Appendix I: Questionnaire on

Islamic Finance Objectives and

Achievements

Dear Respondent,

I am conducting an academic research on whether the Objectives of Islamic Finance

are being achieved or not by Islamic Banks and Financial Institutions. I very humbly
request you to spend your precious five minutes in filling the questionnaire as per your
perception about the Islamic Finance Industry. Your contribution in this regard will be
highly appreciated and will be acknowledged at the time of submission of thesis.

1. Your Name (Optional): Prof./Dr./Mr./Mrs./Miss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.................................................................................
2. Please select your age:
a) Under 25 b) 26–35
c) 36–45 d) 46 or older
3. Please select your gender?
a) Male b) female
4. How are you related with Islamic Finance, please tick any one from the
following.
a) Customer b) Employee of Islamic Bank
c) Shariah Advisor d) Regulatory officer
e) Others (Please specify . . . . . . . . .
5. By religion you are a?
a) Muslim d) Buddhist
b) Christian e) Atheist/Secular
c) Hindu f) Others please specify
6. Data Collection country:
a) Malaysia c) United Arab Emirates

Note: There is no right or wrong answer, all I am interested in knowing is your opinion
on a “- point Scale”. Where,

5 = Strongly Agree,
4 = Agree,
3 = Neutral,
2 = Disagree,
1 = Strongly Disagree.

157
158 Appendix I: Questionnaire on Islamic Finance Objectives and Achievements

√
Please tick ( ) the number for each statement.

Do you think Islamic Banking and Financial Services is:

1 True to the teachings of Islam? 5 4 3 2 1

2 Shariah Based? 5 4 3 2 1
3 A good vehicle to promote Islamic values? 5 4 3 2 1
4 Working as per the teachings of Quran and 5 4 3 2 1
Sunnah?
5 First in conformity with the norms of Islam 5 4 3 2 1
and then in accordance with customer’s
preferences?
6 Investing in business where there is no Gharar 5 4 3 2 1
(more risk)?
7 Practically not indulged in businesses like 5 4 3 2 1
gambling, pornographic, alcohol, cinema and
other forbidden businesses in Islam?
8 Not different from other commercial banks 5 4 3 2 1
except in complying with Shariah legal
prescriptions with regard to product offering?
9 Promoting Islamic values and way of life 5 4 3 2 1
towards staff, clients and general public?

Do you think:

10 Shariah scholars play their role while issuing 5 4 3 2 1

different products?
11 Shariah board acts as a watchdog while issuing 5 4 3 2 1
different products?

Do you think Islamic banks and financial institutions:

12 Do not exploit its customers in any way? 5 4 3 2 1

13 Do not indulge in misleading advertisements? 5 4 3 2 1
14 Do not earn income through unfair means? 5 4 3 2 1
15 Are free from exploitation, discontentment and 5 4 3 2 1
strife?
16 Are in consonance with the principles of fair 5 4 3 2 1
dealing, justice and benevolence?
17 Properly reflect the values in which they are 5 4 3 2 1
based?
18 Follow Islamic ethics? 5 4 3 2 1
 Appendix I: Questionnaire on Islamic Finance Objectives and Achievements 159

I believe that the following objectives of Islamic finance are being achieved
by Islamic Banks and Financial Institutions:

19 Maximizing profits (good percentage of return 5 4 3 2 1

to investors).
20 Help in alleviating poverty (poverty 5 4 3 2 1
eradication).
21 Promoting sustainable development projects. 5 4 3 2 1
22 Providing employment opportunities. 5 4 3 2 1
23 Minimizing cost of operations. 5 4 3 2 1
24 Enhancing product and service quality. 5 4 3 2 1
25 Offering viable and competitive financial 5 4 3 2 1
products.

Do you think Islamic Banks and Financial Institutions:

26 Are providing enough retail products? 5 4 3 2 1

27 Contributing to social welfare? 5 4 3 2 1
28 Collecting and distributing Zakat? 5 4 3 2 1
29 Contribute in removing society’s inequalities 5 4 3 2 1
and improving general standard of living?
30 Performance cannot be judged only through 5 4 3 2 1
good percentage of profit/return?
31 Use modern technology in performing banking 5 4 3 2 1
transactions?
32 Completely serve as an alternative banking 5 4 3 2 1
system?

Do you think following products and services of Islamic finance are really
Islamic:

33 Mudarabah (sleeping partnership)? 5 4 3 2 1

34 Musharakah (partnership Financing)? 5 4 3 2 1
35 Sukuk? 5 4 3 2 1
36 Ijarah (leasing)? 5 4 3 2 1
37 Takaful (insurance)? 5 4 3 2 1
38 Murabahah (cost plus financing)? 5 4 3 2 1
160 Appendix I: Questionnaire on Islamic Finance Objectives and Achievements

Your comments and suggestions are welcome, regarding the development of

Islamic Finance Industry in the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If you need additional sheets, please ask.

Thank You

Your Signature please

Appendix II: Islamic Financial
Institutions (By Region and
Country1)

1. Middle East

1.1 Bahrain
1.2 Jordan
1.3 Kuwait
1.4 Lebanon
1.5 Qatar
1.6 Syria
1.7 Saudi Arabia
1.8 United Arab Emirates
1.9 Yemen

2. Asia (South and Southeast)

2.1 Bangladesh
2.2 Brunei Darussalam
2.3 Indonesia
2.4 Pakistan
2.5 Malaysia
2.6 Thailand

3. Africa

3.1 Kenya
3.2 South Africa
3.3 Sudan

4. Asia (Northern)

4.1 China

5. Australia and Pacific Islands

5.1 Australia

1
Different banks and financial institutions across globe are given. This is not the
complete list in any way. In this list only those banks and financial institutions
have been taken which the researcher knows from his personal website, which is
‘World Database for Islamic Banking and Finance’ (WDIBF), and having website
URL www.wdibf.com.

161
162 Appendix II: Islamic Financial Institutions (By Region and Country)

6. Commonwealth of Independent States

6.1 Azerbaijan
6.2 Kazakhstan
6.3 Russia

7. Europe

7.1 France
7.2 Germany
Country No. of Islamic Name of the Bank Year of Special Features
Banks establishment

Algeria 01 Al Baraka Bank of Algeria2 May 20, 1991 with a capital of 500,000,000 AD
Bahrain 09 Bahrain Islamic Bank (BisB)3 1979 The authorized capital is BD 100 million and paid up
capital is BD 66.235 million
ABC Islamic Bank (E.C.)4 1980 Offices in 22 countries in world
Ithmaar Bank B.S.C.5 No information It has a paid-up capital of US$701 million, total
equity of US$ 1 billion
Gulf Finance House (GFH)6 No information 61% increase in profits to US $340 million during
2007
Al Baraka Bank Bahrain7 1984 Two branches in Bahrain
Al Salam Bank Bahrain8 19 January 2006 Paid up capital US$ 318 million
Capinnova Investment Bank9 January 2009 fully owned subsidiary of the Bank of Bahrain and
Kuwait (“BBK”),
Citi Islamic Investment July 1996 100% owned subsidiary of Citicorp Banking
Bank10 Corporation
Khaleeji Commercial Bank11 November 2004 paid-up capital of BD 30 million

2 http://www.albaraka-bank.com/fr/ translated from Dutch language to English through Google translator.

