part in Mushaarakah management. • The partners may appoint a managing partner by mutual consent. • One or more of the partners may decide not to work for the Mushaarakah and work as a sleeping partner.
  19. 19. Cont‟d • If one or more partners choose to become nonworking or sleeping partners, the ratio of their profit cannot exceed the ratio of their capital investment. • Any partner can liquidate his shares and leave the partnership according to the contract or by mutual consent of other Partners.
  20. 20. Mudaraba • An arrangement in which two entities are involved Mudarib Rabbulmal
  21. 21. Cont‟d • Mudarib who runs the business can be a natural person, a group of persons, or a legal entity and a corporate body. • Rabbulmal (Investor) shall provide his investment in money or species
  22. 22. Cont‟d • Conduct of business shall be carried out exclusively by the Mudarib within the framework of mandate given in the Mudaraba agreement • The profit shall be divided in strict proportion agreed at the time of contract
  23. 23. Cont‟d • Financial losses of the Mudaraba shall be borne solely by the Rabbulmal, unless it is proved that the Mudarib has been guilty • The loss, if any, shall be shared in proportion to the capital of the parties.
  24. 24. Cont‟d • The liability of Rabbulmal is limited to his investment unless otherwise specified in the Mudaraba contract • Mudaraba may be of various types • The Mudarib can invest his funds in the business of the Mudaraba with the permission of Rabbulmal
  25. 25. Murabaha
  26. 26. Murabaha
  27. 27. ISLAMIC SALE
  28. 28. SOLD GOOD OR SUBJECT MATTER ( Mube‟e )
  29. 29. CONTRACT SUBJECT MATTER CONTRACTORS WORDING OF CONTRACT •Specified •Quantified •Non-restricted •Sane •Mature •Present •Unconditional •Non-contingent
  30. 30. 31 Step by Step Murabaha
  31. 31. 32 Stage One (a) for Murabaha financing 1- Promise stage Facility approved Bank Client
  32. 32. 33 Stage One (b) for Murabaha financing Cont’d Murabaha Facility Agreement MOU Bank Client
  33. 33. 34 Stage One (c) for Murabaha financing Cont’d purchase requisition /Promise to the bank. Bank Client
  34. 34. 35 2- Agency stage Agency Agreement Bank Client Agreement to Murabaha
  35. 35. 36 Cont’d Stage Two for Murabaha financing Agreement to Murabaha Agency Agreement Disbursement to the Supplier Islamic BankBank Client
  36. 36. 37 3. Acquiring Possession Stage three for Murabaha financing Client purchases goods and takes possession Transfer of Risk Vendor Bank Client
  37. 37. 38 4. Execution of Murabaha Stage four (a) for Murabaha financing Offer to purchase Bank Client
  38. 38. 39 4. Execution of Murabaha Stage four (b) for Murabaha financing Murabaha Agreement + Transfer of Title Bank Client
  39. 39. 40 Cont’d Stage four (b) for Murabaha financing Payment of PriceBank Client
  40. 40. Cont‟d
  41. 41. Cont‟d
  42. 42. IJARAH
  43. 43. Ijarah
  44. 44. 45 BASIC RULES OF IJARA
  45. 45. BASIC RULES OF IJARA
  46. 46. BASIC RULES OF IJARA
  47. 47. BASIC RULES OF IJARA
  48. 48. Cont‟d
  49. 49. Salam & Istisna
  50. 50. Salam
  51. 51. Conditions
  52. 52. As mode of Financing
  53. 53. Istisna
  54. 54. validity of Istisna‟a
  55. 55. Terms and conditions
  56. 56. Conclusion
  57. 57. Cont‟d

×