Islamic Banking & Finance

Islamic banks earn through asset-based trade and profit-sharing, not interest.

Bai’ is Arabic for sale, a lawful means of income in Shariah.

Any investment in haram industries like alcohol, gambling, or pork is forbidden.

Istisna’ is a sale contract for manufacturing or construction with deferred delivery.

Salam allows prepayment for future delivery, facilitating agricultural or production financing.

Mudarabah and Musharakah are equity-based models promoting risk-sharing between partners.

Conventional insurance contains gharar (uncertainty) and riba (interest), which violate Shariah.

Zakat redistributes wealth to reduce inequality and purify earnings.

Maisir refers to gambling or speculative behavior, prohibited in Islamic finance.

Islamic finance avoids riba, gharar, and maisir-based transactions.

AAOIFI sets global Shariah and accounting standards for Islamic financial institutions.

Bai’ Bithaman Ajil is a sale where payment is deferred but price is fixed in advance.

Wakalah refers to agency where an agent is appointed to act in financial transactions.

Waqf is an endowment made for charitable or religious purposes.

Profit in Islam is lawful only when earned through risk and productive effort.

Salam is a forward contract with full payment in advance and deferred delivery.

Halal profit is income obtained through Shariah-compliant trade and effort.

Home financing is commonly structured via Murabahah (sale) or Ijara wa Iqtina (lease-to-own).

Arbun is a down payment made as part of a sale, with conditions approved by some scholars.

Speculation is prohibited due to gharar and maisir elements, causing injustice and loss.