Riba, or usury, refers to excess or interest charged as part of a loan. The Quran gradually prohibited riba over four stages. Riba takes two forms - debt riba involving loans with interest, and trade riba involving unequal exchanges. Islam prohibits riba to prevent injustice and exploitation. It aims to encourage risk-sharing partnerships that create wealth rather than simply transferring it through interest payments. The rationales for prohibition include preventing the rich from exploiting the poor and encouraging business innovation over security-focused lending.
Riba refers to usury or interest charged on loans. It is prohibited in Islam based on evidence from the Quran and hadith. There are two main categories of riba - debt riba, which includes interest on loans, and trade riba, which involves unequal exchange of goods. Certain goods like gold, silver, wheat and barley are considered ribawi items where rules on quantity and time of exchange must be followed to avoid riba. The prohibition aims to prevent injustice and burden on borrowers that can destabilize societies.
Riba refers to interest or usury, which is prohibited in Islam. There are two main categories of riba - debt riba, which includes interest on loans, and trade riba, which involves the exchange of goods with unequal quantities or delayed exchange. The Quran gradually prohibited riba over several verses. Riba is prohibited in Islam because it places an undue burden on borrowers and can have negative impacts on society as a whole.
The definiton of Ribā according to the fuqaha are numerous. Ibn Qudāmah defines the Shāri‘ah term as “an increment in certain things.” (Al-Mughni, Vol. 4, pg. 125) In other words, Ribā occurs either in a thing, commodity or money. In the legal terminology of the Shari‘ah, Ribā has been defined as:
"an increment, which, in an exchange or sale of a commodity, accumulates to the owner or lender without giving in return an equivalent counter value or recompense (‘Iwadh) to the other party."
This slide program explains in the light of Quran and Hadith that Riba transactions are prohibited in Islam. It provides replies to the questions raised about prohibition of Riba.
The document discusses the concept of Bai Bithaman Ajil (BBA), which is an Islamic financing technique that allows for the deferred payment of goods purchased. BBA involves the immediate delivery of an asset to the buyer while payment is postponed to a future date or paid through installments. The document examines the principles, evidence, objectives, mechanics, and pricing considerations of BBA transactions.
This document discusses riba (usury or interest) and its prohibition in Islam. It begins by defining riba as any excess or increase obtained from a loan without giving an equivalent countervalue. It distinguishes riba from legitimate trade. The document then examines riba's prohibition in the Quran through four stages of revelation, with the language used becoming increasingly stronger. Later passages condemn riba as the practice of Jews and warn of punishment for those who engage in it. The document aims to clearly define riba and the rules around its prohibition.
Canonical Sharia Contracts Applied To Modern Financebrighteyes
The document discusses various Islamic finance concepts and their application to modern finance, including:
- The prohibition of riba (usury or interest) in Islamic scripture and hadith.
- Two main types of riba - riba an-nasi'ah (interest on loans) and riba al-fadl (excess exchanged without due consideration on commodities traded).
- The permissibility and reward of legitimate trade and business activities in Islam.
- The importance of purifying the source of one's income and distinguishing Islamic from conventional interest-based modes of finance.
This document defines and discusses the concept of bay' al-sarf (money exchange) under Islamic law. It provides definitions, evidence from hadith, and discusses the pillars, conditions, scholars' opinions, and applications of bay' al-sarf, including its use in modern foreign exchange markets through spot transactions or structures using promises or murabahah contracts.
Riba refers to usury or interest charged on loans. It is prohibited in Islam based on evidence from the Quran and hadith. There are two main categories of riba - debt riba, which includes interest on loans, and trade riba, which involves unequal exchange of goods. Certain goods like gold, silver, wheat and barley are considered ribawi items where rules on quantity and time of exchange must be followed to avoid riba. The prohibition aims to prevent injustice and burden on borrowers that can destabilize societies.
Riba refers to interest or usury, which is prohibited in Islam. There are two main categories of riba - debt riba, which includes interest on loans, and trade riba, which involves the exchange of goods with unequal quantities or delayed exchange. The Quran gradually prohibited riba over several verses. Riba is prohibited in Islam because it places an undue burden on borrowers and can have negative impacts on society as a whole.
The definiton of Ribā according to the fuqaha are numerous. Ibn Qudāmah defines the Shāri‘ah term as “an increment in certain things.” (Al-Mughni, Vol. 4, pg. 125) In other words, Ribā occurs either in a thing, commodity or money. In the legal terminology of the Shari‘ah, Ribā has been defined as:
"an increment, which, in an exchange or sale of a commodity, accumulates to the owner or lender without giving in return an equivalent counter value or recompense (‘Iwadh) to the other party."
This slide program explains in the light of Quran and Hadith that Riba transactions are prohibited in Islam. It provides replies to the questions raised about prohibition of Riba.
The document discusses the concept of Bai Bithaman Ajil (BBA), which is an Islamic financing technique that allows for the deferred payment of goods purchased. BBA involves the immediate delivery of an asset to the buyer while payment is postponed to a future date or paid through installments. The document examines the principles, evidence, objectives, mechanics, and pricing considerations of BBA transactions.
This document discusses riba (usury or interest) and its prohibition in Islam. It begins by defining riba as any excess or increase obtained from a loan without giving an equivalent countervalue. It distinguishes riba from legitimate trade. The document then examines riba's prohibition in the Quran through four stages of revelation, with the language used becoming increasingly stronger. Later passages condemn riba as the practice of Jews and warn of punishment for those who engage in it. The document aims to clearly define riba and the rules around its prohibition.