3 http://www.bisb.com/AboutUs/history.asp.
4 http://www.arabbanking.com/En/AboutABC/Pages/FactSheet.aspx.
5 http://www.ithmaarbank.com/ithmaar_about_glance.asp.
6 http://www.gfh.com/en/about-us/about-us-3.html.
7 http://www.barakaonline.com/default.asp?action=article&ID=137.
8 http://www.alsalambahrain.com/about_us/Profile.
9 http://www.capinnovabank.com/.
10 http://www.citiislamic.com/ciib/homepage/.
163

11 http://www.khcbonline.com/media/pdf/FH/bank’s%20profile.pdf.
(Continued)
164

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

Egypt 01 Faisal Islamic Bank of Egypt 12 5 July, 1979 first Egyptian Islamic & Commercial Bank
Iraq 01 Iraqi Islamic Bank13 19 December, 1992 established for Investment and Development
Iran 09 Bank Melli Iran14 No information when First iranian commercial bank
started Islamic banking
Bank Mellat 15 December 20, 1979 ranking among the top 1000 banks of the world
Bank Tejarat 16 1987 the facilities of The East Modern Bank was
assigned to Bank Shahanshahi.
Bank Depah17 No information when present paid-in capital of IRR 7,822 billion
started Islamic banking
Bank Keshavarzi18 No information when now considered as a pioneer bank in offering
started Islamic banking variety of banking services nationwide
Maskan Bank19 1974 started its operations as a public company
Kararafin Bank20 October 11, 1980 first privately-owned bank in operation

12 http://www.faisalbank.com.eg/FIB/faisal_en/Elnash2a_1.jsp.
13 http://www.iraqiislamicb.com/. Translated from Arabic to English through Google translator.
14 http://www.bmi.ir/En/BMIHistory.aspx?smnuid=10011.
15 http://en.bankmellat.ir/portal.aspx?tabid=405.
16 http://www.tejaratbank.ir/. Translated from Persian Language to English through Google translator.
17 http://www.banksepah.ir/English/default.aspx?tabid=450.
18 http://www.agri-bank.com/Static/English/About/Profile.asp.
19 http://bank-maskan.ir/default-4446.aspx.
20 http://en.karafarinbank.com/history/default.kb.
 Saman Bank21 August, 2002 share capital of US$ 1.4 mln.
Persian Bank22 July, 2001 registered under No. 178028 on September 6, 2001
Jordan 03 Jordan Islamic Bank23 1978 80 ATMs al over the country
24
Jordan Dubai Islamic Bank 2007 Dubai Islamic Bank along with its partner Jordan
Dubai Capital
Islamic International Arab 9 February, 1998 public shareholding company in accordance
Bank25 with the companies Law of 1989
Kuwait 04 International Bank of July 2007 Kuwait Real Estate Bank (incorporated in 1973)
Kuwait 26 has been renamed to “Kuwait International
Bank to exercise its business as an Islamic bank.
Kuwait Finance House27 1977 First Islamic Bank in Kuwait
28
Boubyan Bank No information Four main branches are in Darwaza, Kuwait City,
Mubarak tower, Farwaniya, Dajeej and Qebla
Tower.
Ahli United Bank Kuwai29 April, 2010 Conventional bank converted into Islamic

21 http://www.sb24.com/.
22 http://www.parsian-bank.com/historyofbank_en.html.
23 http://www.jordanislamicbank.com/en/?pid=DY&lan=1&ppi=124&pgi=127&th=1.
24 http://www.jdib.jo/About-JDIB.aspx.
25 http://www.iiabank.com.jo/en/Home/AboutUs/tabid/54/Default.aspx.
26 http://www.kib.com.kw/KREBClient/ClientPages/Index.aspx?Id=76.
27 http://www.kfh.com/en/about/index.aspx.
28 http://www.bankboubyan.com/mission_vision.html.
29 http://www.ahliunited.com.kw/aub_kw.html.
165
(Continued)
166

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

Lebanon 03 Al-Baraka Bank Lebanon30 1992 first developing bank in Lebanon working according
to Fiduciary Contract Law Number 520 dated
June 6, 1996 in full compliance with Islamic
Shariah
Arab Finance House31 No information Arab Finance House’s Management strongly
supports this incentive (Law 318)
Lebanese Islamic Bank32 No information bank provides zakat affinity card
Palestine 01 Palestine Islamic Bank33 16 December, 1995 14 branches and the head office at Deir
al-Balah
Qatar 04 Qatar Islamic Bank34 8 July 1982 More than 100 ATMs
Qatar International Islamic January 1, 1992 12 branches and 50 ATMs
Bank35
Qatar Islamic Insurance 1995 QR 60.5 million in 2007
Company36

30 http://www.al-baraka.com/aboutus.php?cat=history.php.
31 http://www.afh.com.lb/prevention.asp.
32 http://www.lebaneseislamicbank.com.lb/index.asp.
33 www.islamicbank.ps. Translated from Arabic to English through Google translator.
34 http://www.qib.com.qa/english/site/topics/static228e228e.html?cu_no=1&lng=0&template_id=321&temp_type=42&parent_id=300.
35 http://www.qiib.com.qa/qiib/en/qiibcms.aspx?qcid=6.
36 http://www.qiic.com.qa/English_Pages/History/index.html.
Saudi Arabia 06 Alinma Bank37 31 January, 2007 The Shariah board of Alinma Bank was formed
pursuant to resolution No. 3/43, dated
12/01/1428
Islamic Development Bank38 20 October, 1975 The purpose of the bank is the development of
Muslim countries
Al Rajhi Bank39 1988 More than 2500 ATMs
National Commercial Bank40 No information Paid up capital US $ 8 million
Bank Albilad41 4 November, 2004 corporate capital of 3,000,000,000 Saudi Riyals.
Bank Al Jazira42 June 21, 1975 operates under commercial registration
No. 4030010523
Sudan 07 Al Baraka Bank Sudan43 1984 23 branches and 656 employees
Islamic Co–operative 1982 celebrated its 25th birthday in 2008
Development Bank44
Al Salam Bank45 No information determined on presenting the most advanced
services in Islamic banking
Emirates and Sudan Bank46 No information authorized capital of USD 200 Mn

