ISLAMIC FINANCE PRODUCTS AND SERVICES
Summary Chapter 6,7,8,9 : CONSUMER/RETAIL FINANCING PRODUCTS
6.1 1. Shariah Advisory Council (SAC) Resolutions
REFERENCES FOR 2. Shariah Standard & Operational Requirements
SHARIAH COMPLIANCE 3. Shariah Governance Framework
4. IFSA 2013
5. Islamic Banking Products & Services Guidelines
“Provision of Finance” means entering into, or making an arrangement for another person to enter
into, the businesses or activities which are in accordance with Shariah including:
(a) Equity or partnership financing, including musyarakah,musyarakah mutanaqisah and mudarabah;
(b) Lease based financing, including al-ijarah, al-ijarah muntahia bi al-tamlik and al-ijarah thumma al-bai`;
(c) Sale based financing, including istisna`, bai` bithaman ajil, bai` salam, murabahah and musawamah;
(d) Currency exchange contracts; Bai al-sarf
(e) Fee based activity, including wakalah;
(f) Purchase of bills of exchange, certificates of Islamic deposit or other negotiable instruments; and
(g) The acceptance or guarantee of any liability, obligation or duty of any person.
SHARIAH REQUIREMENTS
1. definition & nature
2. contracting parties
3. asset
4. price
5. arrangement with other contracts
6. dissolution & completion
OPERATIONAL REQUIREMENTS
1. oversight function
2. documentation, policy and procedure
3. disclosure
4. risk management
, Differences between “Islamic Banking Debt- Based” & “Conventional Banking Debt-Based” transactions
Islamic Bank (IB) COnventional bank
Debt based refer to financing activities Debt based refer to loan/ advances
● Revolving Financing Facilities (cash-line, Revolving Credit Facilities [same as IB]
credit card) Term Loan Products (Asset/Property Loan,Vehicle
● Term Financing Product (Property/Asset Loan)
Financing, Vehicle Financing etc
● Trade Finance Facilities (Import/Purchase &
Export/Sale)
● Ar - Rahn Financing (only IB)
Almost all Islamic Financing are Debt–Based
Products.
Tenure of debt-financing (i) Long-Term, (ii)
Medium-Term & (ii) Short-Term debt financing.
Summary Chapter 6,7,8,9 : CONSUMER/RETAIL FINANCING PRODUCTS
6.1 1. Shariah Advisory Council (SAC) Resolutions
REFERENCES FOR 2. Shariah Standard & Operational Requirements
SHARIAH COMPLIANCE 3. Shariah Governance Framework
4. IFSA 2013
5. Islamic Banking Products & Services Guidelines
“Provision of Finance” means entering into, or making an arrangement for another person to enter
into, the businesses or activities which are in accordance with Shariah including:
(a) Equity or partnership financing, including musyarakah,musyarakah mutanaqisah and mudarabah;
(b) Lease based financing, including al-ijarah, al-ijarah muntahia bi al-tamlik and al-ijarah thumma al-bai`;
(c) Sale based financing, including istisna`, bai` bithaman ajil, bai` salam, murabahah and musawamah;
(d) Currency exchange contracts; Bai al-sarf
(e) Fee based activity, including wakalah;
(f) Purchase of bills of exchange, certificates of Islamic deposit or other negotiable instruments; and
(g) The acceptance or guarantee of any liability, obligation or duty of any person.
SHARIAH REQUIREMENTS
1. definition & nature
2. contracting parties
3. asset
4. price
5. arrangement with other contracts
6. dissolution & completion
OPERATIONAL REQUIREMENTS
1. oversight function
2. documentation, policy and procedure
3. disclosure
4. risk management
, Differences between “Islamic Banking Debt- Based” & “Conventional Banking Debt-Based” transactions
Islamic Bank (IB) COnventional bank
Debt based refer to financing activities Debt based refer to loan/ advances
● Revolving Financing Facilities (cash-line, Revolving Credit Facilities [same as IB]
credit card) Term Loan Products (Asset/Property Loan,Vehicle
● Term Financing Product (Property/Asset Loan)
Financing, Vehicle Financing etc
● Trade Finance Facilities (Import/Purchase &
Export/Sale)
● Ar - Rahn Financing (only IB)
Almost all Islamic Financing are Debt–Based
Products.
Tenure of debt-financing (i) Long-Term, (ii)
Medium-Term & (ii) Short-Term debt financing.