Canonical Sharia Contracts Applied To Modern Financebrighteyes
The document discusses various Islamic finance concepts and their application to modern finance, including:
- The prohibition of riba (usury or interest) in Islamic scripture and hadith.
- Two main types of riba - riba an-nasi'ah (interest on loans) and riba al-fadl (excess exchanged without due consideration on commodities traded).
- The permissibility and reward of legitimate trade and business activities in Islam.
- The importance of purifying the source of one's income and distinguishing Islamic from conventional interest-based modes of finance.
This document defines and discusses the concept of bay' al-sarf (money exchange) under Islamic law. It provides definitions, evidence from hadith, and discusses the pillars, conditions, scholars' opinions, and applications of bay' al-sarf, including its use in modern foreign exchange markets through spot transactions or structures using promises or murabahah contracts.
This document discusses several Islamic financing modes:
1) Qard-e-Hasana which is an interest-free loan provided out of kindness, to be repaid without expectation of profit or interest.
2) Musharakah and Mudarabah which are forms of partnership where partners share profits and losses. Musharakah involves joint ownership and management while Mudarabah involves one partner providing capital and another providing labor.
3) Murabahah which is a sale with an agreed upon profit margin, and can be used for financing by the financier purchasing an asset and reselling it.
This document discusses Bay' Bi-Thaman Ajil (BBA), which is an Islamic financing structure that involves the deferred payment of goods. It defines BBA, provides evidence from Islamic sources, discusses its objectives including providing financing flexibility. It covers pricing considerations for BBA, conditions like clearly stating durations, and applications like using BBA for property and vehicle financing. BBA allows the delivery of goods upfront with payment deferred to a later date through installments, at a higher price to compensate for the deferred payment.
This document discusses the Islamic concepts of Riba, Gharar and Qimar. It defines Riba as any excess compensation without due consideration, especially interest charged on loans. The document outlines verses from the Quran that prohibit Riba and classify two types of Riba - Riba al-Nasiyah (interest charged on loans) and Riba al-Fadl (excess received when exchanging specific commodities). It also discusses the prohibition of Gharar (uncertainty) in contracts and defines Qimar as events where there is a possibility of total loss for one party.
This document provides an overview of Riba (interest) in Islam. It begins with an introduction that establishes the key principles of the Islamic economic system, including justice, equality and prohibiting exploitation.
The document is divided into five parts. Part 1 discusses the Islamic ruling prohibiting Riba, providing evidence from the Quran and Hadith. Part 2 compares Islamic economics to other systems. Part 3 defines Riba linguistically and legally. Part 4 explains why Riba is haram both prophetically and rationally. Part 5 examines contemporary issues regarding Riba and credit cards.
The conclusion restates that Riba is considered unjust and illegal in Shariah as it exploits people's needs and creates inequality.
This document discusses Islamic norms for business transactions. It states that transactions should avoid riba (interest), gharar (excessive risk or uncertainty), and fraudulent behavior. It provides definitions of riba al-diyun (debt riba) and riba al-fadl (trade riba), and explains their prohibition. The document also discusses hadith related to riba, stages of revelation on riba, and disadvantages of riba-based finance systems. Overall, the document outlines prohibitions and guidelines for permissible transactions under Islamic economic principles.
The document discusses Islamic principles related to business transactions. It states that transactions should not involve riba (interest), gharar (ambiguity or uncertainty), fraud, coercion, or prohibited goods. It then defines riba and gharar, explaining their prohibition in the Quran, hadith, and Islamic law. Riba refers to interest on loans and can take two forms - riba al diyun relating to debt and riba al-fadl occurring in trade. Gharar introduces ambiguity into contracts. The document contrasts debt-based finance involving riba with participatory finance based on profit-sharing that is more just, equitable and growth-oriented.
1) Murabahah is a sale contract where the seller discloses the cost price and profit margin to the buyer. It involves the purchase and resale of assets where the seller earns a defined profit margin.
2) The key pillars of a murabahah contract include the seller, buyer, asset being traded, price, and offer/acceptance. It must also avoid elements of riba such as uncertainty around prices.
3) Modern applications of murabahah include its use in Islamic banking for financing, treasury products, sukuk issuances, and international trade. Structures like tri-party murabahah and murabahah to the purchase order are commonly used.
This document discusses Bay al-'Inah, which refers to the selling of an asset with deferred payment at a higher price, and then repurchasing the same asset from the buyer at a lower cash price. It defines Bay al-'Inah, provides evidence from hadith, and discusses the differing opinions of scholars on its permissibility. Some scholars prohibit it as a form of interest avoidance, while others permit it based on Imam Shafi'i's approval and use as a financing model when certain conditions are met. The document also outlines how Bay al-'Inah is applied in various Islamic banking products in Malaysia.
The document discusses various Islamic business transactions and contracts. It defines key terms like muamalah and aqad. It outlines categories of transactions such as barter trade, cash trading, and currency trading. It also classifies different types of contracts including contracts of exchange, security, partnership, safe custody/investment, utilization of usufruct, work/services, and gratuitous contracts. Evidence from the Quran, Sunnah, and scholarly consensus is provided to support the Islamic rulings around various commercial interactions and agreements.
This document discusses the concepts of riba and gharar in Islamic finance. [1] Riba refers to any excess amount charged on a loan beyond the principal amount and is prohibited as it is considered an unproductive activity that creates debt. [2] Gharar refers to uncertainty or risk in a contract and is prohibited if it is large and relates to the core aspects of the contract. Several hadiths and Quranic verses provide guidance on avoiding riba and gharar to ensure fairness and justice in financial transactions.