37 http://www.alinma.com/wps/portal/alinma/!ut/p/c5/04_SB8K8xLLM9MSSzPy8xBz9CP0os3hzf2cLDy93A0t3d1c3A093Ixd3_yBfI29TA_3g1Lz40GD
9gmxHRQC3tlD5/.
38 http://www.isdb.org/irj/portal/anonymous?NavigationTarget=navurl://24de0d5f10da906da85e96ac356b7af0.
39 http://www.alrajhibank.com.sa/AboutUs/Pages/default.aspx.
40 http://www.alahli.com/en-US/About%20Us/Corporate%20Profile/Pages/CorporateProfileHome_Page.aspx.
41 http://www.bankalbilad.com/en/about.asp?TabId=1.
42 http://www.baj.com.sa/about/default.asp?ab=view.
43 http://www.albaraka.com/default.asp?action=article&id=96.
44 http://www.iscob.com/about_E.htm.
45 http://www.alsalambank.net/html/about.html.
46 http://www.eandsbank.com/aboutus/aboutus.html.
167
(Continued)
168

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

Export Development Bank47 January 15, 2003 The national private sector holds about 83.14
% of the capital of the bank
Faisal Islamic Bank48 May, 1978 head quarter of the bank is at Khartoum Sudan
Tadamon Islamic Bank49 March, 1983 good reputation at both local and international
leval
Syria 02 Syria International Islamic September 7, 2006 Decree No. 35 (2005)
Bank50
Cham Bank51 September 7, 2006 First Islamic bank in Syria
Tunisia 01 Zaytuna Bank52 October, 2009 universal commercial bank
Turkey 04 Kuveyt Turk Participation 1989 Kuwait finance house has 62% shares in this
Bank53 bank
AlBaraka Turk54 1985 foreign partners share is 66,16%,

47 http://www.edbank.sd/en_web/aboubank1.aspx.
48 http://www.fibsudan.com/en/.
49 http://www.tadamonbank-sd.com/english/1.php.
50 http://www.siib.sy/index.php?option=com_content&view=article&id=47&Itemid=66&lang=en.
51 http://www.chambank.com/index.php?option=com_content&view=category&layout=blog&id=34&Itemid=61&lang=en.
52 http://www.banquezitouna.com. Translated from French to English through Google translator.
53 http://www.kuveytturk.com.tr/en/Hakkimizda_Tarihce.aspx.
54 http://www.banquezitouna.com. Translated from French to English through Google translator.
ttp://en.albarakaturk.com.tr/about_us/detail.aspx?SectionID=YXL0%2bpPb1ZGxucFd8yJzIw%3d%3d&ContentId=opVi0iuq7IuzLtB3Mxt%2fnQ%
3d%3d.

United Arab Emirates
Bank Asya55 October 24, first private finance
1996 house having
ISO 9001 Quality
Management System
Certification,
Türkiye Finans Katılım December 30, 2005 now serving over 1 million customers
Bankası56 at 182 branches
11 Dubai Islamic Bank57 1975 world’s first fully-fledged Islamic bank
Abu Dhabi Islamic Bank58 May 20, 1997 Inauguration on18th April 1999
Emirates Islamic Bank59 2004 Shari’a board comprising several
prestigious scholars of Islamic law
Noor Islamic Bank60 2007 paid-up capital of AED 3 billion
Al Hilal Bank61 June 19, 2008 authorized capital of AED 4 billion
62
Sharjah Islamic Bank 1975 22 branches in UAE
HSBC Amanah63 1998 global Islamic financial services
division of the HSBC Group

55 http://www.bankasya.com.tr/en/about_us/index.jsp.
56 http://www.turkiyefinans.com.tr/en/about_us/history.aspx.
57 http://www.alislami.ae/en/index.htm.
58 http://www.adib.ae/mission-objectives.
59 http://www.emiratesislamicbank.ae/eib/en/aboutus/.
60 http://www.noorbank.com/ae/english/info/about-us/About-NIB/index.aspx.
61 http://www.alhilalbank.ae/web/?page=history.
62 http://www.sib.ae/en/about-sib/about-us.html.
63 http://www.hsbcamanah.com/amanah/about-amanah/.
169
(Continued)
170

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

Attijari Al Islami64 No information part of Commercial Bank of Dubai

Mashreq Al Islami65 No information Islamic Banking arm of Mashreq group
Dubai Bank66 2002 modern Islamic bank of choice
67
Ajman Bank No information paid up capital of AED 1 billion
Yemen 03 Tadhamon international May 25, 1995 bank runs assets that are estimated
Islamic bank68 1.415 million US dollars
Saba Islamic Bank69 April, 1997 7500 shareholder of all segments of society
Islamic Bank of Yemen for No information provides all kinds of modern facilities to its
Finance and Investment70 customers like SMS, ATM etc.
Bangladesh 06 Islami Bank Bangladesh March 30, 1983 first of its kind in Southeast Asia
Limited71
ICB Islamic Bank Limited72 April 30, 1987 banking operations commenced on May 20,
1987

64 http://www.cbdislami.ae/cbdislamic/about_board.aspx.
65 http://www.mashreqalislami.com/english/information/about-us/.
66 http://www.dubaibank.ae/Content/Default.aspx?ID=43.
67 http://www.ajmanbank.ae/en/about-us/company-profile/Pages/Company-Profile.aspx.
68 http://www.tiib.com/pages.aspx?id=67.
69 http://www.sababank.com/view.htm. Translated from Arabic to English through Google translator.
70 http://www.iby-bank.com/eng/default.asp.
71 http://www.islamibankbd.com/introduction.php.
72 http://www.icbislamic-bd.com/.
 Al-Arafah Islami 1995 53 branches in 2008
Bank73
First Security Islami September 22, 1999 52 branches functioning
Bank Limited74
Islamic Finance and April 19, 2001 present address at Chand Mansion, 66,
Investment Limited Dilkusha C/A, Dhaka-1000
(IFIL)75
Shahjalal Islami Bank May 10, 2001 headquarter of the bank is in Dhaka
Limited (SJIBL)76
Brunei 02 Perbadanan Tabung September 29, 1991 First islamic financial insitution
Amanah Islam
Brunei77
Bank Islam Brunei July 7, 2005 More than 600 employees
Darussalam78
Indonesia 05 Bank Muamalat November 1, 1991 endorsed by the Indonesian Council of Ulemas
Indonesia79 and the Government of Indonesia
Takaful Indonesia80 Feburary 24, 1994 headquarter of the company is in Jakarta,
Indonesia

