Financial Shari'ah Advisory Your Pioneer in Islamic Financial Services

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FSA is the pioneer in Islamic financial services. Our commitment to quality services made a difference by empowering our people to achieve their objectives. Our founders are certified Shari’ah Advisors, Auditors and Islamic Professional Accountants by the leading and governing authorities of AAOIFI. We render services in Africa, UK, Middle East, but our core focus is South Africa. FSA interacts with regulators to initiate effective amendments to legislation for Shari’ah application in their business and economics lifestyle. FSA initiated a national training programme for the benefit of FSP’s, employees, regulators, and the public. Our framework of activities have earned us trust and confidence in the market.
1. Islamic Banking, Finance, Investments And Insurance2. Shari’ah Contracts3. Shari’ah Compliance And Risk Management4. Shari’ah Reviews And Audits5. Products, Services And Governance6. Shari’ah Dispute Resolution7. Education

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About Us

Welcome to Shari'ah Advisory
Financial Shari'ah Advisory provides pre-eminent independent value-added Shari'ah compliance solutions to the global Islamic banking, finance and insurance industry, thereby contributing to the on-going development of the Islamic system of financial management.Initiatives in Islamic Banking and Finance services require the involvement of an Independent Shari'ah Board or Panel, a committee of Scholars, knowledgeable in Fiqh al-Maumulat (law relating to Financial transactions) to provide advise and consultation on issues that can lead to the provision of Shari'ah compliant funds and products. Financial Shari'ah Advisory provides Shari'ah solutions for banking and Finance.Principal Business ActivitiesFinancial Shari'ah Advisiory is an independent firm based in South Africa and is not affiliated to any financial institution or investment organisation. It offers Shariah compliance services and consultancy to the various global institutions.These services are conducted on a strictly confidential client-to-client basis, subject to the legal provisions of the relevant jurisdiction of the client or financial structure, and the principles of the Islamic Shariah relating to Fiqh Al-Muamalat (Islamic Law relating to Financial Transactions).Financial Shari'ah Advisory offers, inter alia, the following services:• Shari'ah Compliance for Financial Contracts• Shari'ah Compliance for Investment funds (ex equities)• Shari'ah Compliance for Equity Funds (including structure, stock screening, financial ratios, purification, general guidelines)• Product Innovation & Development• Shari'ah Reviews & Annual Audit• Shari'ah Co-ordination Services• Research & Development• Shari'ah Dispute ResolutionCertificationFinancial Shari'ah Advisory provides certification for the Shari'ah compliance principals. These certificates, where required, may be further endorsed by a fatwa (Islamic legal opinion), given by the Shari'ah principals.Our services are aimed at the global finance sector and its related allied professions such as legal, auditing and accounting, trustees, custodians, ratings and listings agencies.Our Shari'ah financial compliance principals have a proven track record of advising regulatory authorities, financial institutions, entities and individuals, in a number of jurisdictions including United Kingdom, Kenya, India, Malawi, Africa, United Arab Emirates, South Africa.RationaleThe Islamic system of financial management is faith-based, underpinned by the Qur’anic prescription on riba (interest) and gharar (intentional incomplete disclosure). As such, a core component of the Islamic system of financial management is Shari'ah compliance. There can be no compromise on Shari'ah compliance, otherwise the product or service may be deemed as unacceptable.In certain financial services’ jurisdictions, such as Malaysia and Sudan, there are Shari'ah Supervisory Boards at the Central Bank, and in Iran they have a committee within the Council of Guardians, which sets the rules for the banking and finance sector. In other jurisdictions, individual Islamic financial institutions and the Islamic banking units at conventional financial institutions appoint their own Shari'ah Supervisory Boards or Adivsors.A Shari'ah Board is a committee of Islamic financial legal experts established to ensure that the institution’s practices and products offered are in compliance with Islamic Law.Financial Shari'ah Advisory, a South African based institution, pioneered an independent approach to Shari'ah compliance and co-ordination services. These services can be utilised on a confidential basis by any bona fide financial institution, regulatory authority, corporate entity, individual investor, fund manager, legal firm, accounting & auditing partnership, rating agency, etc.Achievements and Experience Of Moulana Shoayb Joosub1) Graduated as a Certified Shari'ah Advisor and Auditor from AAOIFI (Bahrain). Awarded by the Minister of Finance of Bahrain. I was one of the 34 scholars globally that graduated, and 1 of 3 scholars in South Africa. AAOIFI Shari'ah Advisor and Auditor Member: CSAA01080472) Graduated as a Certified Islamic Professional Accounted from AAOIFI (Bahrain). I am 1 of 2 scholars in South Africa that completed successfully the CIPA course. AAOIFI Certified Islamic Professional Accountant Member: CIPA01090463) Bcompt – Unisa (Applied Accounting and Auditing – bachelors degree)4) Mediation and Arbitration Officer by Muslim Mediation and Arbitration Council5) Completed an extensive course in the Islamic Judiciary System and completed the training programme as an Islamic Judge in Bihar and Riyadh – Supervised by the world renowned Chief Justice, Qadhi Mujahidul Islamic Qasmi and Jamiatul Imaam Muhammed bin Saud.6) Completed a comprehensive course in Islamic Studies (7 year – Aalim Course) at Darul Uloom Zakariyya; and7) Memorised the Quran and Studied the different Seven different Qira’ats8) Astronomy9) Provided Islamic Banking training to Gibbs and Chicago University and Islamic Universities nationally and internationally