This document discusses the application of Shariah principles in Islamic financial transactions through the use of various commercial contracts. It provides an overview of key Islamic financial services like Islamic banking, capital markets, and takaful. It then examines some major contracts used in Islamic finance like murabahah, bay' bithaman ajil, ijarah, and their applications in asset financing and sukuk issuance. The document notes that murabahah and BBA are sale contracts that can be used for both short-term and long-term financing, and discusses the basic structure of using murabahah/BBA in Malaysian sukuk. It also provides details on the ijarah lease contract and its
BBA is a contract where goods are delivered immediately but payment is deferred to a future date. It involves the prompt delivery of goods to the buyer while postponing payment until a later specified date or through installments. Hadith provide evidence that deferred payment contracts were permitted by the Prophet Muhammad, including instances where he engaged in such contracts and where the payment terms included profit for the seller in addition to the price. For BBA contracts, there must be an offer (sighah), an asset or goods, and an agreed upon price between the buyer and seller. BBA is commonly used in Malaysia for medium to long-term financing of goods like property, vehicles, education costs, and other assets.
This document discusses the concept of Musharakah, which is an Islamic form of partnership or joint venture. It defines Musharakah, discusses its evidence in the Quran and Hadith, outlines its key pillars and types. It also covers the conditions of Musharakah partnerships, examples like Musharakah Mutanaqisah, and its modern applications.
Hibah-rukba is one part of hibah which has been practiced during jahiliyyah period.
They observe the death of the hibah's receipient to take back their hibah. Then when Islamic Shariah comes into existence, it affirms the hibah concept and disregards the condition of returning the hibah to the donor because He who takes back his present is like him who swallows his vomit.
But If the donor clearly mentioned the donation is for the donee during his life time, in this case, it becomes 'ariyah which must be return to the donor because the Muslims are obliged to follow their conditions.
The document discusses the issue of Bai Bithaman Ajil (BBA) contracts as used in Islamic financing in Malaysia. It summarizes the conceptual model of BBA, which involves the deferred payment sale of an asset from a seller to a purchaser. The document then discusses 5 previous court cases related to BBA and the legal issues they raised. The cases analyzed whether the BBA structure qualified as a legitimate sale contract under Shariah or resembled interest-based financing. The document concludes by noting the Malaysian government strengthened regulations on Islamic finance to address legal uncertainties surrounding BBA raised by the court cases.
This document provides an overview of Murabaha finance, which is a particular type of sale in Islamic finance where the seller discloses the cost of purchasing an asset and sells it to the buyer at a higher price to generate a profit. The document defines Murabaha and explains its key features and components. It also outlines three common models for structuring Murabaha transactions, with Model III involving banks as the most prevalent in modern Islamic banking. Model III is explained in further detail through its typical phases and documentation requirements.
This document discusses Tawarruq personal financing using Bursa Suq Al-sila. Tawarruq involves buying a commodity with deferred payment and selling it for immediate payment at a lower price. Scholars have differing opinions on its permissibility. Bursa Suq Al-sila is an Islamic commodity trading platform designed to facilitate Shariah-compliant transactions in commodities like crude palm oil. It aims to serve as an electronic marketplace for the Malaysian market in accordance with international Shariah standards. The document also outlines specifications for contracts on the platform and potential banking products it could support.
The document defines and discusses the concept of Mudharabah, which is a contract of partnership where one party provides capital and the other provides labor and management. It provides key details on the definition, pillars, categories, conditions and evidence for Mudharabah based on classical Islamic literature. The summary highlights that Mudharabah is a profit-sharing partnership where profits are shared according to a predetermined rate but losses are borne solely by the capital provider.
This document provides an overview of Murabaha, an Islamic financing structure. It defines Murabaha as a sale where the seller discloses the cost of an item and sells it for a higher price, adding a known profit. The document outlines the difference between Murabaha and Musawamah sales, basic rules of Islamic sales, evidence for Murabaha's validity, how it is structured as a financing transaction, potential issues, and mistakes to avoid. It concludes that Murabaha must be implemented carefully according to Islamic principles, as a legitimate sale rather than an interest-based loan.
This document discusses the prohibition of riba (interest) in Islamic economics. It defines riba and the two types: riba al-fadl, which is exchange surplus in barter; and riba an-nasiah, which arises in loan transactions. Riba is prohibited in the Quran and hadith. It can cause injustice, exploitation, debt, and negatively impact economic growth. Alternative solutions discussed include interest-free loans, Islamic banking, and applying the full Islamic economic system. The conclusion is that riba should be avoided as it can harm people and society.
This document provides a history of efforts in Pakistan to establish an interest-free economy and banking system in line with Islamic principles prohibiting riba (interest). It outlines key events and actions taken by various governments, committees, and courts between 1969-1999 to study proposals, issue rulings, and transition Pakistan's economy away from interest-based financing. However, repeated changes in government and lack of meaningful implementation of recommendations resulted in the issue remaining unresolved.
Terdapat 4 tahap pengharaman riba dalam Al-Quran, dimulai dari surah Ar-Ruum ayat 39 (Mekkah), Surah An-Nisa ayat 161 (Madinah), Surah Ali Imran ayat 130-132 (Madinah), dan terakhir Surah Al-Baqarah ayat 275-281 (Madinah) yang menjelaskan larangan dan hukuman bagi yang mengambil riba.