73 http://www.al-arafahbank.com/glance.php.
74 http://www.fsiblbd.com/about.php.
75 http://www.ifilbd.com/linkfiles/about-islamic.php.
76 http://www.shahjalalbank.com.bd/about.asp.
77 http://www.taib.com.bn/abouttaib/profile.htm.
78 http://www.bibd.com.bn/index.php?option=com_content&view=article&id=62&Itemid=55.
79 http://www.muamalatbank.com/index.php/home/about/profile.
80 http://takaful.com/index.php/profile/list/?SGLSESSID=16232628798ad3e88f655e6768718296&/1/.
171
(Continued)
172

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

Bank Shariah Mandari81
Bank Syariah Mega
Indonesia82
Bank Syariah Bukopin’s83
Malaysia 13 Kuwait Finance House84
Bank Islam85
Hong Leong Islamic Bank
Berhad (HLISB)86
November 1, 1999 spread over 26 provinces throughout the
country
August 24, 2004 bank was established by developing a strong
capital base
October 24, 2008 PT Bank Bukopin transferred rights and
obligations of Sharia into PT Bank Syariah
Bukopin
1977 first foreign Islamic bank to be granted a licence
under the Islamic Banking Act (Malaysia) 1983
July, 1983 From only RM80 million initially, Bank Islam’s
paid-up capital swelled to RM1.73 billion as at
June 2009
March 28, 2005 Bank is poised towards reaching out to the
needs of customers seeking an alternative to
conventional banking

81 http://www.syariahmandiri.co.id/banksyariahmandiri/profilperusahaan.php.
82 http://www.bsmi.co.id/Profil-SekilasBSMI.php.
83 http://www.syariahbukopin.co.id/index.php?app=sub_contents&a=2&b=1.
84 http://www.kfhonline.com.my/kfhmb/ep/kfhContentView.do?contentTypeId=3000&channelId=-8113&displayPage=%2Fep%2Fcontent%2Fkfh_
editorial_content.jsp&programId=8457&pageTypeId=8479&contentId=8056.
85 http://www.bankislam.com.my/.
86 http://www.hlisb.com.my/abhlib/icpo.htm.
 Asian Finance Bank
Berhad87
EONCAP Islamic Bank88
Al Rajhi Bank89
Maybank Islamic Berhad90
Standard Chartered Saadiq
Berhad91
HSBC Amanah92
Public Islamic Bank93
Alliance Islamic Bank94
November 28, 2005 Asian Finance Bank is regulated and supervised
by Bank Negara Malaysia under the Islamic
Banking Act, 1983
April 1, 2006 uthorized and paid-up Capital of RM 1 billion
and RM 398 million respectively
October, 2006 19 branches
January 1, 2008 first commercial bank to offer Islamic banking
products and services through a window
concept in 1993
November 12, 2008 headquarter of the bank is in Kula Lumpur
2008 November 2008, the first branch of HSBC
Amanah Malaysia
November 1, 2008 Islamic Banking transactions at all 242 Public
Bank branches and 26 hire purchase centres in
Malaysia
No information with its holistic banking scope, focuses on
consumer banking, commercial banking and
SMEs to boost the business

87 http://www.asianfinancebank.com/corporate_overview/corporate_organization.html.
88 http://www.eonbank.com.my/islamic/aboutus/corporate_profile.shtml.
89 http://www.alrajhibank.com.my/.
90 http://www.maybank2u.com.my/maybankislamic/corporate_info/index.shtml.
91 http://www.standardchartered.com.my/islamic-banking/en/.
92 http://www.hsbcamanah.com/amanah/about-amanah.
93 transactions at all 242 Public Bank branches and 26 hire purchase centres in Malaysia.
94 http://www.allianceislamicbank.com.my/index_aboutus.html.
173
(Continued)
174

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

CIMB Islamic Bank Berhand95 No information CIMB is a universal Islamic bank

Bank Kerjasama Rakyat Malaysia96 No information Operates as an Islamic co-operative bank
Pakistan 06 Al Baraka Islamic Bank (AIB)97 1991 29 branches
98
Meezan Bank Limited January 27, 1997 Pakistan’s first full-fledged commercial banking
license
Bank Islami Pakistan Limited99 October 18, 2004 second full-fledge Islamic Commercial Bank in
Pakistan
Dubai Islamic Bank Pakistan Limited 2006 parent company is a listed company in Dubai
(DIBPL100
Emirates Global Islamic Bank Limited February, 2007 60 on-line branches in 36 cities
(EGIBL)101
Dawood Islamic Bank Limited April 27, 2007 Pakistan’s sixth full-fledged Islamic commercial
(DIBL)102 Bank

95 http://www.cimbislamic.com/index.php?ch=islam_global&pg=islam_global_malaysia&tpt=islamic.
96 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=5538864.
97 http://www.albaraka.com.pk/about/index.php.
98 http://www.meezanbank.com/history.aspx.
99 http://www.bankislami.com.pk/about_us/milestones.php?id=2.
100 http://www.dibpak.com/AboutUs.aspx?tab=4.
101 http://www.egibl.com/egibl/HTML/AboutUs.html.
102 http://www.dawoodislamic.com/AboutBank.aspx.
Kenya 02 GulfAfrican Bank103 2005 Kenya’s first fully Shari’ah compliant bank
First Community Bank104 June 1, 2008 Alternative banking in many paces
South Africa 02 AlBaraka Bank105 1989 The bank is jointly owned by South African
investors. DCD London & Mutual Plc
Absa Islamic Bank106 1991 Reputed bank
Thailand 01 Islamic Bank of Thailand107 June, 2003 paid-up capital of 1 billion baht
Australia 02 Islamic Co-operative 1997 starting equity of only $A2000
Finance Australia Pvt. Ltd108
Muslim Community 1989 group was to provide a practical model of
Co-operative (Australia) Islamic finance in Australia
Limited109
Azerbaijan 01 Kauthar Bank110 1988 First commercial banks in Azerbaijan.
111
Russia 01 Al Shams Capital No information Dr. Djabiev is a pioneer in introducing this
Germany 02 Kuveyt Turk112 1989 Kuwait Finance House has 62 % shares

103 http://www.gulfafricanbank.com/Home/About-Us.
104 http://www.firstcommunitybank.co.ke/index.php?option=com_content&task=view&id=126&Itemid=138.
105 http://www.albaraka.co.za/About_alBaraka/Corporate_Profile.aspx.
106 http://www.absa.co.za/Absacoza/Individual/Banking/Exclusive-Banking/Islamic-Banking.
107 http://www.ibank.co.th/2010/en/about/about_detail.aspx?ID=1.
108 http://www.icfal.com.au/about_us.htm.
109 http://www.mcca.com.au/Pages/Aboutus.html.
110 http://www.kautharbank.com/en/.
111 http://alshamscapital.com/.
112 http://www.kuveytturk.com.tr/en/Hakkimizda_Tarihce.aspx.
175
(Continued)
176

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

IFIS Islamic Banking113
United Kingdom 06 ABC International Bank plc114
Ahli United Bank115
European Islamic Investment
Bank PLC116
QIB (UK)117
Gatehouse Bank PLC118
No information first company in the German market that
keeps strictly within the framework of
German and European rights to the rules of
Islam.
1980 ABC’s network spreads over 22 countrie
1997 Ahli United Bank (UK) PLC (AUBUK
formerly known as The United Bank of
Kuwait PLC) introduced Manzil Home
Purchase Plan
January, 2005 First independent shariah complaint Islamic
investment bank authorized by FSA
No information Asset management, corporate finance, real
estate and treasury.
2008 Pioneering FSA regulated bank offering
Shariah compliant wholesale banking
services based in London, UK.

