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| S.NO<\/th>\n | TERM<\/th>\n | EXPLANATION<\/th>\n<\/tr>\n<\/thead>\n |
|---|---|---|
| 01<\/td>\n | Kafalah (Guarantee)<\/td>\n | A contract of surety in which a person adds to his responsibility or liability on behalf of another person in respect of a demand for something.Al Kafalah is a contract made between the Bank and another party whereby the Bank agrees to discharge \nthe liability of a third party in the case of default by the third party. As a surety, the third party will give the Bank some form of collateral and pay a fee for the services.<\/td>\n<\/tr>\n |
| 02<\/td>\n | Qard e Hasana (Interest free loan)<\/td>\n | A goodwill loan against which interest is not charged; where only the principal amount is to be returned in the future.<\/td>\n<\/tr>\n |
| 03<\/td>\n | Rabb al Maal (Owner of capital)<\/td>\n | The investor or the owner of capital in a Mudarabah contract.<\/td>\n<\/tr>\n |
| 04<\/td>\n | Gharar (Uncertainty)<\/td>\n | Contractual uncertainty that may lead to major dispute between contracting parties which is otherwise preventable or avoidable.<\/td>\n<\/tr>\n |
| 05<\/td>\n | Arbun (Down-payment\/deposit)<\/td>\n | A non-refundable down payment received from the buyer or the Istisna requester securing the purchase of manufactured goods.<\/td>\n<\/tr>\n |
| 06<\/td>\n | Haamish Jiddiah (Security Deposit)<\/td>\n | The Islamic financial term for a sum of earnest money received from the client as security that serves as compensation in the event the lessee backs out from entering into or continuing an Ijarah. The lessor makes up for the actual loss from \nit and returns the remainder to the client.<\/td>\n<\/tr>\n |
| 07<\/td>\n | Shirkat ul Milk (Joint ownership)<\/td>\n | Primarily a \u2018partnership of joint ownership\u2019 which may come\u00a0about deliberately or involuntarily.<\/td>\n<\/tr>\n |
| 08<\/td>\n | Wakalah (Agency)<\/td>\n | An agency contract which usually includes in its terms a fee\u00a0for the agent.<\/td>\n<\/tr>\n |
| 09<\/td>\n | Bai Muajjal (Deferred Payment Contract)<\/td>\n | A deferred sale, where one of the considerations of the\u00a0contract such as its price or the delivery of its subject matter\u00a0is delayed to a future date<\/td>\n<\/tr>\n |
| 10<\/td>\n | Salam (Advance Payment)<\/td>\n | A sale where the price of the subject matter is paid in full at\u00a0the time of the contract\u2019s execution while the delivery of the\u00a0subject matter is deferred to a future date<\/td>\n<\/tr>\n |
| 11<\/td>\n | Istijrar (Recurring sale)<\/td>\n | A contract where the supplier agrees to provide a client a\u00a0particular commodity on an ongoing basis for an agreed\u00a0price based on an agreed mode of payment.<\/td>\n<\/tr>\n |
| 12<\/td>\n | Commodity Murabaha<\/td>\n | A transaction where the Islamic bank purchases a\u00a0commodity on spot and sells it for a deferred payment for\u00a0the purpose of managing liquidity.<\/td>\n<\/tr>\n |
| 13<\/td>\n | Diminishing Musharakah (Declining Partnership)<\/td>\n | A temporary partnership where an asset or property is jointly purchased by two partners and one partner eventually acquires ownership of it through a series of property share purchases.<\/td>\n<\/tr>\n |
| 14<\/td>\n | Ijarah (Islamic Lease)<\/td>\n | A form of lease seeking to provide the benefits of an asset or\u00a0a service to the lessee in return for a payment of an agreed\u00a0upon price or rent.<\/td>\n<\/tr>\n |
| 15<\/td>\n | Ijarah Muntahiya bi Tamlik (Leasing ending with ownership)<\/td>\n | An Ijarah based on the lessor\u2019s undertaking to transfer the\u00a0ownership of the leased property to the lessee at the end of\u00a0the lease or by stages during the term of the contract.<\/td>\n<\/tr>\n |
| 16<\/td>\n | Ijarah wa Iqtina (Lease-and-purchase transaction)<\/td>\n | An Ijarah conducted solely for the purpose of transferring\u00a0the ownership of the leased asset to the lessee at the end of\u00a0the lease period.<\/td>\n<\/tr>\n |
| 17<\/td>\n | Istisna (Order to Manufacture)<\/td>\n | A transaction used for the purpose of acquiring an asset manufactured on order. It may be executed directly with the supplier or any other party that undertakes to have the asset manufactured.<\/td>\n<\/tr>\n |
| 18<\/td>\n | Mudarabah (Investment partnership)<\/td>\n | A Mudarabah is a business partnership between two or more parties, where, typically, one of the parties supplies the capital for the business, and the other provides the investment management expertise.<\/td>\n<\/tr>\n |
| 19<\/td>\n | Murabaha (Cost + Profit)<\/td>\n | A contract in which the cost of acquiring the asset and the profit agreed and disclosed to the client or the buyer upfront.<\/td>\n<\/tr>\n |
| 20<\/td>\n | Musawamah (Negotiated Sale)<\/td>\n | A general sale in which the price of the commodity to be traded is bargained between the buyer and the seller and where no reference is made to the cost of acquisition of the sale asset or the profit to be earned from it.<\/td>\n<\/tr>\n |
| 21<\/td>\n | Musharakah (Equity participation \/ partnership)<\/td>\n | A business partnership set up to make profit, where all\u00a0partners contribute capital and effort to help the business\u00a0run.<\/td>\n<\/tr>\n |
| 22<\/td>\n | Mudarabah Al Muqayyadah (Restricted Mudarabah)<\/td>\n | A Mudarabah in which the Mudarib has to observe certain\u00a0restrictions regarding how the business may be run.\u00a0Typically, these restrictions may relate to sector, activity,\u00a0and\/or region in which the business may be operated.<\/td>\n<\/tr>\n |
| 23<\/td>\n | Sukuk (Islamic bonds)<\/td>\n | Certificates of equal value representing undivided shares in\u00a0ownership of tangible assets, usufruct and services.<\/td>\n<\/tr>\n |
| 24<\/td>\n | Takaful (Insurance)<\/td>\n | Takaful is community-pooling system based on the principles of brotherhood and mutual help wherein participants contribute in a fund to help those who need it most in times of financial difficulties.<\/td>\n<\/tr>\n |
| 25<\/td>\n | Tawarruq (Purchase on Credit & Spot Sale for liquidity arrangement)<\/td>\n | A mode of financing, similar to a Murabaha transaction,\u00a0where the commodity sold is not required by the client but\u00a0is bought on a deferred payment basis and sold to a third\u00a0party for a lesser price, thereby becoming a means of\u00a0liquidity generation.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n [\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":" [vc_row][vc_column][vc_column_text] Key Islamic Banking Definitions [\/vc_column_text][vc_column_text el_class=”table-responsive”] S.NO TERM EXPLANATION 01 Kafalah (Guarantee) A contract of surety in which a person adds to his responsibility or liability on behalf of another person in respect of a demand for something.Al Kafalah is a contract made between the Bank and another party whereby the Bank agrees to […]<\/p>\n","protected":false},"author":1,"featured_media":2107,"parent":1126,"menu_order":47,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"class_list":["post-2145","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"\n |