It is a banking system that provides banking services and products in line with the rules and principles of Shari’a and it is conducted under direct supervision and audit of Shari’a Supervisory Board.
Shari’a is an umbrella term, which stands for the principles and rules related to practical aspects of life, covering cover acts of worship, financial transactions, family law and laws of inheritance, rules of war and peace, etc., whether they are mentioned explicitly in the Holy Quran and Sunnah, or derived from other Shari’a sources by Mujtahedeen, through application of the rules of Ijtihad.
The members of ahli Islamic Shari’a Supervisory Board are:
No, Islamic banking is for all. Anybody who fulfills the bank’s requirements can avail Islamic banking services. However, Islamic bank does not enter into activities which are harmful for a society, or any businesses that are not allowed by Islamic Shari’a, such as the business of alcohol, pork,, etc.
Following are the most commonly used modes of Islamic banking and finance:
Islamic banks invest/utilize the funds received from account holders/customers under Islamic modes of financing, such as Ijara, Murabaha, Salam, Istisna and investment contracts such as Mudaraba, Musharaka, Wakala etc. to generate profit.
If Islamic banks do not impose penalties on late payment, customers may not pay in time; in turn, Islamic banks will not be able to run their business efficiently and give a good return to investors. Therefore, Islamic banks have decided to take from each client an irrevocable undertaking that in case of late payment the client shall be charged a penalty, which shall be donated to a charity supervised by the Shari’a Supervisory Board of the bank, independently from the bank. Islamic banks do not use these donations for their own benefit, but incorporate such provisions in their contracts to check potential default.
Yes, Islamic banks offer interest free credit card facility, for which the client pays a monthly fee, irrespective of the way the client uses the card during the period. The fee is in lieu of real services that a credit card holder becomes entitled to. The fee neither increases nor decreases on the basis of the use, frequency of usage or non-use of the card by the customer.
No, both have the same meaning. Qur’an, Sunnah and Fiqh do not differentiate between the two. Islam terms what is known as interest or usury as Riba, and therefore prohibits it.
Islamic banking offers Riba free banking, in line with Islamic Shari’a rules. It neither gives nor takes interest on loans . It operates as a trading company, which buys, sells and enters into different contracts of investment such as Mudaraba, Musharaka etc.
No, it uses simple Shari’a based contracts like Mudaraba, Musharaka, Murabaha, Ijara and etc.
No one can guarantee or assure profit rates in Islamic banking. Islamic banks declare the profit of their investment pools periodically, and the declared rates can be referred to in order to show past performance with a clear disclaimer that the bank may or may not perform at the same level in future.
No, Islam does not allow business in prohibited items. This is one of the major differences between an Islamic and a conventional bank.
ahli Islamic uses Mudaraba and Wakala bil istithmar for investment of its deposit accounts.
ahli Islamic’s Current Account product is based on the principle of Qard. According to this principle, the bank guarantees safe custody of the deposited amounts and there are no profits shared with the depositor.
All persons (individuals, corporate entities, firms, societies, clubs, government organizations, statutory bodies/corporations, public and private institutions, etc.) are eligible to open account in Islamic banks, provided they fulfill the banks’ and the regulatory authorities’ requirements.
All financing products are approved by the bank’s Shari’a Board. The bank has a Shari’a compliance department, which monitors the operations of the Bank and ensures the implementation of Fatwa and Shari’a Supervisory Board’s directives. If any transaction is found as Shari’a repugnant, its returns are not considered in the income of the bank. It is credited into a charity account, as per the Shari’a Board’s decisions.
The amounts collected in charity account are disbursed under direct supervision of the Shari’a Supervisory Board of the Bank to the organizations which perform charitable activities.
No, Islam does not prohibit from selling or buying or entering into partnership with non-Muslims, provided the underlying transactions are Shari’a compliant.
Yes, the Account Holder bears the loss in proportion to his/her investment.
Takaful is a form of Islamic insurance which is based on Shari’a rules. In case of absence of a Takaful based company, Islamic banks are allowed to get insurance cover through conventional insurance to avoid exposing the investors’ deposits to high risk until the availability of Takaful services.
Takaful is the Islamic way of Insurance. Takaful means mutual protection through contribution by each member.
No, overdraft facilities are not allowed in Islamic banking. Islamic banks may offer Shari’a compliant alternatives for such a facility.
It’s called Ribh in Arabic, and is translated as profit in English.
Sukuk are Islamic Investments certificates issued against shares in the underlying assets, whether existing or described as assets promised to be delivered in the future, or shares in the usufruct of such assets or shares in services.
The owner of Sukuk becomes the owner of the underlying assets in proportion to the investment, and therefore bears the loss and is entitled to the profit proportionately.