113 http://www.kuveytturk.com.tr/en/Hakkimizda_Tarihce.aspx.
114 http://wiki.islamicfinance.de/index.php/ABC_International_Bank_plc.
115 http://www.iibu.com/.
116 http://www.eiib.co.uk/html/aboutus.asp.
117 http://www.qib-uk.com/.
118 http://www.gatehousebank.com/about-us/history/.
 Islamic Bank of Britain119 September, 2004 aunched on the London Stock Exchange –
AIM market – on October 12, 2004.
Canada 06 Ansar Co-Operative No information The Board Declared 6% Patronage Dividend
Housing Corporation Ltd.120 for 2009
An-Nur (Ontario) Housing No information Chances for growth and diversification
Cooperative Corp. Ltd.121
Qurtuba Housing 1991 To create an Islamic financial base for sharia
Cooperative & Al-Ittihad compliant investments.
Investment Inc122
UM Financial123 2004 awarded Best Business Leadership in North
America by World Finance Magazine Islamic
Finance Awards in 2009
frontierAlt Capital November 1, 2006 Shariah complaint mutual funds
Corporation124
Global Prosperata Funds125 No information Provides global iman fund

119 http://www.islamic-bank.com/about-us/.
120 http://www.ansarhousing.com/main.htm.
121 http://www.nurcoop.com/.
122 http://qurtuba.ca/en/presentation.html.
123 http://www.umfinancial.com/index.php?page=content&pid=43.
124 http://www.frontieralt.com/frontieralt-oasis-irc.html.
125 http://www.globalcareers.ca/en/about.htm.
177
(Continued)
178

Country No. of Islamic Name of the Bank Year of Special Features

Banks establishment

United States 14 Bank of Whittier126 December 20, Only True Community Commercial Bank
1982 Headquartered Within The City Of Whittier
Devon Bank127 No information Provides murabahah and ijara products only
University Islamic Financial No information Complete Islamic banking solution as
Corp128 slogan.
Ameen Housing Cooperative of 1996 Provides good number of products
California129
Lariba American Finance House130 1987 serves clients in all states either directly or
through its affiliate.
Guidance Residential131 No information Provides three simple steps to home
ownership
Zayan Finance No information Provides financing from $500,000 to
$25 million and above per transaction

126 https://www.bankofwhittier.com/about.htm.
127 http://www.devonbank.com/islamic/index.html.
128 http://www.universityislamicfinancial.com/IBDMain.html.
129 http://www.ameenhousing.com/home/about-us.
130 https://www.lariba.com/default.htm.
131 http://www.guidanceresidential.com/.
 Allied Asset Advisors – Iman Fund132 June 2000 Markets Fluctuate . . . Principles Don’t, is the
slogan of this bank
Azzad Asset Management133 1997 Provides azaad ethical mid cap fund
JETS DJIM International Index July 1, 2009 ceased trading on October 19, 2010.
Fund134
Amana Mutual Fund Trust135 1989 Provides Amana Income, Amana Growth and
Amana Developing world
Arcapita136 No information Operates in Bahrain, Atlanta, London and
Singapore
Shariah capital Inc.137 No information awarded the prestigious Master of Islamic
Funds Award in 2007
Unicorn Investment Bank138 2004 international presence in the United States,
Malaysia, Turkey and Saudi Arabia

132 http://www.investaaa.com/.
133 http://azzad.net/new/aboutus_whyazzad.aspx.
134 http://www.javelinfunds.com/jets-djim.php.
135 http://wiki.islamicfinance.de/index.php/Saturna_Capital_Corp.
136 http://www.arcapita.com/about/corpinfo/overview.html.
137 http://www.shariahcap.com/index.php.
138 http://www.unicorninvestmentbank.com/en/about/strategic-business-overview.html.
179
Appendix III: Glossary on Islamic
Finance

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.

Al-Aariyah (Gratuitous loan of non-fungible objects): Al-Aariyah means the loan

of a particular piece of property, the substance of which is not consumed by its
use, without anything being 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, which 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.

Al-Kafalah (Suretyship): Literally, Kafalah means responsibility, amenability or

suretyship. Legally, in Kafalah a third party becomes surety for the payment of
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.

Al-Qur’an (also written as the Qur’an only): The Holy Book of Muslims, con-
sisting of the revelations made by God to Prophet Muhammad (peace be upon
him). The Qur’an lays down the fundamentals of the Islamic faith, including
beliefs and all aspects of the Islamic way of life.

Al-Rahn: Pledge, collateral; legally, Rahn means to pledge or lodge a real or corpo-
real 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.

Al-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.
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

180
 Appendix III: Glossary on Islamic Finance 181

contract. Amanah entails absence of liability for loss except in breach of duty.
Current Accounts are regarded as Amanah (trust). If the bank gets authority to
use Current Accounts funds in his business, Amanah transforms into a 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 buyer retaining a

right to confirm or cancel the sale.

Awqaf : Plural of waqf. Waqf means appropriation or tying up a property in

perpetuity for specific purposes. No property rights can be exercised over the
corpus. Only the usufruct is applied towards the objectives (usually charitable) of
the waqf.

Ayah: A verse of al-Qur’an.

Bai bil Wafa: Sale with a right in the seller, having the effect of a condition, to
repurchase (redeem) the property by refunding the purchase price. According to
majority of Fuqaha it is not permissible.

Bai Muajjal: Literally, it means a credit sale. Technically, a financing technique

adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a con-
tract 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 the bargain, 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
gold, silver or currencies because these are 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.

Bay al-salam: A sale in which payment is made in advance by the buyer and the
delivery of the goods is deferred by the seller.

Bay: Stands for sale. It is often used as a prefix in referring to different sales-based
modes of Islamic finance, like murabahah, ijarah, istisna, and salam.
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; compare Amanah.
182 Appendix III: Glossary on Islamic Finance

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. Duyun (debts) ought to be
returned without any profit since they are advanced to help the needy and meet
their demands and, therefore, the lender should not impose on the borrower
more than what he had given on credit.

