INTRODUCTION TO THE ISLAMIC FINANCIAL SYSTEM What is Shariah
refers to sum total of Islamic laws which were revealed
What is Islamic Finance to Prophet Muhammad (SAWS) , which are recorded in
type of financing activity that must comply with Sharia Quran and deductible from Prophet's divinely
(Islamic Law) guided lifestyle (Sunnah) .
concept can refer to investment that are permissible under
Sharia Shariah as Bedrock of Islamic Financial System
main difference between conventional finance and Islamic Islamic Finance is reflection of Islam as way of life.
finance is practices and principles used in conventional no isolation between ibadah and muamalat
finance are strictly prohibited under Sharia laws . Shariah clear path to be followed Islamic Law
(extend beyond jurisprudence)
Why study Islamic Finance source of rules Quant Sunnah +
Ijtihad
1) Finance Ijtihad process by which qualified Islamic jurist
describes management ,
creation and study of money , (called mujtahid) endeavors to arrive at correct
banking , credit , investments assets and liabilities that
, ruling on given issue by reflecting on source texts
make up financial systems and study of financial from fundamental sources of Shariah ,
Quran and
instruments. Sunnah .
deals with resource allocation , management acquisitions
, ,
IFI must achieve objective of shariah (magasid al-
and investment. Shariah) .
deals with fundamental issues in finance Crisk Magasid al Shariah is aims or goals intended by Islamic
transformation and management) . law for realization of benefit to mankind .
2 Islamic
about relating to Islam Al-Quran , and
,
As-Sunnah . Objectives of Magasid al-Shariah (5 principal)
Islamic Finance is expected to essentially function nifz al-aql (preservation of intellect
similarly or at least produce same economic effects as hifz al-din (preservation of faith)
its conventional counterpart. hifz al mal (preservation of wealth)
implies differences between Islamic finance and hifz al-nafs (preservation of life)
conventional counterpart. hifz al nasb (preservation of lineage)
built upon no . of doctrine and unique characteristics
based upon principles underlined by Shariah .
characteristics of Islamic Financial System (IFs)
no riba
no gharar
no gambling
no monopoly
no unethical activities
must pay zakat
halal business
must benefit society
Objectives of Islamic Financial system
I to establish justice
2 to establish good practices
3 to make life easy and bearable
4 full utilization of resources
5 proper distribution of wealth
6 ensure economy efficiency
7) stability in value of
money
refers to sum total of Islamic laws which were revealed
What is Islamic Finance to Prophet Muhammad (SAWS) , which are recorded in
type of financing activity that must comply with Sharia Quran and deductible from Prophet's divinely
(Islamic Law) guided lifestyle (Sunnah) .
concept can refer to investment that are permissible under
Sharia Shariah as Bedrock of Islamic Financial System
main difference between conventional finance and Islamic Islamic Finance is reflection of Islam as way of life.
finance is practices and principles used in conventional no isolation between ibadah and muamalat
finance are strictly prohibited under Sharia laws . Shariah clear path to be followed Islamic Law
(extend beyond jurisprudence)
Why study Islamic Finance source of rules Quant Sunnah +
Ijtihad
1) Finance Ijtihad process by which qualified Islamic jurist
describes management ,
creation and study of money , (called mujtahid) endeavors to arrive at correct
banking , credit , investments assets and liabilities that
, ruling on given issue by reflecting on source texts
make up financial systems and study of financial from fundamental sources of Shariah ,
Quran and
instruments. Sunnah .
deals with resource allocation , management acquisitions
, ,
IFI must achieve objective of shariah (magasid al-
and investment. Shariah) .
deals with fundamental issues in finance Crisk Magasid al Shariah is aims or goals intended by Islamic
transformation and management) . law for realization of benefit to mankind .
2 Islamic
about relating to Islam Al-Quran , and
,
As-Sunnah . Objectives of Magasid al-Shariah (5 principal)
Islamic Finance is expected to essentially function nifz al-aql (preservation of intellect
similarly or at least produce same economic effects as hifz al-din (preservation of faith)
its conventional counterpart. hifz al mal (preservation of wealth)
implies differences between Islamic finance and hifz al-nafs (preservation of life)
conventional counterpart. hifz al nasb (preservation of lineage)
built upon no . of doctrine and unique characteristics
based upon principles underlined by Shariah .
characteristics of Islamic Financial System (IFs)
no riba
no gharar
no gambling
no monopoly
no unethical activities
must pay zakat
halal business
must benefit society
Objectives of Islamic Financial system
I to establish justice
2 to establish good practices
3 to make life easy and bearable
4 full utilization of resources
5 proper distribution of wealth
6 ensure economy efficiency
7) stability in value of
money
