Frequently Asked Questions(FAQs)
Shariah literally means a way or path. In Islam Shariah refers to the divine
guidance and laws given
by the Holy Quran, the Hadith (sayings) of the Prophet Muhammad (Peace Be
Upon Him) and
supplemented by the juristic interpretations by Islamic scholars. Shariah
embodies all aspects of the
Islamic faith, including beliefs and practices. Islamic Shariah is derived
from the following four
sources:
- The Holy Quran
- The Sunnah of the Prophet (Peace Be Upon Him)
- Ijma (consensus of the Ummah)
- Qiyas (Analogy)
Riba refers to interest charged on loans or debts, which is prohibited in
Islamic finance. Islamic
finance offers alternative modes to interest-based transactions.
Takaful is based on mutual cooperation and adheres to Shariah laws, while
conventional
insurance operates on commercial bases and may involve elements like
interest and uncertainty.
Qard e Hasan refers to an interest-free loan given for a good cause in the
name of Allah, aiming for
repayment or reward in the Hereafter. It is distinct from commercial loans
and involves charitable
intent.
| Takaful | Conventional Insurance |
|---|---|
| Takaful is based on mutual cooperation/ Ta’awun | Based on commercial bases only |
| Subject to Shari`ah laws and government laws | Shari`ah law is not taken into account |
| Takaful plan holders and shareholder’s capital can only be invested in Shari`ah compliant investment funds | Capital of the premium for conventional insurance is invested in funds and investment channels that are not necessarily Shari`ah compliant |
| Free from Riba (Interest), Gharar (Uncertainty) and Maysir (Gambling) | There are elements of Interest, Gambling and Uncertainty |
| Risks are shared and distributed among Takaful participants who agree to jointly assume risk | Risk is transferred and passed on from individual to conventional insurance provider |
Shariah compliance ensures that financial transactions and investments are
conducted ethically
and in accordance with Islamic law. It provides confidence to investors,
promotes fairness, and
upholds moral integrity in financial dealings.
Our methodology involves a meticulous evaluation of financial products and
transactions to
ensure they align with Shariah principles. We work closely with experienced
Shariah scholars,
employing in-depth research and analysis to provide accurate and reliable
guidance.
No, Islamic finance is a global industry accessible to people of all faiths
and nationalities. It
caters to diverse clients worldwide, including individuals, businesses, and
governments,
promoting financial inclusivity.
Ethical investing aligns with Shariah principles, promoting investments in
businesses that adhere
to ethical, social, and environmental standards. It ensures responsible
wealth creation,
contributing to societal welfare and environmental sustainability.
Getting started is simple. Reach out to us through our contact page or
schedule a consultation.
Our experienced consultants will guide you through the process,
understanding your specific
needs and tailoring our services to provide effective Shariah-compliant
solutions for your
financial endeavors.
"Shari’ah Compliant" refers to an instrument, transaction, or contract that
adheres to Islamic
principles and guidelines.
Gharar denotes excessive uncertainty in a contract, making it void. It
refers to ambiguity about the
subject matter, quantity, quality, price, delivery, and payment terms.
Islamic finance operates on principles of profit and loss/risk sharing,
ensuring that profit is earned by
sharing in risk-bearing activities, promoting trade and productive
investment.
| Riba | Sale |
|---|---|
| Interest (Ar-Riba) | Profit Margin from Trade (Ar-Ribh) |
| Money as a commodity. Lender lends the money | Goods as an object. Bank use goods as a commodity |
| Relationships: Debtor-Creditor | Relationship: business relationship, partnership |
| Just a money transaction | Monetary and Real Sector related strong, so encourage the acceleration of the flow of goods, production and employment. |
| If non-performing loan was getting higher, then the interest will be a compound interest | Margins and selling prices unchanged |
| No trade transaction | Fulfill buying and selling principles |
| Determining the interest is not considering the profit and loss | Determination of the profit-sharing ratio in Aqad, based on the profit and loss |
| The percentage of interest previously determined, based on the lending amount | The profit sharing is accordance with the agreed ratio |
| If loss happened, it is only covered by the Borrowers, based on fixed interest payment as promised in the agreement | If loss happened, both parties will cover the loss |
| The interest must be paid by the borrower regardless of the business success or failure | The success of the business is going to be both parties’ concern |
Islamic finance refers to financial activities that comply with Islamic law
(Shariah). It prohibits
interest (riba) and promotes ethical and socially responsible investments,
ensuring wealth
distribution and economic stability.
We specialize in providing comprehensive Shariah-compliant financial
solutions. Our services
include Shariah advisory, product structuring, compliance audits, risk
management, and
guidance on ethical financial practices.
Profit and loss sharing (PLS) is a fundamental concept in Islamic finance.
It means that both the
investor and entrepreneur share profits and losses in a mutually agreed
manner. This approach
encourages risk-sharing and fair wealth distribution.
Shariah-compliant financial solutions offer businesses access to ethical
funding sources, enhance
corporate social responsibility, and foster sustainable growth. They also
attract socially conscious
investors and expand market reach.
Client confidentiality and data security are paramount to us. We employ
industry-standard
security measures to safeguard your information and ensure that our
consulting services are
conducted with the utmost privacy and professionalism.