Islamic banking glossary of terms

System of accountability in an islamic state in order to check unlawful practices. Shariahcompliant investments are structured on the exchange of ownership in tangible assets or services, with money simply acting as the payment mechanism to effect the transfer. Islamic banks use it as a mode of financing for purchase and sale or deferred payment of consumer goods. Sale contract followed by repurchase by the seller at a different price. Glossary of islamic finance terms mohammed amins website. Right from a debit card issued the moment you open your account to the freedom and flexibility of online banking services, we take pride in delivering unmatched ease and simplicity. Technically, an important value of islamic society in mutual dealings. A contract of acquisition of goods by specifi cation or order. Technically, this financing facility is based on the activities of buying and selling. Pdf a comprehensive glossary of terms in islamic commercial. Oecd glossary of statistical terms islamic banking definition. Islamic banking glossary uganda bankers association.

May 03, 2020 this term refers to a mode of financing adopted by islamic banks. This glossary is not limited to islamic terms and contains arabic and english terms that are also referred to in the study of islamic economics, banking and. Glossary of islamic banking terminology glossary of islamic terms abbasid. It dominated particularly central middle east region. I will be very thankful to you for your help, thanks, imtiyaz ahmad. Technically, sale of a definite usufruct in exchange for a definite reward. The council of the islamic fiqh academy established by the organisation of. Institute of islamic banking and insurance vanguard business centre unit 4 alperton lane, greenford ub6 8aa.

In general, islamic banking and finance has been described as having the same purpose as conventional banking but operating in accordance with the rules of shariah law institute of islamic banking and insurance, or having the same basic objective as other private entities, i. The classification of islamic banking instruments as external debt, or not, can be determined by the following general guidance. While islamic banking in general has been codified since early 1980s in malaysia, the familiarity to islamic banking or finance terms remain a challenge. An islamic concept that requires one to love what allah loves, and hate what allah hates. Glossary of islamic banking definitions of the most commonly used terms in islamic banking. Popular islamic finance terms islamic bankers resource.

Discover islamic products glossary page to know about islamic banking terms, meaning and other information. The collateral may be disposed off in the event of a default. This glossary explains the key arabic terms and contracts used in islamic finance, giving alternate spellings, where applicable. At a later date, the bank will repurchase the asset and pay the client in cash terms. In modern islamic banking, the term refers to a buying and selling transaction between the bank or financial institution and the customer, whereby the former buys a property or an asset, e. Glossary the fundamental principle of islamic finance is that money has no intrinsic value. This short glossary gives my recommended spelling and a detailed explanation of the term. Arbun the down payment is used to guarantee that the purchase agreement is fulfilled at the defined time. The largest living member of the semitic languages family in terms of.

The islamic banking terms apply to any person or entity that avail any product or service that adcb islamic banking offers. The wealth services terms apply to individuals or corporate entities who use or purchase investments defined in the terms and including debt instruments, equity, fixed income and other funds, sukuk, insurance policies or. A system of banking based on the statutes of islamic law and economics. Amirul mumineen the commander of the faithful, imam ali a. According to islam, zakat the third pillar of islam purifies wealth and souls. Islamic banking and finance discusses islamic financial theory and practice, and focuses on the opportunities offered by islamic finance as an alternative method of financial intermediation.

It is a contract under which the islamic bank finances equipment, a building or other facility for the client against an agreed rental together with an undertaking from the client to purchase the equipment or the facility. Islamic banking has the same underlying purpose as conventional banking but it operates in accordance with the rules of shariah. Islamic finance glossary of terms and contracts arabic. Alijarah thumma albai aitab, lease contract followed by ownership of asset through a sale contract. Amanah entails absence of liability for loss except in breach of duty. Key features of profitsharing as opposed to debtbased contracts are highlighted, and the ways in which they can facilitate improved efficiency and. Modest practical steps in the 1960s were followed by the establishment of several islamic banks in the private sector in the 1970s.

Terms like mudarabah or musyarakah or wakalah remains difficult to remember but also its meaning have been lost to many, although there has been many attempts to communicate the various glossaries. Alizz islamic bank is proud to bring you ease and simplicity with our best current account. Islamic banking fundamentals islamic banking information. Technically applied in the model of islamic banking by some. The name of the creator of the universe and all that it contains according to islam. Those are typically of later origin than the concepts listed here. Glossary of terms islamic terms dictionary meezan bank. Resale of goods with a discount on the original stated cost. This contract refers to the sale of goods on a deferred payment basis. Islamic finance, based on religious principles which avoid interest and pure monetary speculation, is growing rapidly, supported by large pools of shariacompliant funds in the gulf and the. Glossary of islamic banking terminology open offshore bank. Paying or collecting interest, or riba, is prohibited by islamic law. Down payment deposit to retain a right to transact future date. The recent impressive growth in the islamic finance industry makes it essential that the worlds.

For example, those from the institute of islamic banking and insurance, al salam bank bahrain. Plot 2702 block 244 nyangweso road kironde road tankhill muyenga. This glossary is not limited to islamic terms and contains arabic and english terms that are also referred to in the study of islamic economics, banking and insurance. This account includes instant debit card issuance and flexibility of online banking services. Some of the modes of islamic bankingfinance include mudarabah profitsharing and lossbearing, wadiah safekeeping, musharaka joint. Relating to islamic banking, refers to an investment account where the account holder authorizes the islamic bank to invest the account holders funds on the basis of mudarabah contract in a manner which the islamic bank deems appropriate without laying down any restrictions as to where, how and for what purpose the funds should be invested. Used by some islamic banks, it refers to selling of an asset to the customer through deferred payments. A person may hold property in trust for another, it entails the absence of any liability for loss, except for breach of duty.

