INTRODUCT

ION TO
ISLAMIC
FINANCE
BY: NAJAH NAWARIAH BT AMINUDIN
SITI NURNATASHA BT ABDUL JABAR.
 SUBTOPIC:

Philosophy of Principle of Shariah Fundamental Development of

Islamic Finance Islamic Framework for Prohibited Islamic Finance in
Economics and Islamic Finance Elements in Malaysia
Finance Islamic Finance

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PHILOSOPHY OF ISLAMIC FINANCE
oAvoiding interest (Riba)

-- Riba is defined as an excess over and above the principal of loan without any countervalue

oAvoiding Gharar

-- Gharar in Islam refers to any transaction of probable objects whose existence or description are not certain, due to lack of
information and knowledge of the ultimate outcome of the contract

oAvoiding gambling (maysir)

-- Maysir refers to the easy acquisition of wealth by chance, whether or not it deprives the other’s right, also, any form of business
activity where monetary gains are derived from mere chance, speculation or conjecture

oAvoiding producing & selling impure goods

oAvoiding producing & selling goods that are of no use, therefore of no value
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PRINCIPLES OF ISLAMIC ECONOMICS

Allah SWT is the real owner

Human beings as a khalifah
Distribution of Zakat
Prohibition of Riba
Al-adl Wal Ihsan (Justice & Spiritual)
Integration of values in behavior, and economic activities and banking (avoid
gharar)
Positive attitude towards economics activities and development
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PRINCIPLES OF ISLAMIC FINANCE

Mudharabah
o Those who have money (investor) would assign their money to another party (entrepreneur) to carry out a business and the profit
will be split according to the ratio agreed by both party

Musyarakah
o Means a joint-venture agreement between two parties to engage a specific business activity to make profit

Murabahah
o Refers to the sale of goods at a price of the cost plus a profit margin agreed upon by both parties concerned

Ijarah
o Means contract to lease or rent or hire

Quardhul Hassan
o A loan which the borrower is obligate to repay the lender the exact principal sum borrowed

Wadiah
o An agreement between the owner of assets with another party (the keeper)

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SHARIAH FRAMEWORK FOR ISLAMIC
FINANCE
DEFINITION OF SHARIAH
Shariah literally means a well-worn path to a water source, and Islamically, it is
a term that is used to describe Islam as a complete way of life.
Water is essential to human life and the religion of Islam is essential to complete
spiritual wellbeing.
Thus, Shariah is a set of laws that provide a clear and straight path to fulfillment
in this life and success in the Hereafter.
The Shariah is made up of commandments, rules and regulations that are
designed by God to protect and benefit all of humankind.
It also provides the framework for a functioning society with specific moral,
ethical, social and political codes of conduct.
The Shariah allows each individual to form an ongoing relationship with God.
Its laws provide the guidance 6
SOURCES OF ISLAMIC LAW

Primary sources Secondary sources

• Quran • Istihsan
• Sunnah • Istishab
• Ijma’ • Maslahah Mursalah
• Qiyas • Sadd al-Dharai’i
• Urf

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FUNDAMENTAL PROHIBITED
ELEMENTS
IN ISLAMIC FINANCE
Prohibition of Riba

Prevention of Gharar

Prohibition of Maysir
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DIFFERENCE BETWEEN ISLAMIC FINANCE AND
CONVENTIONAL FINANCE

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 DEVELOPMENT OF ISLAMIC FINANCE IN
MALAYSIA

The Islamic financial system in Malaysia has witnessed a tremendous growth

in demand, acceptance and development since its introduction in 1963. It
began with the establishment of the Malaysian Pilgrims Fund Board (Tabung
Haji) and the country’s first Islamic bank, Bank Islam Malaysia Berhad (BIMB)
, which began operations on 1 July 1983.
Since then, BIMB has become the core component of Malaysia’s 
Islamic financial system. With its initial objective confined to the development
of a viable and modern alternative to meet financial needs, the Malaysian
model is now one of the most advanced Islamic banking systems in the world.

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OPPORTUNITIES & CHALLENGE TO SUSTAIN
DEVELOPMENT IN GLOBAL FINANCE SYSTEM
Tools to Attract Depositors
Need for Theoretical Research
Extra management Burden of the Islamic Banks
Use of Media

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REFERENCES
 https://www.linkedin.com/pulse/principles-islamic-economics-marifa-team
https://www.theedgemarkets.com/article/islamic-finance-institutions-need-rethink-r
oles-current-times-%E2%80%94-bank-rakyat
https://www.sciencedirect.com/science/article/abs/pii/S1044028316300424
https://www.sciencedirect.com/science/article/pii/S2214845017300194

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