Products

Products

Shariah Software

Shari'ah Software

Inheritance Calculator
Shiny

Zakat Calculator

Zakaat Calculator.xls

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Indices

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Shari'ah Indices

Description Formula of Weight Calculation

1 Dirham 3,0618 grams of Silver

1 Dinar 4.375 grams of gold

1 Tola 11.664 grams

1 Misqaal 4.375 grams of gold

Zakaah Nisaab 20 Dinars = 7.5 Tolas = 87.48 grams; 200 Dirhams =

52.5 Tolas = 612.36 grams. The value of 612.36g of

silver is the basis of nisab

Minimum Mehr 10 dirhams = 30,618 grams of silver

Mehr Azwajun Nabi (S.A.W.) 500 dirhams = 1.5309kg of Silver

Mehr Fatimi 500 dirhams = 1.5309kg of Silver

Sadaqatul Fitr - Hanafi 1/2½ saa’ = 1.592136kg of wheat flour

Sadaqatul Fitr – Shafi” 1 saa’ = 3.184272kg of wheat flour

Source:

1) Mufti Mohammed Ashraf Qureishi Saheb

2) http://www.al-inaam.com/library/mahr.htm

3) http://www.jamiat.co.za/newsletter/online_newsletter_0123.htm

4) http://www.sharenet.co.za

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Sadaqat-ul-Fitr

Ibn Abbas Radhi-Allâhu ‘anhu narrates that Rasulullâh Sallallâhu 'alayhi wasallam has made obligatory Sadaqat-ul Fitr as a means of cleansing the fasts from idle and lewd talk and in order that it provides

food for the poor and destitute. (Abû Dawûd)

Rewards are multiplied in the month of Ramadan. Ramadan is a month for being kind to those less- fortunate. It is a month of giving. Many people discharge their religious obligation of zakah in the month of Ramadan.

Sadaqatul - Fitr is also obligatory upon every Muslim alive before Maghrib on the last day of Ramadân.

Fitrah refers to Sadaqat-ul - Fitr. It is a special type of alms that is Waajib upon a wealthy person, for himself and all his dependants on the day of Eidul Fitr. This should be given to the poor and needy on the day of Eid or at least a few days prior to it so that they may also enjoy the happiness of Eid. About 1.633 kg (1/2 Saa') of wheat flour should be given or it's equivalent in cash be given.

Source: http://www.jamiat.co.za/newsletter/online_newsletter_0123.htm

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Nisaab for Zakat

T he Nisaab (minimum amount you have to possess) to be liable for Zakah is:

a) Gold- 20 Dinars = 7.5 Tolas = 87.48 grams

Or

b) Silver-200 Dirhams = 52.5 Tolas = 612.36 grams

Since the time of the Prophet Muhammed (Allah bless him and give him peace) the price of silver has drastically fallen whereas the price of gold has risen. Hence the drastic difference between the current figures for the Nisaab of gold and the Nisab of silver. The principle of Anfa’lil-Fuqara (what is more beneficial to the poor and recipients) is applied whereby that which is most beneficial to the recipients of Zakat is taken into account by some scholars. Hence the nisab of silver is applied as the standard Nisaab. Therefore if the total value of your excess wealth is 612.36 grams of silver or more than you are liable to pay Zakat.

