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ISLAMIC FINANCE IN A NUTSHELL

partnerships 46–52, 123–4, 212, 219, 220–2 personality 21 pillars of Islam 212–13 PLS see prot-and-loss sharing predetermined payments 5 productivity 6, 20 prot-and-loss sharing (PLS) viii–x, 5–6

asymmetric information 11–12 background comments 122

  • nance modes diagram 26

investment accounts 128–30 productivity emphasis 6 risk-sharing 6 as substitute for interest 4 see also Mudaraba...; Musharaka partnerships property rights 19–20 Prophet Mohammed 13, 18, 75, 87–8

see also Hadith; Qur’an; Sunnah purication’ process 118–19

qabdh (possession) 222 Qard Hasan accounts 127 Qard (loan) 5, 125–7, 222–3 qimar (gambling) 223 Qiyas (analogical reasoning) 86, 93–5, 101,

223 Qur’an

basis for banking 2–3 riba 13–19 sanctity of contracts 8 Sharia’a law 85–9, 91–2, 101

Rahn (pledge) 223–4 rates of return viii–ix rating, IIRA 189–97 real estate 52 receivables 155, 162 regulatory issues 168–9, 176–81 retail banking xii–xiii riba (interest) viii–ix, 2–3, 13–21

allowed limits 118 denition 224–6

eating interest 116–17 eects on personality 21 Ijara contracts 62 impermissablity of 16–21 Murabaha contracts 35–6 negative social growth 20–1 property appropriation 19–20 Qur’an/Hadith texts 13–15 rationale for ban 16–21 Riba Al-Fadl 13, 113, 225 Riba Al-Nasiah 13, 225–6 time value of money 29, 116–17 ribawi (items attracting riba) 226 risk ix–x, xv–xvi, 6–8, 11–12

sadaqah (charitable giving) 226 sahih (sound/healthy) 226 Salaf (loan) 226 Salam contracts 24, 74–80 conventional banking 79–81 denitions 75–6, 226–7 implementation 76 as mode of nance 74 parallel Salam 74, 79, 227 Sharia’a rules 32, 76–9 sanctity of contracts 8–12 Sarf (monetary exchange) 228 savings 126–8, 132 scholars 103–15 CVs of prominent men 107–14 denition 98 lack of 106–7 qualications required 107 roles 103–6 State Bank of Pakistan 114–15 see also individual scholars segmentation of customers xii–xiii service sector xiii, 52 shares 118–19 Sharia’a 83–95 Allah the Lawgiver 84–5 banking application 98–101, 115–20 Ijma 92–3

340

bindex.indd 340

3/24/2010 7:36:06 PM

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