Understanding Islamic Finance - Doha Academy of Tertiary Studies

514 Understanding Islamic FinanceMusharakah Sukuk 399–400Muslim countries and Islamic finance 459–61Nasiruddin Tusi’s Memorandum 28non-bank financial institutions (NBFIs) 185,418, 447norms and ethics, in Islamic economics andfinancefree marketing and fair pricing 68–9freedom from Dharar 69–70fulfilling covenants and liabilities 67–8justice and fair dealing 64–7mutual cooperation and removal of hardship68offer and acceptance, of contract 106–8order to manufacture (Istisna’a)accounting practices by banks 271–4and agency contract 268binding nature of 266–7definition 263–4guarantees 267housing finance 274–5parallel contract 267, 276–7penalty clause 266post execution scenario 268–9potential of 269for preshipment export finance 275–6price in 265–6risk management in 269–70subject matter of 264–5vs Ijarah (Ujrah) 271vs Salam 270–1ownership, in Islamic law 33of assets 102of debt 102of usufruct 102Pareto efficiency, in conventional economics38participation term certificates (PTCs) 334participatory modes (Shirkah)asset side of the banking system 332–4concept of 307criticisms 442–4deposits side of the banking system 331–2Diminishing Musharakah (DM) 337–43joint stock companies 328–30legality of 308–12modern 308Mudarabah contract 319–27Mudarabah vs Musharakah 327–8Musharakah contract 312–19in the pre-Islamic period 307principles of Shirkah 343–4securitization 334partnershipsconditions with respect to partners 312–13in creditworthiness 310–11, 317general 310guarantees 318in labour or crafts 310maturity and termination 318–19mutual relationship among partners 314–16in the profits of capital and labour 311–12rules related to capital invested by a partner313–14treatment of profit and loss 316–17, 319–20universal 310penalty on defaults 454–5see also loan and debt, in Islamic commerciallawphilosophy, of Islamic financealternative forms of financing 76–8avoiding gambling/games of chance 76avoiding Gharar 75avoiding interest 74–5entitlement to profit 81–2gains on investment or principal of a business78–81Islamic banks dealing in goods 82–3risks associated with Islamic banks 84–5transparency and documentation 83–4prize bond schemes and Islamic principles63–4profitin the context of partnerships 316–17,319–20defined 36with liability 113prohibitions, in Islamic economics and financeof conventional insurance 418–20exchange of two liabilities 113Gharar 57–61, 110–11Khalabah 66Maisir/Qimār 61–4, 112Najash 66, 110Riba 44–57, 111in sales 142–4securitization 392two mutually contingent and inconsistentcontracts 112–13