Zakat Calculator

Zakaat Calculator.xls

Blank Mehr(Dowry)The Mehr of the wives of Rasulullah (Sallallaahu Alayhi Wasallam) and the Mehr of Fatima (Radhiallaahu Anha)Allah Ta'ala says: “Indeed we know what we have enjoined upon them for their wives.” (Surah Ahzaab Aayat 50)This Aayat implies that Allah Ta'ala in his infinite knowledge knows the rights of the wife that are due upon the husband. The Hanafi Scholars state that amongst the rights mentioned in the above verse is the right of mehr (dowry) also. There is a stipulated amount in Allah’s knowledge, which Rasulullah (Sallallaahu Alayhi Wasallam) highlighted in a Hadith reported by Jaabir (Radhiallaahu Anhu) not to be less than ten dirhams. Ibn Abi Hatim (R.A) has recorded this narration with the sanad (chain of narrators) and Hafiz Ibn Hajar (R.A) has stated that its status is no less than Hasan.Minimum MehrTherefore according to the Hanafi Scholars the mehr can not be less than ten dirhams. Infact less than ten dirhams will not even be regarded as mehr.However there is no maximum limit of mehr, although to stipulate a very mehr is not preferred. Umar (Radhiallaahu Anhu) said: “Do not stipulate the dowry of women to high. If (doing so) was a token of honour in this world or a source of piety by Allah than your Rasul (Sallallaahu Alayhi Wasallam) should have been more worthy of it.” (i.e. of stipulating a high mehr) Tirmizi Pg.212Mehr-e-Azwajun Nabi (Sallallaahu Alayhi Wasallam) (mehr of Nabi (Sallallaahu Alayhi Wasallam) to his wives)It is mustahab (preferable), if one can afford it, to stipulate that amount as mehr that Rasulullah (Sallallaahu Alayhi Wasallam) gave to his wives. (Nawawi (R.A)-commentary of Sahih Muslim V.1 Pg.458)According to an authentic narration of Sahih Muslim, Rasulullah (Sallallaahu Alayhi Wasallam) gave his wives five hundred dirhams as mehr. Thus if one can afford it, it will be mustahab to give that amount as mehrMehr-e-Fatimi (Radhiallaahu Anha)Similarly it is also preferable to stipulate that amount as mehr, upon which the daughters of Rasulullah (Sallallaahu Alayhi Wasallam) were married. From amongst the daughters of Rasulullah (Sallallaahu Alayhi Wasallam) mention is made, in the narrations, of the mehr of Fatima(Radhiallaahu Anha). However these narrations are not recorded in the sihah (six authentic compilations of Hadith). Furthermore there is a difference of opinion with regard to the exact amount that was stipulated for Fatima (Radhiallaahu Anha).* According to Ibnul Humam (R.A) the mehr-e-Fatimi is four hundred dirhams. (1224g of silver) (Mirqaat V.6 Pg.246)* Mulla Ali Qari (R.A) states in Mirqaat that the mehr-e-Fatimi is four hundred mithqaal of silver. (1750g) (ibid)* Mufti Muhammed Shafi’s (R.A) verdict is that mehr-e-Fatimi is five hundred dirhams. (Imdadul Muftein V.3-4 Pg.1-2)* Mufti MahmoodHasan Gangohi (R.A) has also stipulated mehr-e- Fatimi to be five hundred dirhams. (+132 tolas=1540g) (Fataawa Mahmoodia V.11 Pg.201) At times his verdict was four hundred mithqaal (+150 tolas=1750g) (Nizam Kanpur –July 1965)* Moulana SiddiqueAhmed Banwi rahas stipulated the mehr-e-fatimi to be four hundred mithqaal, (150 tolas=1750g) (fadhaail Nikah Pg.31) and Moulana Burhanuddin Sambali has also preferred this view.* Mufti AbdurRahim Lachpori writes: “The preferred and more cautious view is that the mehr-e-Fatimi be calculated upon 150 tolas of silver.” (1750g) (Fataawa Rahimia V.6 Pg.445)From the above mentioned views one can understand the extent of difference of opinion amongst the Scholars and Akabir Ulema. There even exists a difference of opinion amongst the Ulema and Muftis as to which view should be given preference to.ConclusionIn South Africa it has become famous that mehr-e-Fatimi is five hundred dirhams. We have not found any clear, authentic narration to substantiate it. Thus to regard this amount as mehr-e-Fatimi ,with certainty is not correct. However this same amount (500 dirhams) being mehr-e-azwajunNabi (Sallallaahu Alayhi Wasallam) is substantiated from an authentic narration of Sahih Muslim. Thus one should term the dowry at the time of nikah as mehr-e-azwajunNabi(Sallallaahu Alayhi Wasallam). If one wants to stipulate mehr-e-Fatimi, then it is best and most preferred to calculate it with four hundred mithqaal (1750g). This amount is substantiated from some narrations.Nevertheless as Allamah Nawawi (R.A) has stated that, if one can afford it, one should stipulate that amount as mehr that Rasulullah (Sallallaahu Alayhi Wasallam) gave his blessed wives. (500 dirhams). This mehr is called mehr-e-azwajunNabi (Sallallaahu Alayhi Wasallam).Method of calculation.The method of calculating mehr-e-azwajunNabi (Sallallaahu Alayhi Wasallam) is to multiply the current silver price per gram to 1530gramsSource: http://www.al-inaam.com/library/mahr.htm

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Fidya

Fidyah refers to a monetary compensation in lieu of an Ibaadat, such as Salaah and fasting that one could not perform due to a valid reason.