Falah: Falah means to thrive, to become happy or to have luck and success.
Technically it implies success both in this world and in the Akhirah (Hereafter).
The Falah presumes belief in one God, the apostlehood of Prophet Muhammad
(Peace be upon him), Akhirah and conformity to the Shariah in behaviour.

Fatawa: Plural of fatwa. Religious verdicts by fuqaha.

Fiqh: Refers to the whole corpus of Islamic jurisprudence. In contrast with con-
ventional law, fiqh covers all aspects of life, religious, political, social, commercial
or economic. The whole corpus of fiqh is based primarily on interpretations of the
Qur’an and the Sunnah and secondarily on ijma (consensus) and ijtihad (individ-
ual judgment). While the Qur’an and the Sunnah are immutable, fiqhi verdicts
may change due to changing circumstances.

Fuqaha: Plural of faqîh meaning jurist, who gives opinion on various juristic
issues in the light of the Qur’an and the Sunnah.

Gharar: It means any element of absolute or excessive uncertainty in any busi-

ness or a contract about the subject of contract or its price, or mere speculative
risk. It leads to undue loss to a party and unjustified enrichment of other, which
is prohibited.

Ghish: Literally means deception, fraud. Technically, means trying to deceive

someone by concealing vital information in a deal.

Hadith: Sayings, deeds and reactions of Prophet Muhammad (peace be upon

him) narrated by his companions.

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 – con-
tract of assignment of debt. It also refers to the document by which the transfer
takes place.

Hibah: Hibah means Gift.

Hikmah: Wisdom.

Ijab: Offer, in a contract; see also qabul.

Ijarah: Letting on lease. Sale of a definite usufruct of any asset in exchange of

definite reward. It refers to a contract of land leased at a fixed 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.
 Appendix III: Glossary on Islamic Finance 183

Ijarah-wal-Iqtina: A mode of financing, by way of Hire-purchase, adopted by

Islamic banks. It is a contract under which the Islamic bank finances equipment,
building or other facilities for the client against 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 under-
taking 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 is fixed in such a
manner that the bank gets back its principal sum along with some profit, which
is usually determined in advance.

Ijma: Consensus of all or majority of the leading qualified jurists on a certain

Shariah matter in a certain age.

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.

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 Shrikah): It is a form of partnership in which each partner

contributes capital and has a right to work for the business, not necessarily
equally.

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.
Istihsan: It is a doctrine of Islamic law that allows exception to strict legal rea-
soning, or guiding choice among possible legal outcomes, when considerations
of human welfare so demand.

Istisna’a: It is a contractual agreement for manufacturing goods and commodi-

ties, 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, step by step 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.
184 Appendix III: Glossary on Islamic Finance

Jua’alah or Ji’alah: Literally, Joalah constitutes wages, pay, stipend or 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.

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.

Khilafat al-Rashidah: The period of the first four caliphs after the Prophet
(peace be upon him), ranging from the year 11AH (632 AC) to the year 41AH
(661 AC).

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.

Khiyar al-shart: Option to rescind a sales contract. One of the parties to a sales
contract may stipulate certain conditions, which if not met, would grant a right
to the stipulating party an option to rescind the contract.

Khiyar: Option or a power to annul or cancel a contract.

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.

Mal-e-Mutaqawam: Things the use of which is lawful under the Shariah; or

wealth that has a commercial value. 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 (non-Mutaqawam) but is valuable
for non-Muslims. Examples are wine and pork.

Mithli (Fungible goods): Goods that can be returned in kind, i.e. gold for gold,
silver for silver, wheat for wheat, etc.

Mubah: Object that is lawful (i.e. something which is permissible to use or

trade in).

Mudarabah: A form of partnership where one party provides the funds 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
advance.
 Appendix III: Glossary on Islamic Finance 185

Musaqah: A contract in which the owner of a garden agrees to share its produce
with someone in an agreed proportion in return for latter’s services in irrigating
and looking after the garden.

Musawamah: Musawamah is a general kind of sale in which price of the com-

modity 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. Qard is, in fact, a par-
ticular 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).

Qard al-hasan: A loan extended without interest or any other compensation

from the borrower. The lender expects a reward only from God.

Qimar: Qimar means gambling. Technically, it is an arrangement in which pos-

session 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.

Rabb al-mal: Capital owner (financier) in a mudarabah contract.

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 Con-
cept of Riba Al-Fadl refers to sale transactions while Riba Al-Nasiah refers to loan
transactions.
186 Appendix III: Glossary on Islamic Finance

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
scholar about its prohibition.
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.
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.
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.
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 part-
nership 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 seek-
ing 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, abso-
lutely at lender’s own discretion and without any prior condition or inducement
for reward, is also covered under Tabarru. 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 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.
 Appendix III: Glossary on Islamic Finance 187

Takaful: An alternative for the contemporary insurance contract. A group of per-

sons agree to share certain risk (e.g. damage by fire) by collecting a specified
sum from each. In case of loss to anyone of the group, the loss is met from the
collected funds.

Tawakkul: Trust in God for results after one has undertaken all necessary effort.
It is one of the important values for Muslims. After making all necessary efforts,
a Muslim believes that the results are in the hand of God.

Ujrah: See Jua’alah.

Wadiah: A contract whereby a person leaves valuables with someone for safe-
keeping. The keeper can charge a fee, even though in Islamic culture it is
encouraged to provide this service free of charge or to recover only the costs
of safekeeping without any profit.

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.

Waqf : Appropriation or tying up a property in perpetuity for specific purposes.

No property rights can be exercised over the corpus. Only the usufruct is applied
towards the objectives (usually charitable) of the waqf.

Zakah: The amount payable by a Muslim on his net worth as a part of his
religious obligations, mainly for the benefit of the poor and the needy.
Notes

1 Islamic Finance: An Introduction

1. An event in which there is a possibility of total loss to one party. Maysir has
elements of gharar, but not every gharar is maysir.
2. Gharar is the sale of probable items whose existence or characteristics are not
certain, due to the risky nature which makes the trade similar to gambling.
The sale of fish in the sea and the birds in the sky are examples of this.
3. This hadith is reported by all the six famous books of hadith (see Ibn ul-
humam, Fath-ul-humam, Fath-ul-Qadir v. 6, p. 25).
4. In the case of a Sovereign Sukuk, the underlying assets (such as toll roads and
utilities) will need to be permitted assets from a Shariah perspective.