This document discusses several Islamic financing modes:
1) Qard-e-Hasana which is an interest-free loan provided out of kindness, to be repaid without expectation of profit or interest.
2) Musharakah and Mudarabah which are forms of partnership where partners share profits and losses. Musharakah involves joint ownership and management while Mudarabah involves one partner providing capital and another providing labor.
3) Murabahah which is a sale with an agreed upon profit margin, and can be used for financing by the financier purchasing an asset and reselling it.
This document discusses Bay' Bi-Thaman Ajil (BBA), which is an Islamic financing structure that involves the deferred payment of goods. It defines BBA, provides evidence from Islamic sources, discusses its objectives including providing financing flexibility. It covers pricing considerations for BBA, conditions like clearly stating durations, and applications like using BBA for property and vehicle financing. BBA allows the delivery of goods upfront with payment deferred to a later date through installments, at a higher price to compensate for the deferred payment.
This document discusses the Islamic concepts of Riba, Gharar and Qimar. It defines Riba as any excess compensation without due consideration, especially interest charged on loans. The document outlines verses from the Quran that prohibit Riba and classify two types of Riba - Riba al-Nasiyah (interest charged on loans) and Riba al-Fadl (excess received when exchanging specific commodities). It also discusses the prohibition of Gharar (uncertainty) in contracts and defines Qimar as events where there is a possibility of total loss for one party.
This document provides an overview of Riba (interest) in Islam. It begins with an introduction that establishes the key principles of the Islamic economic system, including justice, equality and prohibiting exploitation.
The document is divided into five parts. Part 1 discusses the Islamic ruling prohibiting Riba, providing evidence from the Quran and Hadith. Part 2 compares Islamic economics to other systems. Part 3 defines Riba linguistically and legally. Part 4 explains why Riba is haram both prophetically and rationally. Part 5 examines contemporary issues regarding Riba and credit cards.
The conclusion restates that Riba is considered unjust and illegal in Shariah as it exploits people's needs and creates inequality.
This document discusses Islamic norms for business transactions. It states that transactions should avoid riba (interest), gharar (excessive risk or uncertainty), and fraudulent behavior. It provides definitions of riba al-diyun (debt riba) and riba al-fadl (trade riba), and explains their prohibition. The document also discusses hadith related to riba, stages of revelation on riba, and disadvantages of riba-based finance systems. Overall, the document outlines prohibitions and guidelines for permissible transactions under Islamic economic principles.
The document discusses Islamic principles related to business transactions. It states that transactions should not involve riba (interest), gharar (ambiguity or uncertainty), fraud, coercion, or prohibited goods. It then defines riba and gharar, explaining their prohibition in the Quran, hadith, and Islamic law. Riba refers to interest on loans and can take two forms - riba al diyun relating to debt and riba al-fadl occurring in trade. Gharar introduces ambiguity into contracts. The document contrasts debt-based finance involving riba with participatory finance based on profit-sharing that is more just, equitable and growth-oriented.
1) Murabahah is a sale contract where the seller discloses the cost price and profit margin to the buyer. It involves the purchase and resale of assets where the seller earns a defined profit margin.
2) The key pillars of a murabahah contract include the seller, buyer, asset being traded, price, and offer/acceptance. It must also avoid elements of riba such as uncertainty around prices.
3) Modern applications of murabahah include its use in Islamic banking for financing, treasury products, sukuk issuances, and international trade. Structures like tri-party murabahah and murabahah to the purchase order are commonly used.
This document discusses Bay al-'Inah, which refers to the selling of an asset with deferred payment at a higher price, and then repurchasing the same asset from the buyer at a lower cash price. It defines Bay al-'Inah, provides evidence from hadith, and discusses the differing opinions of scholars on its permissibility. Some scholars prohibit it as a form of interest avoidance, while others permit it based on Imam Shafi'i's approval and use as a financing model when certain conditions are met. The document also outlines how Bay al-'Inah is applied in various Islamic banking products in Malaysia.
The document discusses various Islamic business transactions and contracts. It defines key terms like muamalah and aqad. It outlines categories of transactions such as barter trade, cash trading, and currency trading. It also classifies different types of contracts including contracts of exchange, security, partnership, safe custody/investment, utilization of usufruct, work/services, and gratuitous contracts. Evidence from the Quran, Sunnah, and scholarly consensus is provided to support the Islamic rulings around various commercial interactions and agreements.
This document discusses the concepts of riba and gharar in Islamic finance. [1] Riba refers to any excess amount charged on a loan beyond the principal amount and is prohibited as it is considered an unproductive activity that creates debt. [2] Gharar refers to uncertainty or risk in a contract and is prohibited if it is large and relates to the core aspects of the contract. Several hadiths and Quranic verses provide guidance on avoiding riba and gharar to ensure fairness and justice in financial transactions.
This document discusses the application of Shariah principles in Islamic financial transactions through the use of various commercial contracts. It provides an overview of key Islamic financial services like Islamic banking, capital markets, and takaful. It then examines some major contracts used in Islamic finance like murabahah, bay' bithaman ajil, ijarah, and their applications in asset financing and sukuk issuance. The document notes that murabahah and BBA are sale contracts that can be used for both short-term and long-term financing, and discusses the basic structure of using murabahah/BBA in Malaysian sukuk. It also provides details on the ijarah lease contract and its
BBA is a contract where goods are delivered immediately but payment is deferred to a future date. It involves the prompt delivery of goods to the buyer while postponing payment until a later specified date or through installments. Hadith provide evidence that deferred payment contracts were permitted by the Prophet Muhammad, including instances where he engaged in such contracts and where the payment terms included profit for the seller in addition to the price. For BBA contracts, there must be an offer (sighah), an asset or goods, and an agreed upon price between the buyer and seller. BBA is commonly used in Malaysia for medium to long-term financing of goods like property, vehicles, education costs, and other assets.