In such a scenario he is then required to bequeath in his will that in the event of his death where he was unable to perform that Ibaadat a monetary compensation should be given in lieu of it from his estate. Similarly, an old person that is so weak that is unable to fast and he has no hope of being able to do so in future, where his weakness is in fact becoming more apparent and close to death, then such a person may give Fidyah (monetary compensation) for those fasts.

The amount for Fidyah is 1/2 Saa', i.e. the same value of Sadaqatul Fitr (which is also 1/2 Saa' = 1.633kg of wheat).

[Tahtaawi alaa Miraaquil Falaah Pg.723, Fataawaa Mahmoodiyyah Vol. 7 Pg. 294/5].

And Allah Ta'aala knows best.

Source: http://www.jamiat.co.za/newsletter/online_newsletter_0123.htm

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Stock Exchange

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Page 2 Shari'ah ScreeningThe awareness and demand for Shari'ah compliant investments are increasing rapidly.A detailed screening process is applicable to ensure that Investments complies with Shari’ah rules and principles.ScreeningThe 5 key dimensions of a complete process of the Shari'ah screening method are: 1) Exclusion of companies engaged in prohibited business activities.2) Exclusion of companies exhibiting prohibited financial ratios.3) Exclusion of companies with insufficient information.4) Calculation of a dividend purification ratio.5) Periodic screening of the companies and revising the approved list of Shari'ah compliant companies.Exclusion of companies engaged in prohibited business activities.a) The core activities of the companies should not be impermissable / or shari'ah incompatible. Such services would therefore include: Financial services based on interest; Gambling; Manufacture or sale of non halaal products eg. pork or alcohol or related products; Conventional insurance; Entertainment activities; Manufacture or sale of tobacco based products or related products; Stock broking; Share trading in shariah non approved securities; Defense/weapons; Companies offering lottery or betting services; Music; Owners and operators of hotels; Cinema and adult entertainment. b) Certain companies comprise both permissable and non-permissable elements. For such companies the following criteria are used: The core activities of the company are important and considered to be in the public interest of the Muslim Ummah. The non permissable element involves matters that are difficult to avoid. However, for these non permissable elements, there exist “Benchmarks of Tolerance.” The 10% Benchmark: Applied to assess the level of mixed contributions from the activities that involve the elements that are unavoidable and affect most people. E.g. interest income from fixed deposits in conventional banks. The 25% Benchmark: This benchmark is used to assess the level of mixed contributions from the activities that are generally permissable according to the shari'ah and have an element of public interest. However, there are elements that are contradictory to shariah principles.Eg, Hotel and resort operations; Share trading.Exclusion of companies exhibiting prohibited financial ratios.Quantitative CriterionThe balance of the approved companies, are further screened on a financial basis due to Shari'ah requirements.The financial criterion applicable for companies to be considered Shari'ah compliant are:* Interest bearing debt must be less that 33% of total Assets; and* Cash and financial interest bearing assets must be less than 33% of total assets* Accounts receivables and cash (liquid assets) are less than 70%; and* Interest Income and income generated from Non compliant activities should not exceed 10% of total revenue; and* Accounts receivables, cash and financial assets must be less than the average market capitalisation at the time of acquisitionExclusion of companies with insufficient information. Should there exist insufficient information to determine the range of activities or ratios, the company would be considered non compliant and hence excluded. CALCULATION OF A DIVIDEND PURIFICATION RATIO If a company derives part of its total income from interest, then this “tainted income “ will be donated to charity. The donation is calculated as the greater of the following two calculations:(operating and non operating interest income / gross profits)(prohibited revenue / total revenue )EXCLUSION OF COMPANIES WITH INSUFFICIENT INFORMATION Should there exist insufficient information to determine the range of activities or ratios, the company would be considered non compliant and hence excluded. CALCULATION OF A DIVIDEND PURIFICATION RATIO If a company derives part of its total income from interest, then this “tainted income “ will be donated to charity. The donation is calculated as the greater of the following two calculations:(operating and non operating interest income / gross profits)(prohibited revenue / total revenue ) PERIODIC REVIEW OF ALL GENERAL INDEX MEMBERS AND REVISION OF THE APPROVED LIST All constituents will have to be revised and retested for continued compliance.

