Islamic finance 101 March 1, 2024 https://www.youtube.com/watch?v=73nHDC6x5jo&t=614s Yaseen Foundation yaseen.org

1. ISLAMIC FINANCE 101
Dr. Main Alqudah
Associate Professor

2. FINANCE
Fund Mobilization
Fund Utilization
Fund Intermediation

3. ISLAMIC
Jewish & Christian as well
Transparency & Integrity
Ethics & Values
Commoditization & Asset-
Backed
 Ban of Riba or Interest

4. 101
Introduction only
No technical details
No Islamic alternatives

5. WHAT IS RIBA
“ The premium that must be
paid by the borrower to the
lender along with the principal
amount, either as a condition for
the loan, or for an extension in
its maturity ”

6. RIBA: RISK SHIFTING FINANCE
No partnership
No risk is taken by the
lender
Financial exploitation

7. CHALLENGE WE FACE
Different terms in the contemporary
transactions: penalty, overdraft
charge, late fees, dividend, profit,
commission, interest, cash back,
fine, compensation, honorarium,
service fees, equity, shares ….etc.

8. OUR JOB
Interpret the transaction
Find out if someone is offering (lending)
money without taking any liability,
where principal and premium are
guaranteed.
Above is Riba, whether it is called as
such or not.

9. FIQH MAXIM
“ What matters in transactions
is the essence and reality , not
the wording or the formality”

10. EXAMPLES
Saving account
Overdraft charge
Home mortgage

11. OPPOSITE EXAMPLES
Cash back
Owner finance with interest
Penalty clause

12. ISLAMIC FINANCE:
RISK SHARING
Mudharabah
Musharakah
Murabahah
Ijarah
Istisnaa’

13. TRADITIONAL VS. ISLAMIC
“ They say, verily trading is only like usury, and Allah
has allowed trading and prohibited usury”
Declining partnership vs. Interest-bearing loan:
- Maintenance , tax, insurance
- Appreciation, depreciation, guaranteeing the
principal amount.
- Foreclosure, eminent domain, natural disaster

14. WHY RIBA IS PROHIBITED
Excessive profit & excessive loss
Financial exploitation
Establishing justice is a core Islamic principal:
“We have already sent Our messengers with
clear evidences and sent down with them the
Scripture and the balance, so people may
maintain [their affairs] in justice” .

15. CONTEMPORARY ISSUES
Cryptocurrency
Student loans
Retirement accounts
Investing in the stock market
Insurance, especially the life one
Home mortgage
Banking

16. GUIDANCE COLLEGE
Master’s in Islamic Economics and finance
https://www.guidancecollege.org/maef
Online
Evening and weekend college
Affordable tuition
In-house scholarships and financial aid

17. SHORT TERM SOLUTION
Syndication
Islamic alternative : mutual fund,
home mortgage, commercial
finance

18. LONG TERM SOLUTION
Penetrating the US Finance
system
Working with Lawmakers
Political engagement
Lobbying

19. THANK YOU !
GuidanceCollege.org
Dr.Main@GuidanceCollege.org
Shariah compliance consultation:
https://clarity.fm/drmainalqudah