Introduction to CTU351

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Introduction to CTU351 Fundamentals of Islamic Banking

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Introduction to CTU351

  1. 1. ISLAMIC BANKING AND FINANCE Mahyuddin Khalid emkay@salam.uitm.edu.my INTRODUCTION TO CTU351
  2. 2. 2 COURSE BACKGROUND Course code : CTU351 Course name : Fundamentals of Islamic Banking Level : Diploma Credit hour : 4 Contact hour : 4 Part : 5 Status : CORE Prerequest :
  3. 3. COURSE OUTCOMES  At the end of this course, students should be able to: 1. Explain the essentials of Shariah-compliant banking system. 2. Differentiate Islamic Banking System (IBS) against the conventional system. 3. Evaluate the modus operandi of Shariah- compliant investments/instruments and financing facilities under the Islamic Banking System. 3
  4. 4. COURSE DESCRIPTION  This is an introductory course to Islamic Banking for students to understand the fundamentals of Shariah-compliance banking system.  Students will be introduced to the concepts and principles adopted/adapted by Islamic banks to comply with the Shariah requirements.  The course will equip students with the basics to distinguish between Islamic and conventional banking system, expose students to the modus operandi of selected facilities/instruments offered by Islamic banks and assist them in evaluating the value proposition promoted by Islamic Banking System. 4
  5. 5. SYLLABUS CONTENT  Overview of Financial System  Financial Markets and Institutions  Roles of Banks as Financial Intermediaries  Framework of Islamic Financial System  Islamic Banking, Takaful, Islamic Capital Market (ICM) and Islamic Interbank Money Market (IIMM)  Historical Development of Islamic Banking  Structure of Islamic Bank  Compliance to the Scheme of Shariah Laws  3.1 Primary and Secondary Sources of Shariah Laws  3.2 Aqidah, Akhlaq, Shariah ( Ibadat & Muamalat )  3.3 Ethics in Islamic Financial System 5
  6. 6. SYLLABUS CONTENT  Principles of Islamic Banking  Investment and Financing of Halal (Permissible) Activities  Profit and Loss Sharing vs. Lender-Borrower Relationship  Trade-based Financing vs. Interest-based Investments/Loans  Prohibition of Riba, Gharar (unnecessary risk) and Maysir (gambling / speculation)  Payment of Zakat  Sources of Funds - Savings/Investments and the underlying Shariah Concepts  Al-Wadiah/Al-Mudarabah Savings Accounts  Al-Wadiah/Al-Mudarabah Current Accounts  Al-Mudarabah General Investment Accounts (MGIA)  Al-Mudarabah Special Investment Accounts (MSIA) 6
  7. 7. SYLLABUS CONTENT  Application of Funds - Financing Facilities and the underlying Shariah Concepts  Home/Property Financing (Bai’ Bithaman Ajil / BBA)  Home/Property Financing (Musharakah)(Musharakah Mutanaqisah)  Motor Vehicle Financing (Al-Ijarah) (Al-Ijarah Thumma al- Bai’)  Personal Financing (Bai’ al-Inah)  Credit Cards (Al-Wadiah)( Bai’ al-Inah)(Qard al- Hasan)  Project Financing (Al-Mudarabah) (Al-Musharakah)  Acquisition of Assets (Al-Bai’ Bithaman Ajil)  Working Capital Financing (Al-Murabahah )  Letter of Credit (Wakalah) (Musharakah) (Murabahah)  Islamic Accepted Bills (Bai` al-Dayn)  Islamic Export Credit Refinancing (IECR) 7
  8. 8. SYLLABUS CONTENT  7. Treasury  Islamic Inter-Bank Money Market  Foreign Exchange Trading  Other Services  Agency (Al-Wakalah)  Guarantee (Al-Kafalah)  Commission (Ju’alah)  Fee (Al-Ujr)  Remittance (Al-Hiwalah) 8