2 Historical Development and Research Design

1. S. Heffernan (1996). John Wiley and Sons, UK.
2. W.J. Fischel (1992) “Djahbadh,” TheEncyclopedia of Islam, vol. 2, pp. 382–3.
3. A.A. Duri (1986) “Baghdad”, The Encyclopedia of Islam (Leiden, E.S. Brill),
vol. 1, pp. 894–909.
4. J.H. Kramers (1952) “Geography and Commerce.” In T. Arnold and A.
Guillaume (eds), The Legacy of Islam (Oxford: Oxford University Press).
5. Overview of Islamic Finance, US Department of the Treasury Office of
International Affairs, August 2006.
6. All of Iran’s banking assets were converted by law to be Shariah-compliant in
1983 (Islamic Banking Law).
7. www.wdibf.com (World Database for Islamic Banking and Finance).

3 Islamic Finance – An Overview

1. (Qur’an 5:3). ‘5’ indicates the chapter number and ‘3’ indicates the verse
number.
2. Qur’an is the highest and most authentic authority in Islam. It consists the
sacred writings of Islam revealed by Allah (God) to the prophet Muhammad
(PBUH) during his life at Mecca and Medina. Quotations from the Quran are
normally followed by a reference to the number of the chapter (sura) and the
number of the quoted verse (aya). All Quranic texts in this thesis are printed
in italics.
3. It is a collection of the Prophet’s sayings and deeds, including his opin-
ions about matters, as well as the practices of his companions. The sunnah
occupies a place second to the Qur’an.
4. A committee of religious advisers whose opinion is sought on the acceptabil-
ity of new instruments, and which conduct a religious audit of the bank’s
activities as well as other features reflecting their religious status. These are

188
 Notes 189

usually those people who have a command on economic as well as religious

knowledge.
5. Peace Be Upon Him (PBUH).
6. Muslim, Kitab al-Musaqat, Bab la’ana akil al-riba wa mu’kilahu; also in
Tirmidhi and Musnad Ahmad.
7. Muslim, Kitab al-Hajj, Bab Hajjat al-Nabi, may peace be on him; also in
Musnad Ahmad.
8. Mishkat al-Masabih, Kitab al-Buyu, Bab al-riba, on the authority of Ahmad
and Daraqutni). Bayhaqi has also reported the above hadith in Shuab al-
Iman with the addition that “Hell befits him whose flesh has been nourished
by the unlawful” (ibid.).
9. Ibn Majah, Kitab al-Tijarah, Bab al-taghliz fi al-riba; also in Musnad Ahmad.
10. Abu Dawud, Kitab al-Buyu, Bab fi ijtinab alshubhat; also in Ibn Majah.
11. Mustadrak al-Hakim, Kitab al-Buyu.
12. Commentary on verse 2:275 in Tafsir al-Kabir of Fakhruddin al-Razi.
13. Jabir ibn Abdallah, giving a report on the Prophet’s Farewell Pilgrimage, said:
The Prophet, peace and blessings of God be on him, addressed the people
and said: All of the riba of Jahilliyyah is annulled. The first riba that I annul
is our riba, that accruing to Abbas ibn Abd al-Muttalib (the Prophet’s uncle);
it is being cancelled completely. (Muslim, Kitab al-Hajj, Bab Hajjat al-Nabi,
may peace be on him; also in Musnad Ahmad).
14. Al-Qur’an (106:2).
15. Abd al-Rahman al-Jaziri’s book ‘Al-Fiqh Ala al-Madhahib al-Arba‘ah’ is a com-
pendium on the juristic opinions of the four predominant schools of Muslim
jurisprudence. It is held in high esteem and considered to be an authority on
the subject.
16. From Abu Hurayrah: The Prophet, peace be on him, said: “Riba has seventy
segments, the least serious being equivalent to a man committing adultery
with his own mother” (Ibn Majah).
17. Cited by Ibn Kathir in commentary on verse 2:275.
18. From Umar ibn al-Khattab: The last verse to be revealed was on riba and the
Prophet, peace be on him, was taken without elaborating it to us; so give up
not only riba but also ribah [whatever raises doubts in the mind about its
rightfulness] (Ibn Majah, op. cit.).
19. There are two Hadiths related to this:

(1) From Anas ibn Malik: The Prophet, peace be on him, said: “Deceiving
a mustarsal [an unknowing entrant into the market] is riba (Suyuti, al-
Jami al-Saghir, under the word ghabn; Kanz al Ummal, Kitab al-Buyu,
al-Bab al-thani, al-fasl al-thani, on the authority of Sunan al-Bayhaqi).
(2) From Abdallah ibn Abi Awfa: The Prophet, peace be on him, said:
“A najish (one who serves as an agent to bid up the price in an auction)
is a cursed taker of riba (Cited by Ibn Hajar al-Asqalani in his commen-
tary on al-Bukhari called Fath al-Bari, Kitab al-Buyu, Bab al-najash; also
in Suyuti, al-Jami al-Saghir, under the word alnajish and Kanz al-Ummal,
op. cit., both on the authority of Tabarani’s al-Kabir).

20. From Abu Umamah: The Prophet, peace be on him, said: “Whoever makes
a recommendation for his brother and accepts a gift offered by him has
190 Notes

entered riba through one of its large gates” (Bulugh al-Maram, Kitab al-Buyu,
Bab al-riba, reported on the authority of Ahmad and Abu Dawud).
21. This is explained in three hadiths:

(1) From Abu Sa‘id and Abu Hurayrah: A man employed by the Prophet,
peace be on him, in Khaybar brought for him janibs [dates of very fine
quality]. Upon the Prophet’s asking him whether all the dates of Khaybar
were such, the man replied that this was not the case and added that
they exchanged a sa’ [a measure] of this kind for two or three [of the
other kind]”. The Prophet, peace be on him, replied, “Do not do so.
Sell [the lower quality dates] for dirhams and then use the dirhams to
buy janibs.” [When dates are exchanged against dates] they should be
equal in weight”. (Bukhari, Kitab al-Buyu, Bab idha arada bay tamarin bi
tamarin khayrin minhu; also Muslim and Nasa’i).
(2) From Abu Sa’id: Bilal brought to the Prophet, peace be on him,
some barni [good quality] dates whereupon the Prophet asked him
where these were from. Bilal replied, “I had some inferior dates which
I exchanged for these – two sa’s for a sa’.” The Prophet said, “Oh no, this
is exactly riba. Do not do so, but when you wish to buy, sell the inferior
dates against something [cash] and then buy the better dates with the
price you receive”. (Muslim, Kitab al-Musaqat, Bab al-ta‘am mithlan bi
mithlin; also Musnad Ahmad).
(3) From Fadalah bin Ubayd al-Ansari: On the day of Khaybar he bought a
necklace of gold and pearls for twelve dinars. On separating the two, he
found that the gold itself was equal to more than twelve dinars. So he
mentioned this to the Prophet, peace be on him, who replied, “It [jew-
ellery] must not be sold until the contents have been valued separately”.
(Muslim, Kitab al-Musaqat, Bab bay al-qiladah fiha kharaz wa dhahab;
also in Tirmidhi and Nasa’i).