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Shari'ah Compliant Companies
As a complimentary service to you, here is a list of Shari'ah Compliant Companies.ACL Arcelor Mittal Sa Limited ADH Advtech LimitedAECI AeciAGL($) Anglo American PlcALT Allied TechnologiesANG Anglo Gold Ashanti APK AstrapakARI African Rainbow Minerals LtdATN Altron BAW BarloworldBCX Business Connexion Group BEL Bell Equipment BIL Billiton PlcCFR(EUR) Compange Fin Richemont CSB CashbuildDGC Digicore HoldingsDTC Data TecEHS Evraz Highveld Steel And Vanadim LtdELI Ellies Holding EQS Eqstra FWD Freeworld CoatingsGFI Gold Fields GIJ GijimaGRF Group 5HLM Hulamin LimitedHWN HowdenILV IllovoKIO Kumba Iron OreLHC Life Healthcare LON Lonmin MDC Medi Clinic MND MondiMTN MtnNPK Nampak LtdOMN Omnia Holding LtdPFG Pioneer Foods LtdRBX Raubex Group LimitedRLO ReunertSOL Sasol LtdTKG Telkom Sa LimitedTON TongatVOD Vodacom

FSA

Principle Business Activities

Islamic Banking, Finance, Investments & Insurance:

FSA is key to preparing market due diligence and builds strategies from concept phase until it is rolled out to its target market. Our expertise is specializing in merging high standard Shari’ah application with regulatory requirements and minimising infrastructure and software developments. We partner with FSP’s and have won international awards.

Governance, Products & Services:

FSA is key to Shari’ah governance models. We design and prepare Shari’ah board, advisors, officers contracts and assist in the selection of the Shari’ah board members. We have designed basic products such as deposit, finance, takafol and range to Shari’ah indices, Shari’ah derivatives and sukuks. Our products are globally implemented. We are admired for our treasury structures and liquidity management role. We design and assist in implementing the end to end process for any product or service and structure the standard operating procedures for implementation

Shari’ah contracts:

FSA structures contracts for legal practitioners to prepare. This ranges from individual needs to corporate requirements.

Education:

FSA authored and published a number of Islamic books and delivered courses at local and global seminars. We also cater for special requirements.

Shari’ah compliance and risk managements:

FSA monitors and provides certification for Shari’ah compliance. We prepare Shari’ah risk analysis and assist in risk management.

Shari’ah reviews and audits:

FSA conducts Shari’ah reviews and performs agreed upon procedures for Shari’ah audits in conjunction with the international audit firms.

Shari’ah dispute resolution:

FSA designed a fair, transparent and efficient Shari’ah dispute resolution council that is gaining confidence and trust. Our disputes are chaired by experts and are enforceable by law.

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clientele

Islamic Finance - First Rand Group

Absa Islamic Banking

Albaraka Bank Limited

Barclays Group

Old Mutual

Nedbank Capital

Anglorand Financial Services Group

Frater Asset Management

Takafol S.A

Future Growth Albaraka Equity Fund

Stanlib Islamic Shariah

Accounting and Auditing of Islamic Financial Institutions

Rand Merchant Bank

Deneys Reitz

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Shari'ah Contracts

FSA structures contracts for legal practitioners to prepare. This ranges from individual needs to corporate requirements.

Islamic Last Will & Testament

islamic_will(1).doc

Free- Islamic Last Will and Testament

Sale of Property

sec_title.doc

Purchase and Sale Agreement - Immovable Property (Sectional Title)

Acknowledgement of debt arrangements

Acknowledgement of Debt.doc

Acknowledgement of debt arrangements

Shariah Software

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FSA

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Library

Library

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Dear friends,

here is an important website to Muslims around the world which is Saheeh Al Bokhari in English. Kindly don’t hesitate to send to all of your friends and relatives so that you can take the Thawab. May Allah reward you for that.