This document discusses the concept of Musharakah, which is an Islamic form of partnership or joint venture. It defines Musharakah, discusses its evidence in the Quran and Hadith, outlines its key pillars and types. It also covers the conditions of Musharakah partnerships, examples like Musharakah Mutanaqisah, and its modern applications.
Hibah-rukba is one part of hibah which has been practiced during jahiliyyah period.
They observe the death of the hibah's receipient to take back their hibah. Then when Islamic Shariah comes into existence, it affirms the hibah concept and disregards the condition of returning the hibah to the donor because He who takes back his present is like him who swallows his vomit.
But If the donor clearly mentioned the donation is for the donee during his life time, in this case, it becomes 'ariyah which must be return to the donor because the Muslims are obliged to follow their conditions.
The document discusses the issue of Bai Bithaman Ajil (BBA) contracts as used in Islamic financing in Malaysia. It summarizes the conceptual model of BBA, which involves the deferred payment sale of an asset from a seller to a purchaser. The document then discusses 5 previous court cases related to BBA and the legal issues they raised. The cases analyzed whether the BBA structure qualified as a legitimate sale contract under Shariah or resembled interest-based financing. The document concludes by noting the Malaysian government strengthened regulations on Islamic finance to address legal uncertainties surrounding BBA raised by the court cases.
This document provides an overview of Murabaha finance, which is a particular type of sale in Islamic finance where the seller discloses the cost of purchasing an asset and sells it to the buyer at a higher price to generate a profit. The document defines Murabaha and explains its key features and components. It also outlines three common models for structuring Murabaha transactions, with Model III involving banks as the most prevalent in modern Islamic banking. Model III is explained in further detail through its typical phases and documentation requirements.
This document discusses Tawarruq personal financing using Bursa Suq Al-sila. Tawarruq involves buying a commodity with deferred payment and selling it for immediate payment at a lower price. Scholars have differing opinions on its permissibility. Bursa Suq Al-sila is an Islamic commodity trading platform designed to facilitate Shariah-compliant transactions in commodities like crude palm oil. It aims to serve as an electronic marketplace for the Malaysian market in accordance with international Shariah standards. The document also outlines specifications for contracts on the platform and potential banking products it could support.
The document defines and discusses the concept of Mudharabah, which is a contract of partnership where one party provides capital and the other provides labor and management. It provides key details on the definition, pillars, categories, conditions and evidence for Mudharabah based on classical Islamic literature. The summary highlights that Mudharabah is a profit-sharing partnership where profits are shared according to a predetermined rate but losses are borne solely by the capital provider.
This document provides an overview of Murabaha, an Islamic financing structure. It defines Murabaha as a sale where the seller discloses the cost of an item and sells it for a higher price, adding a known profit. The document outlines the difference between Murabaha and Musawamah sales, basic rules of Islamic sales, evidence for Murabaha's validity, how it is structured as a financing transaction, potential issues, and mistakes to avoid. It concludes that Murabaha must be implemented carefully according to Islamic principles, as a legitimate sale rather than an interest-based loan.
This document discusses the prohibition of riba (interest) in Islamic economics. It defines riba and the two types: riba al-fadl, which is exchange surplus in barter; and riba an-nasiah, which arises in loan transactions. Riba is prohibited in the Quran and hadith. It can cause injustice, exploitation, debt, and negatively impact economic growth. Alternative solutions discussed include interest-free loans, Islamic banking, and applying the full Islamic economic system. The conclusion is that riba should be avoided as it can harm people and society.
This document provides a history of efforts in Pakistan to establish an interest-free economy and banking system in line with Islamic principles prohibiting riba (interest). It outlines key events and actions taken by various governments, committees, and courts between 1969-1999 to study proposals, issue rulings, and transition Pakistan's economy away from interest-based financing. However, repeated changes in government and lack of meaningful implementation of recommendations resulted in the issue remaining unresolved.
Terdapat 4 tahap pengharaman riba dalam Al-Quran, dimulai dari surah Ar-Ruum ayat 39 (Mekkah), Surah An-Nisa ayat 161 (Madinah), Surah Ali Imran ayat 130-132 (Madinah), dan terakhir Surah Al-Baqarah ayat 275-281 (Madinah) yang menjelaskan larangan dan hukuman bagi yang mengambil riba.
The document discusses the principles of Islamic investment according to Sharia law. It defines Islamic investment as investing in financially and ethically permissible ways according to Islamic rules. The principles require investments to be in ethical sectors and involve profit and risk sharing between investors and businesses. The document also outlines prohibited activities like interest, uncertainty, gambling and unethical industries. It then discusses the implementation of Islamic investment in Malaysia through various Islamic financial institutions and regulatory bodies.
Contract of Wadiah and its Application in Islamic BankingNabil Bello
This document discusses the concept of wadiah in Islamic banking. Wadiah refers to safekeeping of property in trust. There are two main types - wadiah yad al-amanah which is pure safekeeping with no liability for losses, and wadiah yad al-dhamanah which guarantees return of deposits. Wadiah is applied in savings accounts, where deposits are guaranteed but returns are at the bank's discretion, and current accounts, where deposits are used by the bank with no returns paid. While wadiah is widely used in modern Islamic banking, some argue this differs from the original concept of pure safekeeping of property in trust described in Islamic sources.
