What Is Gharar

What_Is_Gharar

Gharar, a key term in Islamic finance, denotes excessive uncertainty and ambiguity in contracts, making them non-compliant with Sharia law. Rooted in principles of fairness and transparency, gharar aims to prevent exploitation and unjust enrichment by ensuring clear obligations and rights among parties. Historical and scholarly interpretations have evolved, categorizing it into excessive and minor forms, affecting the validity […]

What Is Takaful

What Is Takaful

Takaful is an Islamic insurance system grounded in mutual risk sharing and ethical investments, compliant with Sharia law. Participants contribute to a common fund managed by Takaful operators, ensuring equitable distribution of both risks and rewards. Unlike conventional insurance, Takaful avoids elements like interest (riba) and uncertainty (gharar) and operates on a non-profit basis, with any surplus redistributed among members. This […]

What Is Sukuk (Islamic Bonds)

what is sukuk

Sukuk, or Islamic bonds, are financial instruments designed to conform with Sharia law, which prohibits interest (riba). Unlike conventional bonds, Sukuk represent ownership in tangible assets or ventures and generate returns through profit-sharing or lease agreements. Popular types include Ijarah (lease-based), Murabaha (cost-plus financing), and Mudarabah (profit-sharing partnerships). Sukuk provide a secure, ethical investment by ensuring asset-backed structures and alignment with risk-sharing principles. […]

What Is Murabaha

what is murabaha

Murabaha is an Islamic financing method predicated on a cost-plus-profit arrangement, facilitating transactions devoid of riba (interest) and emphasizing clarity of costs and mutual consent. This Sharia-compliant technique mandates the seller’s ownership of the asset prior to the sale and ensures full disclosure of the acquisition cost and the predetermined profit margin. Crucial to Islamic finance, Murabaha aligns with principles of fairness and […]

What Is Musharakah

what is musharakah

Musharakah is an Islamic financing structure in which multiple parties contribute capital to a joint venture, sharing profits and losses based on pre-agreed ratios. This method is compliant with Shariah law, prohibiting fixed returns and riba (usury), thus ensuring an ethical and transparent investment process. Partners actively participate in management, fostering joint responsibility. Various forms exist, such as diminishing and […]

What Is Ijarah

What is ijarah

Ijarah is an Islamic leasing contract where the lessor transfers the right to use a tangible asset to the lessee without transferring ownership, adhering to Shariah principles. Key attributes include clearly defined lease periods, rental payments, and maintenance responsibilities. There are two main types: operating leases, where ownership stays with the lessor, and financial leases, which may lead to […]

What Is A Halal Mortgage?

What is a halal mortgage

A halal mortgage is a home financing option that adheres to Islamic law (Sharia), which prohibits interest (riba) and promotes ethical investments and risk-sharing. It uses alternative finance structures like murabaha (cost-plus financing), ijara (lease-to-own), and musharaka (partnership) to acquire property. These methods guarantee transparency, fairness, and alignment with Islamic principles by using asset-backed transactions and avoiding investments in haram (forbidden) […]