Volume 1.pdf

Volume 2.pdf

Volume 3.pdf

Volume 4.pdf

Volume 5.pdf

Volume 6.pdf

Volume 7.pdf

Volume 8.pdf

Volume 9.pdf

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Glossary -Islamic Banking

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Page 1 Amanah:It refers to deposits in trust. A person can hold a property in trust for another, sometimes by express contract and sometimes by implication of a contract. Amanah entails absence of liability for loss except in breach of duty. Current Accounts are normally regarded as Amanah (trust). If the bank gets authority to use Current Accounts funds in its business, Amanah transforms into a Qardh (loan). As every loan has to be repaid, banks are liable to repay full amount of the Current Accounts.Arbun: Down payment; a non-refundable deposit paid by a purchaser retaining a right to confirm or cancel the sale.Aariyah: Gratuitous loan of non-fungible objects,i.e. a loan of a particular piece of property, the substance of which is not consumed by its use, without anything taken in exchange, In other words, it is the gift of usufruct of a property or commodity that is not consumed on use. It is different from Qard that is the loan of fungible objects which are consumed on use and in which the similar and not the same commodity has to be returned. It is also a virtuous act like Qard. The borrowed commodity is treated as liability of the borrower who is bound to return it to its owner.Bai‘ Muajjal:Literally it means a credit sale. Technically, a financing structure adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a contract in which the seller earns a profit margin on his purchase price and allows the buyer to pay the price of the commodity at a future date in a lump sum or in installments. He has to expressly mention cost of the commodity and the margin of profit is mutually agreed. The price fixed for the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price.Bai′ Salam: Salam means a contract in which advance payment is made for goods to be delivered later on. 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. According to normal rules of the Shariah, no sale can be effected unless the goods are in existence at the time of concluding the transaction, but Salam sale forms an exception given by the Holy Prophet (SAW) himself to the general rule provided the goods are defined and the date of delivery is fixed. It is necessary that the quality of the commodity intended to be purchased is fully specified leaving no ambiguity leading to dispute. The objects of this sale are goods and cannot be currencies because this is regarded as monetary values exchange of which is covered under rules of Bai al Sarf, i.e. mutual exchange is hand to hand without delay. Barring this, Bai′Salam covers almost everything which is capable of being definitely described as to quantity, quality and workmanship.Bai′ bil Wafa: Sale with a right reserved by the seller, having the effect of a condition, to repurchase (redeem) the property by refunding the Daman: 1) Contract of guarantee, security or collateral; 2) Responsibility of entrepreneur/manager of a business; one of two basic relationships toward property, entailing bearing the risk of its loss.Dayn or Debt:A Dayn comes into existence as a result of any other contract or credit transaction. It is incurred either by way of rent or sale or purchase or in any other way which leaves it as a debt to another. purchase price. According to majority of Fuqaha it is not permissible.

Page 2 Fiqh: Islamic law. The science of understanding the laws of the Shariah. It is an important principle of Islamic economics.Gharar:It means any element of absolute or excessive uncertainty in any business or a contract about the subject of contract or its price. It leads to undue loss to a party and unjustified enrichment of other, which is prohibited.Al Ghunm bil Ghurm: This provides the rationale and the principle of profit sharing in Shirkah arrangements. Earning profit is legitimized only by engaging in an economic venture, risk sharing and thereby contributing to the economy.Halal:Anything permitted by the Shariah.Haram: Anything prohibited by the Shariah.Hawalah: Literally, it means transfer; legally, it is an agreement by which a debtor is freed from a debt by another becoming responsible for it, or the transfer of a claim of a debt by shifting the responsibility from one person to another – contract of assignment of debt. It also refers to the document by which the transfer takes place.Hibah: Hibah means Gift.Ijab: Offer, in a contract; see also qabul.Ijarah: Letting on lease. Sale of a definite usufruct of any asset in exchange of an agreed reward. It refers to a contract of property leased