The document defines al-Wadi'ah as property left with someone to take care of it based on trust. It discusses the evidence from the Quran and hadith supporting al-Wadi'ah. The pillars of al-Wadi'ah are the depositor, deposited property, and depositary. There are two main types: al-Wadi'ah Yadd al-Amanah based on trust without liability, and al-Wadi'ah Yadd al-Dhamanah which allows the depositary to use the property and be liable for damages. Issues like conditions, flows, and disputes over profits are also summarized.
Riba refers to interest or usury which is forbidden in Islamic economic jurisprudence. There are two main types of riba - riba al-nasiah which refers to time period and riba al-fadl which is the exchange of commodities of the same kind in unequal proportions. Scholars have different views on what constitutes riba al-fadl based on characteristics of commodities. Riba is prohibited in Islam as it is an unlawful forced addition while profit from trade and business is permitted if derived fairly through mutual consent and sharing of risk.
Riba refers to interest paid on loans, which is prohibited in Islam. There are two main types of riba - riba al-nasiyah which is interest on loans, and riba al-fadl which involves exploiting unequal exchanges of commodities. The Quran and hadith clearly forbid riba. Riba causes injustice, greed, inflation and burdens poor nations with unsustainable debt. Muslims should avoid taking out loans with interest and instead use riba-free banking options or borrow from family/friends interest-free. Strictly following Islamic financial principles can help society avoid the harms of riba.
Fundamental of Islamic Banking - Principles of Islamic BankingMahyuddin Khalid
This document provides an overview of Islamic banking and finance principles. It discusses permissible and prohibited activities for Islamic investment and financing. Key concepts covered include profit and loss sharing, trade-based financing vs interest-based loans, and the prohibition of riba (interest), gharar (uncertainty) and maisir (gambling). It also outlines the payment of zakat and some major Islamic legal maxims.
This document defines and discusses the concept of bay' al-tawarruq, an Islamic financing structure. It provides the definition, evidence from Islamic legal sources, key pillars and participants, types, conditions and a modern application of bay' al-tawarruq. Bay' al-tawarruq involves the purchase of a commodity on credit followed by the immediate resale of that commodity to a third party for a lower price in cash. The document outlines the different types and conditions that must be met for bay' al-tawarruq to be valid according to Islamic law.
Concept Of Riba in Islamic Muamalah Maliyahabdou hamadah
This document discusses the concepts of interest, usury, and riba in Islam. It begins by defining riba as an increase or addition, specifically referring to premiums paid on loans in addition to the principal. It outlines the prohibition of riba in the Quran and hadith. It describes the main types and classifications of riba as riba al-nasi'ah (interest on loans), riba al-fadl (excess in exchange), riba al-qard (profit on loans), and riba al-yad (delayed exchange). It also discusses the differences between riba/interest and legitimate profit in trade, noting that money has no intrinsic utility unlike commodities.
This document provides an introduction and overview of key concepts in Islamic banking, including:
- It begins with defining Islamic banking as a system of banking consistent with Islamic law and avoiding interest.
- It then discusses some of the key principles of Islamic banking like risk sharing, prohibition of interest (riba), and materiality/economic purpose.
- It provides classifications of riba and discusses the sources of shariah law and some of its main objectives like protecting property and life.
- It also introduces some common Islamic banking contracts and products like murabahah, ijara, musharakah and their differences from conventional banking.
Financial institution report on historic judgement Sahrish Darjat
The document discusses arguments that have been made regarding the prohibition of interest (riba) in Islam and provides Quranic verses in response. It discusses five main arguments: 1) That the verses prohibiting riba were revealed late and the Prophet did not have time to interpret them; 2) That riba only refers to excessive interest on loans to the poor; 3) That riba does not apply to commercial loans; 4) That riba only prohibits increasing a debt over time, not pre-agreed interest; 5) That interest is necessary for modern economies. The document then provides answers to each argument based on Quranic verses and scholars, clarifying that riba is prohibited for all loans and interest-based
This document provides an introduction to Islamic banking and finance. It discusses why Islamic banking exists as an alternative to conventional banking that avoids Riba (interest) and Gharar (excessive uncertainty). The key topics covered include the prohibition of Riba in Islam, common misconceptions about Islamic banking, features of Islamic banks, and an overview of major Islamic finance modes like Musharakah, Murabaha, and Ijarah. The document emphasizes that Islamic banking operates according to Shariah principles of avoiding practices like interest, gambling, and unethical behaviors.
This document defines and discusses the Islamic contract of salam. It begins by defining salam as a contract where advance payment is made for goods to be delivered later. It provides evidence for salam from the Quran and hadith. It discusses the objectives of salam, which include providing financing for small businesses. The document outlines the pillars and conditions of a valid salam contract, including specifying the product, period of delivery, price, place of delivery, quality, and quantity.
This document defines and discusses bay' al-dayn (sale of debt), including:
1) Its definition in Islamic law and evidence from hadith.
2) The different types of debts and pillars required for a valid bay' al-dayn contract.
3) Scholars' opinions on the permissibility of selling debt to the debtor or third parties.
4) Modern applications of bay' al-dayn in Islamic finance instruments.
