q.2 Explain the money market and capital market instrument.

Q.1 c Briefly explain the two tier model of Islamic banking.

the Islamic bank serves as rab al-mal (capital provider, financier) in its relationship with clients
and mudarib (investor, entrepreneur) in its relationship with depositors. The bank, on its own,
may not have the capacity to assume the role of investor for different reasons such as when it
doesnt have enough funds to enter a mudaraba contract with an entrepreneur or money
manager.

q.1d) Define quard al hasna and bai-istisna.

Qard al-hasan translated as "beautiful loan" or "benevolent loan", is a type of loan in Islamic
banking without any interest.

Bai' Al-Istisna refers to a sale by order of good / property, which is to be constructed /

manufactured, and delivered at a specified future date.

Q.3 a) Define ijrah and wa iqtina.

Ijarah- , al-Ijrah, "to give something on rent"[1][2] or "providing services and goods temporarily for a
wage"[

Wa iqtina- a financing instrument used by practitioners of contemporary Islamic finance in which a

financier purchases reusable merchandise (e.g. airplane, buildings, cars) and then leases them to
clients in return for an agreed upon rental fee (to be paid for the length of the lease period) and an
agreement that the client will purchase the merchandise at the end of the lease period..

Q.3 b) Differentiate between hiba and rehen

Heba is an Arabic word which means gift

Q.3 c) Differentiate between al wadiah and current account

Al-Wadiah Current Account is operated on the principles of Al-Wadiah. Bank plays the role of
Safe Custodianship in this case. Bank commits to refund customers money deposited in these
accounts on the demand of customers. On the other hand the Bank takes permission from
customers that the Bank may utilize their money. Customers may operate these accounts as
many times as required. No profit is disbursed in these accounts and depositors do not bear any
loss.

What is a current account?

This is an account where you can: Deposit Put money in to a bank and Withdraw take money out at any
time.
Q.3 d) differentiate between normal saving account and mudarabah saving account

Mudarabah savings account- one have the choice of saving money with bank for t profit sharing
(Mudharabah). funds are invested in Shariah based activities. The profits gained from these investments
will be shared between you and the Bank at a pre-agreed profit sharing ratio.

What is a 'Savings Account'

A savings account is an interest-bearing deposit account held at a bank or another financial institution
that provides a modest interest rate. Banks or financial institutions may limit the number of withdrawals
you can make from your savings account each month, and they may charge fees unless you maintain a
certain average monthly balance in the account.
Q.4 a) Who is mudarib and sahib al maal. Explain the terms and condition of musawamah.
sahib al-mal (capital provider, financier) in its relationship with clients and mudarib (investor,
entrepreneur) in its relationship with depositors.
Terms and condition of musawamah:

1. The Bank (purchaser) places an order with its customer for a given quantity of
goods, a value corresponding to its financing need.
2. The customer (seller) sends to the Bank a proforma invoice indicating the nature,
the quantities and the price of the goods ordered.
3. Both parties agree to the terms of the transaction and sign a MUSAWAMAH
contract with agreed terms (nature of goods, quantities, prices, terms and
conditions of delivery and / or sale on behalf of the Bank etc ).
q.4 b) Diminishing musharaka

q.5 a) Define musaqat

A partnership (sharikah) in which one party presents designated plants/trees that produce
edible fruits to another (irrigating worker- musaqi or saqi) who undertakes irrigation works in
consideration for a common defined share in the fruits. In essence, musaqa is a form
of mudarabah which is confined to irrigation activities.

q.5b)differentiate between waqala and juala

Wakala is the agency contract which is used widely in Islamic Finance.

q.5 c) define by ariyah- To allow another person receive benefit from ones property without any
consideration. It is one of the customs of the Muslim society.

By istisna- In Islamic finance, istisna' is generally a long-term contract whereby a party undertakes to
manufacture, build or construct assets, with an obligation from the manufacturer or producer to deliver
them to the customer upon completion
q.5 d) difference between murabaha and bai mujjal

murabaha mujjal
Sale at a mrak up profit Credit sale
No loss Profit and loss
It may be in cash or credit It must be in credit
Client should be informed about the purchase Not necessary to inform the client
price

q.6 b) basic features of bai salam

Bai Mujjal-

1. deferred payment sale at fixed price.

2. It is permissible to make the promise binding upon the Client to purchase from the Bank,
3. It is permissible to take cash / collateral security to Guarantee

4. The Bank may sell the goods at a higher price than the purchase price to earn profit.
5. The price once fixed as per agreement and deferred can not be further increased.