Indeed, Allah commands you to render back the trusts to those, to whom they are due...
If you trust one another, then let him who is trusted fulfill his trust, and let him be conscious of God, his sustainer
And perform the trust to those who entrusted it to you, and do not betray those who betrayed you
...Allah has permitted trade and has forbidden interest.
(Yusuf) Said: You will cultivate consecutively for seven years. Leave in the ears all that you have harvested except the little out of which you may eat. Then there will follow seven years of great hardship in which you will eat up all you have stored earlier, except the little that you may set aside (stored)
Interest must not be charged or paid on any financial transaction, as interest is deemed unlawful by Shari’ah. Allah has permitted trade and has forbidden interest.
Uncertainty in contractual terms and conditions is forbidden. However, risk taking is allowed when all the terms and conditions are clear and known to all parties. Abu Hurairah (RA) reported that Prophet Muhammad (saw) forbade a transaction determined by throwing stones, and the type which involves some uncertainty.
‘Intoxicants and gambling and divining arrows are an act of abomination of Satan’s handiwork’; so avoid them, so that you attain true success
The best earning is what a man earns with his own hands and from a permissible trade
....Truly many are the partners (in business) who wrong each other’s: Not so do those who believe, and work deeds of righteousness.
If you had wished, surely you could have exacted some recompense for it.
Abdullah Ibn Umar narrated, the Prophet (peace be upon him) said: Pay the hired worker his wages before his sweat dries off.
The Prophet (peace be upon him) is reported to have said: … He who hires a person should inform him of his fee.
Wadee’ah is a contract between the owner of goods and custodian of the goods. Toprotect the goods from being stolen, destroyed etc. In other words, the custodian is to ensurethe safe custody of the goods.There are two types of Wadee’ah i.e. Wadee’ahAl-Amanah (trustee, safe custody) and Wadee’ah YadDhamanah (guaranteed custody).If the funds that are pooled together, being utilized and being charged for the service, theShari’ah contract of Wadee’ah YadDhamanah is applied.
Mudarabah is a kind of partnership where one partner gives money to another for investing in commercial enterprises. The investment comes from the first partner who is called “Rab-ul-Maal” while the management and work is an exclusive responsibility of the other, who is called “Mudarib”. Under Mudarabah principle, the profit generated is shared in a predetermined ratio between the “Rab-ul-Maal” and the “Mudarib”. In case of a loss, the “Rab-ul-Maal” (participants of deposit pool) shall bear the loss on the pro rata basis.
“Bai’ Murabahah" is a particular sale of trust in which a commodity is sold at the original purchase price plus an agreed upon marked up profit. Alternatively, it is described as ‘a sale transaction on a cost plus profit basis.
A basic Bai’ Murabahah has the following characteristics:
Bai’ Murabahah is generally referred to as only ‘’Murabahah’’.
Under this mode, the bank purchases vehicles, machineries and instruments, building, apartment etc. and allowed clients to use those on payment of fixed rents in installments with the ultimate objective to sell the asset to the client at the end of the rental period . The client acquires the ownership/ title of the assets/ properties subject to full payment/ adjustment of all the installments.
A partnership contract between two or more individuals or bodies, each contributes capital, and profit or loss is shared between the partners. Musharakah is better known as Sharikat which is described as an accumulation of capital by shareholders to finance a particular project and the profit from the project is distributed based on an agreed ratio or based on shareholding if thereis no agreed ratio. If the project incurs losses then they are to be borne by the shareholders according to their shareholdings.
HPSM is one of the most commonly used modesof investment followed by the Islamic Banks in Bangladesh. InArabic,it is known as Bai’ bilIjarah. Under HPSM contract, the bank participates in the form of equity jointly with the client for purchase of an asset as per agreement, lease out the asset to the client against rent and the client gradually pays back the bank investment, in installments, within stipulated time as per agreement.
HPSM may, in general, is used for:
Bai’Salam is a form of forward contract when the price for an asset is paid upfront at the time of the contract for an asset or commodity to be delivered later. It can also be defined as the sale where the Asset/Commodity is delivered on a deferred basis in exchange for the Price be paid immediately.
The basis of Islamic Banking is based on the premises of an existence of an underlying asset. The asset itself must have the following attributes:
Firstly, the asset must exist. Therefore, an asset which does not exist at the time of sale cannot be
Secondly, the seller should have acquired the ownership of that asset. Therefore, if the asset exists, but the seller does not own it, he has no right to sell it.
Thirdly, mere ownership is not enough. It should have come into the possession of the seller, either physically or constructively. If the seller owns an asset, but he has not taken its delivery himself or through an agent, he cannot sell it.
"Bai’Muajjal" means sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on Credit. In Bank's perspective, Bai’ Muajjal is treated as a contract between the Bank and the Client under which the bank sells to the Client certain specified goods, purchased as per order and specification of the Client at an agreed price payable within a fixed future date in lump sum or by fixed installments.
A sukuk is an Islamic financial certificate, similar to a bond in western finance that complies with Islamic law commonly known as Shari’ah.Since the traditional western interest-paying bond structure is not permissible, the issuer of a sukuk essentially sells an investor group a certificate, and then uses the proceeds to purchase an asset that the investor group has direct partial ownership. The issuer must also make a contractual promise to buy back the bond at a future date at par value.