The document discusses the Islamic concept of al-Qardh, which is an interest-free loan. It defines al-Qardh and provides evidence from the Quran, hadith, and scholarly consensus. It outlines the pillars of al-Qardh as the lender, borrower, property, and contract. It discusses the conditions of a valid al-Qardh contract and explains the concept of Qardh al-Hassan, which is a loan given out of benevolence. It concludes by outlining the procedures for debt disbursement in Islam, including documenting the transaction in writing.
1) Murabahah is an Islamic financing contract where the bank purchases an asset for the customer and sells it to them at an agreed upon profit.
2) It involves the bank disclosing the purchase price and profit amount to the customer upfront.
3) Murabahah is commonly used for import financing, working capital, and other purchases where the bank acts as an intermediary in the transaction.
There are two types of riba (interest) prohibited in Islam:
1) Riba al-nasiyah (interest on loans) which refers to any predetermined increase on a loan based on time.
2) Riba al-fadl (interest in exchange) which occurs when exchanging amounts of the same commodity if the amounts are not equal or not simultaneous.
The key differences between the two are that riba al-nasiyah involves lenders/borrowers while riba al-fadl involves sellers/buyers, and riba al-nasiyah considers time while riba al-fadl can occur in a spot transaction. Both ultimately aim to curb unfair
Riba refers to excess or interest from a loan according to Islamic principles. There are two main types of Riba: Riba al Nasiyah, which is interest charged on a loan of a specified amount for a given period, and Riba al Fadal, which is an excess taken in exchange of similar commodities. The Quran prohibits Riba, citing verses that warn against consuming or paying interest. Hadith also curse those who pay or receive interest. Riba al Nasiyah is further divided into commercial interest from productive loans and usurious interest from personal loans. Islam promotes debt-free financing alternatives to avoid the prohibition of Riba.
Islamic perspective in business_Islamic bankingBobby Darmawan
Islamic banking operates according to sharia law and prohibits interest (riba), gambling (maisir), and financing non-halal activities. It aims to provide an alternative to conventional interest-based banking by using profit and loss sharing arrangements like mudarabah and musharakah. Islamic banks must be supervised by a sharia board, segregate funds, and safeguard deposits to ensure compliance with Islamic principles.
This document discusses the concepts of riba (usury) and gharar (uncertainty) in Islamic finance. It defines riba as any excess amount charged over the principal of a loan, which is prohibited as it is considered an unproductive activity that creates debt. Gharar refers to uncertainty in a contract, such as uncertainty around delivery, quality or existence of the object being traded, which is also generally prohibited. The document examines verses from the Quran and hadith that prohibit riba and gharar. It discusses the conditions for permissible contracts and outlines different types of prohibited riba and gharar related to credit transactions, surplus exchanges and uncertainty in contracts.
This document discusses arguments against indexing loans to inflation. It argues that indexing loans would constitute riba (interest) since only the original capital can be claimed back according to Islamic law. Indexing could introduce elements of gharar (uncertainty) and inflation has many complex causes not attributable to the borrower. The document also discusses how wage indexing is allowed since wages are prices, not debts. It concludes that when a loan is made in Islam, the exact same amount must be repaid regardless of changes in purchasing power or prices.
3. INTRODUCTION
Riba was gradually prohibited through 4 stages in 4
different verses in the Quran
Practice of giving and taking riba has been widely
practice in Arab society and regarded as part and
parcel of the business society
To eliminate something that have been accustomed
for so long is not an easy task
This approach also adopted in the prohibition of
liquor
Arab society had been given ample time to gradually
adjust themselves
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4. RIBA IN THE QURAN
Stages Of Moral
Legal Al-Bay’ as the
Riba & the Prohibition of alternative to
Prohibition denounciatio
Jews Riba Riba
n of Riba
Of Riba In (An-Nisa : 61) (Ali-Imran: (Al-Baqarah:
(Al-Rum : 39)
The Quran 130-132) 275-281)
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7. DEFINITION
Literally:
Riba is an Arabic word, derived from the verb raba that literally means „to grow‟ or
„expand‟ or „increase‟ or „inflate‟ or „excess‟
Excess quantity, addition, an increase of a thing over and above its original size or
amount
It is generally translated into English as “usury” or “interest”, but in fact it has a
much broader sense in the Shari`ah.
Riba in the Shari`ah, technically refers to the „premium‟ that must be paid by
the borrower to the lender along with the principal amount as a condition for
the loan or for an extension in its maturity.
In fiqh terminology, riba means an increase in one of two homogeneous
equivalents being exchanged without this increase being accompanied by a
return.
Technically (2 definition depending on the nature of transaction):
Trade Transaction
Loan Transaction
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8. DEFINITION
Definition 1:
Trade transaction:
Unlawful gain derived from the quantitative inequality of
the counter-values in any transaction purporting to effect
the exchange of 2 or more species which belong to the
same genus(category) and are governed by the same
efficient cause(illah)
Definition 2:
Loan transaction:
A predetermined excess or surplus over and above the
loan received by the creditor conditionally in relation to a
specified period
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9. CATEGORIES OF RIBA
Debt Riba
Riba Qardh
Riba Jahiliyyah
Trade Riba
Riba al-Fadl
Riba al-Nasiah
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10. DEBT RIBA
Riba Qardh
Any predetermined benefit for the owner of debt stated in the
contract, which the debtor need to fulfil
E.g.: interest stated in loan contract
Riba Jahiliyyah
The surplus or excess payment above the original debt as a
penalty to the debtor due to his inability to service the loan
repayment within the stipulated time
Real and primary form of riba
Premium paid to the lender in return for his waiting
Giving or taking of every excess amount in exchange of a loan
at an agreed rate irrespective of whether it is low or high
E.g.: interest in credit card transactions due to the delay in the
repayment
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11. TRADE RIBA
Riba al-Fadl
Any additional quantity or inequality in the exchange
of goods from the similar type of the ribawi items
(Quantity Factor)
Riba al-Nasiah
Any delay in the exchange of the ribawi items from
the same type and category
(Time Factor)
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13. EVIDENCE
Hadith:
From Jabir: The Prophet saw cursed the receiver and
the payer of usury, the one who records it and the two
witnesses to the transaction and said: “They are all
alike (in guilt and sin).