at a fixed agreed rent payable in cash and also to a mode of financing adopted by Islamic banks. It is an arrangement under which the Islamic banks lease equipments, buildings or other facilities to a client, in exchange for an agreed rental.Ijarah-wa-Iqtina‘: A mode of Islamic financing, by way of hire-purchase, adopted by Islamic banks. It is a contract under which the Islamic bank finances equipment, motor vehicles or other assets for the client in exchange for an agreed rental together with a unilateral undertaking by the bank or the client that at the end of the lease period, the ownership in the asset would be transferred to the lessee. The undertaking or the promise does not become an integral part of the lease contract to make it conditional. The rental as well as the purchase price are fixed in such a manner that the bank gets back its principal sum along with some profit, which is usually determined in advance. Ijtihad: It refers to an endeavor of a qualified jurist to derive or formulate a rule of law to determine the true ruling of the divine law in a matter on which the revelation is not explicit or certain, on the basis of Nass or evidence found in the Holy Qur’an and the Sunnah. Express injunctions have no room for Ijtihad. Implied injunctions can be interpreted in different ways by way of inference from the accepted principles of the Shariah.‘Illah: It is the attribute of an event that entails a particular Divine ruling in all cases possessing that attribute. ‘Illah is the basis for applying analogy for determining permissibility or otherwise of any act or transaction.Ijma‘: Consensus of all or majority of the companions of the Prophet (Sallallahu Alayhi Wassallam) or consensus of all or majority of the leading qualified jurists on a certain Shariah matter in a certain age.‘Inah ( A kind of Bai):Double sale by which the borrower and the lender sell and then resell an object between them, once for cash and once for a higher price on credit, with the net result of a loan with interest.‘Inan (A type of Shirkah): It is a form of partnership in which each partner contributes capital and has a right to work for the business, not necessarily equally.Istihsan:It is a doctrine of Islamic law that allows exception to strict legal reasoning, or guiding choice among possible legal outcomes, when considerations of human welfare so demand.Israf: It refers to immoderateness, exaggeration and waste and covers spending on lawful objects but exceeding moderation in quantity or quality; spending on superfluous objects while necessities are unmet; spending on objects which are incompatible with the economic standard of the majority of the population. See also TabzirIstisna’:It is a contractual agreement for manufacturing goods and commodities, allowing cash payment in advance and future delivery or a future payment and future delivery. A manufacturer or builder agrees to produce or build a well described good or building at a given price on a given date in the future. Price can be paid in installments, or basis of completion method or cash as agreed between the parties. Istisna’a can be used for providing the facility of financing the manufacture or construction of houses, plants, projects, and building of bridges, roads and highways.Jahl or Jahala:Ignorance, lack of knowledge; indefiniteness in a contract, sometime leading to Gharar.Jua′alah or Ji’alah:Literally, Jua’alah constitutes wages, pay, reward. Legally, it is a contract for performing a given task against a prescribed fee in a given period. A similar contract is ‘Ujrah’ in which any work is done against stipulated wage or fee.Kali bil-Kali: The term Kali refers to something delayed; appears in a maxim forbidding the sale of al-Kali bil-Kali i.e. the exchange of a delayed counter value for another delayed counter value.Kafalah (Suretyship): Literally, Kafalah means responsibility, amenability or suretyship, Legally in Kafalah a third party becomes surety for the payment of a debt. It is a pledge given to a creditor that the debtor will pay the debt, fine etc. Suretyship in Islamic law is the creation of an additional liability with regard to the claim, not to the debt or the assumption only of a liability and not of the debt.Kharaj bi-al-Daman:Gain accompanies liability for loss; a Hadith forming a legal maxim and a basic principle – see also Al- Ghunm bil Ghurm.Khiyar: Option or a power to annul or cancel a contract.Khiyar al-Majlis: Option of the contracting session; the power to annul a contract possessed by both contracting parties as long as they do not separate.Khiyar al-Shart: A right, stipulated by one or both of the parties to a contract, to cancel the contract for any reason for a fixed period of time.