Technically, a financing technique adopted by islamic banks that takes the. Some divergence among the scholars in terms of the timing of fi xation and pricing. Used as the basis of modern islamic banking since the amount charged for. Islamic banking glossary kenya bankers association. The seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advance price fully paid at the time of contract.

Zakat is levied on cash, cattle, agricultural produce, minerals, capital invested in industry and business. There are many islamic finance glossaries available on the internet. Amanah entails an absence of liability for loss except in breach of. The first modern theoretical literature on islamic banking appeared in urdu, arabic, and english from the 1940s through the 60s. It also refers to a contract of land lease at a fixed rent payable in cash. Oecd glossary of statistical terms islamic banking. Relating to islamic banking, refers to an investment account in which the bank has the authority to invest the account holders funds on the basis of mudarabah contract or agency based contract for investment, but has certain restrictions as to where, how and for what purpose the funds are to be invested. Glossary of islamic finance terms and contracts h i hadiah althawaab a gift with the intention of getting the reward from the recipient in the future. Bank charges and commission have been interpreted to be juala by the jurists and thus considered lawful. A glossary of financial terms that provides definitions for processes, schemes, laws, and institutions that fall under various financial sectors, including.

An arrangement whereby a valuable asset is places as collateral for a debt. In hanafi terminology, a thing is to be determined through weight or measure during a transaction of sale. Islamic banking glossary increasingly, banks are offering niche services and products to meet the needs of a diverse customer base. They are simply islamic economic terms you may come across when trying to do business islamically or reading up on this subject.

Many approaching islamic finance for the first time are daunted by the intricacies of the subject, but a little effort usually leaves them feeling confident to explore this dynamic area of finance. Refers to commission, fees or wages charged for services. Islamic instrumentsdeposits include conventional and transferable deposits, such as amanah and qardhasan depositsas well as various investment participation certificates that are not investments in the permanent capital of a financial institution and. Relating to islamic banks, refers to investment contracts where the investment account holders appoint the islamic bank as agent for investing their funds for a specified fee and share of profit if it exceeds a certain level, the latter being an incentive for the islamic bank to achieve a return higher than expected. This term refers to a mode of financing adopted by islamic banks.

Glossary of islamic banking terms islamic bankers resource. Research report on islamic banking part 4 glossary, appendix and references by mohamed ariff, university of malaya, taken from asianpacific economic literature, vol. It is the perfect name for god as it truly denotes the absolute oneness of god. Uob islamic banking glossary of terms uob malaysia. Salam means a contract in which advance payment is made for goods to be delivered later on. We at alizz islamic bank are proud to bring you ease and simplicity with our current account. Relating to islamic banks, refers to investment contracts where the investment.

This account is for both salaried and self employed indivuduals, now you can experience everyday. Technically applied in the model of islamic banking by some bank. The basic principle of islamic banking is the sharing of risk, profit and loss and the prohibition of riba interest and gharar uncertainty. Allah refers to god, glory be to him, there is no god but he.

Islamic banking, also known as noninterest banking, is a banking system that is based on the principles of islamic or sharia law and guided by islamic economics. Sale contract based on deferred payment at certain price. A comprehensive glossary of terms in islamic commercial law business, banking and finance article pdf available december 2012 with 2,0 reads how we measure reads. It is often used as a prefix in referring to different salesbased modes of islamic finance, such as murabaha, istisnaa, and salam. In islamic parlance the word refers to the muslims of madina who helped the muhajirin immigrants of makka in the process of the latters settling down in the new environment. A dynasty that reigned in the middle of the second century of the islamic calender through the eighth century. Alijarah thumma albai aitab lease contract followed by ownership of asset through a sale contract. A person can hold a property in trust for another, sometimes by express contract and sometimes by implication of a contract. Islamic banking terms glossary hong leong islamic bank. Nov 10, 2014 islamic finance, based on religious principles which avoid interest and pure monetary speculation, is growing rapidly, supported by large pools of shariacompliant funds in the gulf and the. Dear, its good to see the web page for islamic banking, please tell me what we say in english.

It is contrary to muzarah when rent is fixed as a certain percentage of the produce of land. Hajj haj, haji islamic pilgrimage to mecca halal acceptable and lawful hamish jiddyah a security deposit paid by a party prior to entering into an exchange contract such as sale and lease, for his. A this glossary is not limited to islamic terms and contains arabic and english terms that are also referred to in the study of islamic economics, banking and insurance. Below you find a glossary in alphabetical order explaining the most important terms and principles of islamic banking. Derives from the word ilah which means the one deserving all worship, the one to whom all hearts submit in love, fear, reverence, desire, trust and sincerity, and to whom all limbs submit in all forms of worship such as prayers, supplications, sacrifices, invocations, etc. Sharing profit and loss is a banking principle and shareholder capital and deposits are kept separate to ensure fair revenue sharing. Relating to islamic banking, refers to an investment account where the account holder. Used as the basis of modern islamic banking since the amount charged for deferred payment is in excess of the.