22. This is explained in two Hadiths:

(1) From Abu Sa‘id al-Khudri: The Prophet, peace be on him, said: “Do not
sell gold for gold except when it is like for like, and do not increase
one over the other; do not sell silver for silver except when it is like
for like, and do not increase one over the other; and do not sell what
is away [from among these] for what is ready”. (Bukhari, Kitab al-Buyu,
Bab bay al-fiddah bi al-fiddah; also Muslim, Tirmidhi, Nasa’i and Musnad
Ahmad).
(2) From Abu Sa’id al-Khudri: The Prophet, peace be on him, said: “Gold for
gold, silver for silver, wheat for wheat, barley for barley, dates for dates,
and salt for salt – like for like, and hand-to-hand. Whoever pays more
or takes more has indulged in riba. The taker and the giver are alike [in
guilt]”. (Muslim, ibid; and Musnad Ahmad).

23. David Oakley, Shannon Bond, Cynthia O’Murchu, and Celve Jones, “Islamic
Finance Explained,” Financial Times.
24. Reuters, “Islamic Finance Set to Cross $1 Trillion: Moody’s,” The Economic
Times, 21 October 2010.
 Notes 191

25. Jospeh DiVanna and Brian Caplen, “Top 500 Islamic Financial Institutions,”
The Banker, 2 November 2010.
26. www.thecityuk.com and retrieved on 13 June 2011.
27. A form of partnership where one party provides the funds while the other
provides expertise and management. The latter is referred to as the Mudarib.
Any profits accrued are shared between the two parties in pre-agreed ratios,
while loss is borne by the provider of the capital.
28. Musharikah means a relationship established under a contract by the mutual
consent of the parties for sharing of profits and losses in the joint busi-
nesses. It is an agreement under which the Islamic bank provides funds,
which are mixed with the funds of the business enterprises and others.
All providers of capital are entitled to participate in the management, but
not necessarily required to do so. The profit is distributed among the part-
ners in pre-agreed ratios, while the loss is borne by each partner strictly in
proportion to respective capital contributed.
29. A contract under which an Islamic bank finances equipment, building or
other facilities for the client against an agreed rental together with a unilat-
eral 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 undertak-
ing 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 is fixed in such
manner that the bank gets back its principal sum along with profit, which is
usually determined in advance.
30. Literally, it means a sale on mutually agreed profit. Technically, it is a con-
tract of sale in which the seller declares his cost and profit. Islamic banks
have adopted this as a mode of financing. As financing technique, it involves
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 settled in advance.
31. http://www.pwc.com/my/en/issues/islamic-finance-malaysia.jhtml. Retrieved
on May 5, 2011.
32. http://www.moneyworks.ae/news/archive/3200708.pdf. Retrieved on 12 May 2011.
33. http://www.beltoneenclave.com/research/Beltone_UAE_Banking_Sector_Review_
for_BE.pdf. Retrieved on 12 May 2011.

4 Objectives of Islamic Finance

1. Quran (4:29).
2. Cited by Ibn Rushd in Bidayat al- Mujtahid, Cairo, 1960, vol. 2, p. 167.
3. Jaziri, vol. 2, pp. 283–4.
4. Quran (2:284).
5. Quran (23:84–5).
6. Quran (24:33).
7. Muslim (second athentic hadith book after Bhukahri), vol. 2, p. 728: 122.
8. See, for example, verses 3 and 4 of Surah 53 of the Holy Qur’an.
9. Quran (15:9).
10. Quran (33:21).
11. Quran (24:54).
12. Quran (6:165).
192 Notes

13. Quran (75:36).

14. Muslim, vol. 4, p. 1987: 34.
15. Bukhari, vol. 8, p. 15.
16. Ibid., p. 199; and Nisa’i, vol. 8, p. 65.
17. Musnad lmam Ali al-Rida. Beirut, 1966, p. 474.
18. Abu Yusuf, Kitab al-Kharaj; Cairo, 1367 A.H.
19. Abu Yusuf, pp. 4 and 6.

5 The Objectives and Achievements of Islamic Finance:

An Analysis
1. Religious ruling about the permissible and non-permissible transactions.
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Index
achievements 143
age profile of respondents 92
background 41
banks 6
branches 9
challenges of Islamic Finance 61
components of Islamic Finance 6
conclusion 13, 35, 64, 141, 146, 156
conventional banks 5
conventional financial system 4
country profile of respondents 93
current Islamic finance market 19
customers 87
development of Islamic Finance
economic objectives 76
vs age 128
vs country 129
vs gender 130
vs profession 126
employees of Islamic banks 88
equity and capital market 7
ethical objectives 79
vs age 115
vs country 116
vs gender 117
vs profession 113
factor analysis 101
full-fledged banks 9
gender profile of respondents
general banking services 6
glossary 180
history of Islamic finance 15
hypotheses of the study 30
Ijara (leasing) 12
Ijma 43
Ijtehaad 44
institutions 161
interest 44
investment and investment
management 6
Islamic banking 5
Islamic banking assets 59
Islamic finance 1
in Malaysia 56
in Saudi Arabia 21
in the United Arab Emirates 59
Islamic financial system 4
Islamic objectives 75
vs age 108
vs country 110
vs gender 111
51 vs profession 107
Islamic Shariah and its
objectives 70
limitations of the research 34
literature review 25
meaning of Riba (usury) 47
Mudarabah (sleeping partnership) 11
Murabahah (cost-plus financing) 10
Musharakah (partnership financing)
11
objectives (Maqasid) of Shariah 72
objectives of Islamic finance 66
objectives of the study 30
operating structure of Islamic
91 banks 8
others 89
plan of the research 33
products and services of Islamic
finance 10
prohibition of Riba (interest) 45
in Hadith 46
in Qur’an 45
200
 Index 201

Qiyas 43 vs gender 123

questionnaire 85, 157 vs profession 119
Qur’an 43 social services 7
sources of Islamic/divine law 43
references 14, 36, 64, 81, 141 sources of Shariah tenets 70
Regulatory Officers 89 stakeholders 87
reliability of data 98 statement of the problem 24
religious profile of respondents 92 subsidiaries 9
research gap 29 suggestions for development of
research methodology 32 Islamic finance 151
research process 31 Sukak (bond) 13
research questions 32 Sunnah 43
Riba (meaning) 47
Riba Al-Fadl 49 Takaful (insurance) 7, 13
Riba Al-Nasi’ah 47 Takaful assets 59
right people 63 talent shortage 62
types of Islamic Finance Objectives
Salam 12 75
sample 84 types of Riba 47
sampling plan 86
sampling size 89 universe 83
scope for further research 35
Shariah advisors 88 validity 100
social objectives 78
vs age 121 Waqf and Zakat 8
vs country 122 Window Model 9