Page 3 Mal-e-Mutaqawam:Wealth that has a commercial value in terms of Shariah. Legal tenders of modern age that carry monetary value are included in Mal-e-Mutaqawam. It is possible that certain wealth has no commercial value for Muslims (Ghair Mutaqawam) but is valuable for non-Muslims. Examples are wine and pork.Maisir: An ancient Arabian game of chance played with arrows without heads and feathering, for stakes of slaughtered and quartered camels. It came to be identified with all types of hazard and gambling.Mithli (Fungible goods):Goods that can be returned in kind, i.e. gold for gold, silver for silver, US $ for US $, wheat for wheat, etcMubah: Object that is lawful (i.e. something which is permissible to use or trade in).Mudarabah:A form of partnership where one party (rabbul Mal) provides the capital (Ra’sul Mal) while the other provides expertise and management. The latter is referred to as the Mudarib. Any profits accrued are shared between the two parties on a pre-agreed basis, while loss is borne by the provider(s) of the capital.Murabaha: Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale in which the seller declares his cost and the profit. This has been adopted by Islamic banks as a mode of financing. As a financing technique, it can involve a request by the client to the bank to purchase a certain item for him. The bank does that for a definite profit over the cost which is stipulated in advanceMusawamah: Musawamah is a general kind of sale in which price of the commodity to be traded is bargained between seller and the purchaser without any reference to the price paid or cost incurred by the former.Musharakah: Musharakah means a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses in the joint business. It is an agreement under which the Islamic bank provides funds which are mixed with the funds of the business enterprise and others. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by every partner strictly in proportion to respective capital contributions.Qabul: Acceptance, in a contract; see also Ijab.Qard (Loan of fungible objects): The literal meaning of Qard is ‘to cut’. It is so called because the property is really cut off when it is given to the borrower. Legally, Qard means to give anything having value in the ownership of the other by way of virtue so that the latter could avail of the same for his benefit with the condition that same or similar amount of that thing would be paid back on demand or at the settled time. It is that loan which a person gives to another as a help, charity or advance for a certain time. The repayment of loan is obligatory. The Holy Prophet is reported to have said “…..Every loan must be paid…….” But if a debtor is in difficulty, the creditor is expected to extend time or even to voluntarily remit the whole or a part of the principal amount. Qard is, in fact, a particular kind of Salaf. Loans under Islamic law can be classified into Salaf and Qard, the former being loan for fixed time and the latter payable on demand. (see Salaf)Qimar: Qimar means gambling. Technically, it is an arrangement in which possession of a property is contingent upon the happening of an uncertain event. By implication it applies to a situation in which there is a loss for one party and a gain for the other without specifying which party will lose and which will gain.Qiyas: Literally it means measure, example, comparison or analogy. Technically, it means a derivation of the law on the analogy of an existing law if the basis (‘illah) of the two is the same. It is one of the sources of Islamic law.Riba:An excess or increase. Technically, it means an increase over principal in a loan transaction or in exchange for a commodity accrued to the owner (lender) without giving an equivalent counter-value or recompense (‘iwad) in return to the other party; every increase which is without an ‘iwad or equal counter-value.Riba Al-Fadl:Riba Al-Fadl (excess) is the quality premium in exchange of low quality with better quality goods e.g. dates for dates, wheat for wheat, etc. – an excess in the exchange of Ribawi goods within a single genus. The Concept of Riba Al-Fadl refers to sale transactions while Riba Al-Nasiah refers to loan transactions.Riba Al-Nasiah: Riba Al-Nasiah or riba of delay is due to exchange not being immediate with or without excess in one of the counter values. It is an increment on principal of a loan or debt payable. It refers to the practice of lending money for any length of time on the understanding that the borrower would return to the lender at the end of the period the amount originally lent together with an increase on it, in consideration of the lender having granted him time to pay. Interest, in all modern banking transactions, falls under purview of Riba Al-Nasiah. As money in present banking system is exchanged for money with excess and delay, it falls, under the definition of riba. A general accord reached among scholars about its prohibition.Ribawi: Goods subject to Fiqh rules on Riba in sales, variously defined by the schools of Islamic Law: items sold by weight and by measure, foods, etc.Rahn: Pledge, Collateral; legally, Rahn means to pledge or lodge a real or corporeal property of material value, in accordance with the law, as security, for a debt or pecuniary obligation so as to make it possible for the creditor to recover the debt or some portion of the goods or property. In the pre-Islamic contracts, Rahn implied a type of earnest money which was lodged as a guarantee and material evidence or proof of a contract, especially when there was no scribe available to put it into writing. The institution of earnest money was not accepted in Islamic law and the common Islamic doctrine recognized Rahn only as a security for the payment of a debt.Salaf or Loan / Debt: The word Salaf literally means a loan which draws forth no profit for the creditor. In wider sense, it includes loans for specified periods, i.e. short, intermediate and long-term loans. Salaf is another name of Salam as well wherein price of the commodity is paid in advance while the commodity or the counter value is supplied in future; thus the contract creates a liability for the seller. Amount given as Salaf cannot be called back, unlike Qard, before it is due. (see Qard)Sarf: Basically, in pre-Islamic times it was exchange of gold for gold, silver for silver and gold for silver or vice versa. In Islamic law such exchange is regarded as ‘sale of price for price’ (Bai al Thaman bil Thaman), and each price is consideration of the other. It also means sale of monetary value for monetary value – currency exchange.Shariah: The term Shariah refers to divine guidance as given by the Holy Qur’an and the Sunnah of the Prophet Muhammad (PBUH) and embodies all aspects of the Islamic faith, including beliefs and practice.Shirkah: A contract between two or more persons who launch a business or financial enterprise to make profits. In the conventional books of Fiqh, the partnership business has been discussed under the option of Shirkah that, broadly, may include both Musharakah and Mudarabah.Sunnah: Custom, habit or way of life. Technically, it refers to the utterances of the Prophet Muhammad (PBUH) other than the Holy Quran known as Hadith, or his personal acts, or sayings of others, tacitly approved by the Prophet.Tabarru’: It is a donation/gift, the purpose of which is not commercial but is seeking the pleasure of Allah. Any benefit that is given by a person to other without getting anything in exchange is called Tabarru’. Gracious repayment of debt, absolutely at borrower’s own discretion and without any prior condition or inducement for reward, is also covered underTabarru’. Repaying a loan in excess of principal and without a pre-condition is commendable and compatible with the Sunnah of the Holy Prophet (peace be upon him). But, it is a matter of individual discretion and cannot be adopted as a system because this would mean that loan would necessarily yield a profit. If such reward takes the form of a system, it would be considered Riba.Tabzir: Spending wastefully on objects which have been explicitly prohibited by the Shariah irrespective of the quantum of expenditure. (See also Israf.)Ujrah: See Jua′alah.Wakalah: A contract of agency in which one person appoints someone else to perform a certain task on his behalf, usually against a certain fee.

Source: 1) SBP Publication, ‘Islamic Banking and Finance: Theory and Practice’ by Muhammad Ayub, Sr. J.D. IBD, SBP) 2) Moulana Shoayb Joosub

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