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Sharia practices ban riba (earning interest) and involvement in haram. It also forbids gambling ( maisir ) and excessive risk ( bayu al- gharar ). [ 1 ] [ 2 ] This, however has not stopped some in Islamic finance industry from using some of these instruments and activities, but their permissibility is a subject of "heated debate" within the ...
Sharia prohibits riba, or usury, defined as interest paid on all loans of money (although some Muslims dispute whether there is a consensus that interest is equivalent to riba). [4] [5] Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also haraam ("sinful and prohibited").
Nizam Yaquby, for example declares that the "guiding principles" for Islamic finance include: "fairness, justice, equality, transparency, and the pursuit of social harmony". [113] Some distinguish between Sharia-compliant finance and a more holistic, pure and exacting Sharia-based finance.
Divine, abstract sharia: In this sense, Sharia is a rather abstract concept which leaves ample room for various concrete interpretations by humans. Classical sharia: This is the body of Islamic rules, principles and cases compiled by religious scholars during the first two centuries after Muhammad, including IjtihÄd
Sukuk securities are structured to comply with Sharia by paying profit, not interest—generally by involving a tangible asset in the investment. For example, Sukuk securities may have partial ownership of a property built by the investment company (and held in a Special Purpose Vehicle ), so that sukuk holders can collect the property's profit ...
On the liability side, Feisal Khan argues there is a "long established consensus" that debt finance is superior to equity investment (PLS being equity investment) because of the "information asymmetry" between the financier/investor and borrower/entrepreneur – the financier/investor needing to accurately determine the credit-worthiness of the ...
The Amana Developing World Fund was created in 2009. All three funds are managed according to Islamic principles. Traditional mutual funds are off-limits to Muslims, because they typically contain securities that are forbidden by sharia law. Accordingly, the Amana Funds are managed under strict guidelines to comply with Islamic principles.
Journalist John Foster, quotes an investment banker based in the Islamic Banking hub of Dubai on the practice of "fatwa shopping", We create the same type of products that we do for the conventional markets. We then phone up a Sharia scholar for a Fatwa [seal of approval, confirming the product is Shari'ah compliant].