From Abi Said al-Khudri: The Prophet saw said: gold
for gold, silver for silver, wheat for wheat, barley for
barley, dates for dates, salt for salt, like for like, and
hand to hand. Whoever pays more or takes more has
indulged in riba. Take taker and the giver are alike (in
guilt).
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15. RIBAWI ITEM
(1) Prompt delivery (time)
(2) Prompt delivery with the equivalent quantity
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16. ISLAMIC RULINGS ON RIBA IN TRADE
Category Type Exchange Quantity Items
1 Same Same Spot Equal in Regardless of Gold with Gold,
category type exchange quantity quality Wheat with Wheat
2 Same Different Spot Inequality Equality is not a God with Silver
category type exchange is condition Wheat with Rice
permitted Salt with Dates
3 Different Different Delayed is Inequality Time and Gold with Wheat
category type permitted is Quantity Factor RM with Dates
permitted is not a
condition
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17. ISLAMIC RULINGS ON RIBA IN TRADE
Category Type Exchange Quantity Items
4 Ribawi Items and Non- Delayed is Inequality is Time and RM with vehicles
Ribawi Items permitted permitted Quantity UD with furniture
Factor is not a
condition
5 Between 2 Non- Delayed is Inequality is Time and Bricks with Sands
Ribawi Items permitted permitted Quantity Cloth with Patrols’
Factor is not a
condition
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18. THE RATIONAL BEHIND THE PROHIBITION OF RIBA
Barter system is not so favourable from the Shariah point of view.
The impact of riba is on the society at large compared to other crimes
prescribed in hudud which impact are restricted to only a few of people.
It is a clear burden on the borrower. In any circumstances, he is obliged
to repay the principal and interest charge (Money renting). Money and
time cannot grow by themselves.
Riba is the main pushing factor for the people with surplus of money to
lend their money out to the deficit units in the economy. However, it
could render to exploitation of deficit units by the surplus units.
To prevent any form of injustice, exploitation and manipulation among
the parties.
The inflexibility of interest charge results in loss and unemployment in
comparison with the profit-and-loss sharing system.
Security oriented vs Growth oriented. Interest-based system is not for
the poor parties with poor creditworthiness.
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19. THE RATIONAL BEHIND THE PROHIBITION OF RIBA
Inequality in loan distribution makes the rich becomes richer and the poor
becomes poorer.
Interest-based system impends the innovations amongst the small-scale
enterprises particularly.
Wealth creation and transfer: Riba activities do not create a new stock of
wealth.
Borrowers are not exposed to any risk (except credit risk - does not
commensurate the profit made).
Money is considered as commodity is an interest-based system and subject to
the law of demand and supply (Allowing speculation on money).
Interest is a component of costs in an interest-based system.
Case Studies:
Bank interest
Riba al-fadl
Similarities between trade and riba
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20. CASE 1
Charging Interest In The Banking Sector
Prohibition of riba would safeguard the interest of both financial
institution and customer
In case of money deposits in savings accounts or fixed deposits, the
interest is unfair because of:
Banks:
Conventional Bank: Obliged to pay interest to the depositor which is more than the
principal amount deposited
Islamic Banks: Profit would be given to the depositor only if bank make profit. If they
are making losses, they are not compelled to pay any amount of profit
Customers:
Conventional Bank: Customers would be deprived from the high profit gained by
bank even though they are guaranteed some form of fixed income (interest), it is
rather small compared to the huge profit gained by the banks.
Islamic Bank: If bank making huge profits for a certain period, depositor would be
given a fair share of profit based on agreed proportion
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21. CASE 2
Prohibition of Riba al-Fadl
To ban any form of unfair trade practices from the business society – unfair
practice in barter transaction
The Prophet saw was actually trying to discourage barter trading and gradually
eliminate barter system while suggesting a better and just monetary system
using currency
The answer to the question:
Why any trader would like to trade 2 similar commodity of different quality without
having gain from the differences in quantity?
No sensible trader would like to trade at loss, they would avoid any
involvement of barter trading that might lead to either the practice of riba or
trade at loss.
Islam suggested fairer alternative – utilize currency as a medium of exchange
that could facilitate a proper flow of trade and accurate market value. This
would avoid injustice due to inability to determine fair value for the exchange in
barter trade.
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22. CASE 3
Why Riba is Mentioned Together With Trade In The Quran
Difficulties in distinguishing between these 2 concepts.
Similarity
Both seems to gain something extra from the original principal – through interest and
profit
Trade Riba
In trading, buyer will gain and retain In riba based transaction, debtor will not
something in possession in return for retain anything from the creditor even
profit achieved by the seller. though he gets to utilize money in the first
place. He is required to pay back more
than principle. No value added in riba
based transaction.
In trade, traders always exposed to the In riba based transaction, the creditor
concept of profit and loss. always gain at the expense of the debtor
at all cost. It is confirmed gain on the part
of creditor
Trading is win-win situation. Interest always win-lose situation or lose-
lose situation
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