  9. 9. COURSE ASSESSMENT  Continuous Assessment 50%  Test 15%  Assignment 15%  Presentation 20%  Final Exam 50%  Total 100% 9
  10. 10. REFERENCES  Main Reference:  Rosly, Saiful Azhar. 2005. Critical Issues on Islamic Banking and Financial Markets. Kuala Lumpur: Dinamas Publishing.  Additional References:  Haron, Sudin & Shanmugam, Bala. 2001. Islamic Banking System: Concepts & Applications. Malaysia: Pelanduk Publications.  Islamic Banking Practice from The Practitioner’s Perspective. 1994. Kuala Lumpur: Bank Islam Malaysia Berhad.  Usmani, Muhammad Imran Ashraf. 2002. Meezanbank’s Guide to Islamic Banking. Karachi: Darul Ishaat.  Gafoor. A.L.M, Abdul. 2005. Interest, Usury, Riba and The Operational Costs of a Bank. Kuala Lumpur: A.S.Noordeen  Shanmugam, B., Perumal.V., & Ridzwa.A.H. (Eds.). 2004. Islamic Banking: An International Perspective. Serdang: Universiti Putra Malaysia Press. 10
  11. 11. 11 FORMAT OF ASSIGNMENT  Font:  Use Times New Roman  Size: 12  Spacing:  Double  10-15 pages  Primary references:  THREE books or  FIVE articles from journal
  12. 12. 12 REFERENCING  Use the APA (American Psychological Association) referencing system.  References in the text should include author’s name, publication year and page number if available.  Examples of citations in text :  One author (Bean, 1992, p. 33); two authors (Graham & Krugman, 1989); more than two authors (Bernanke et al., 1999) or  Bean (1992, p. 33), Graham and Krugman (1989), and Bernanke et al. (1999).  In the case of more than two authors, the first citation includes all the last names of the co-authors. The above examples only apply for subsequent citations.  References must be listed in alphabetical order of first author at the end of the paper.
  13. 13. 13 REFERENCING - EXAMPLE  Article in Journal:  Dornbusch, R. (1976), Exchange Rate Expectations and Monetary Policy, Journal of International Economics, 6, 231-44.  Chapter in Book:  Dornbusch, R. (1977), The Theory of Flexible Exchange Rate Regimes and Macroeconomic Policy, In J. Herin, A. Lindbeck & J. Myhrman (Eds.),  Flexible Exchange Rates and Stabilization Policy (pp. 123-43), Boulder, CO: Westview Press.
  14. 14. 14 REFERENCING - EXAMPLE  Books:  Helpman E., & Krugman, P. (1985). Market Structure and Foreign Trade. Cambridge: MIT Press.  Mishkin, F.S. (2004). The Economics of Money, Banking and Financial Markets (7th ed.). Boston: Addison Wesley  Electronic Sources:  Electronic reference formats recommended by the American Psychological Association. (2000, October 12). Retrieved October 23, 2000, from http://www.apa.org/journals/webref.html  Eid, M. & Langeheine, R. (1999). The measurement of consistency and occasion specificity with latent class models: A new model and its application to the measurement of affect.  Psychological Methods, 4, 100-116. Retrieved November 19, 2000, from the PsycARTICLES database  *If information is retrieved from an aggregated database, and the name of the database is provided and sufficient, no address is needed (as in the second example for electronic sources)*
  15. 15. 15 TABULATION OF MARKS  Introduction = 1%  Facts = 3%  Explanation = 3%  Conclusion = 1%  Reference = 2%  Total = 10%
  16. 16. 16 FORMAT OF PRESENTATION  Format:  Power point presentation  Time of presentation:  30 minutes  Q & A session:  20 minutes
  17. 17. 17 TABULATION OF MARKS  Explanation of facts = 4%  Q & A = 4%  Creativity = 1%  Time management = 1%  Total = 10%
  18. 18. END18

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