F.A.Q

Islamic finance refers to financial activities that adhere to Shariah (Islamic law) principles, which prohibit the charging of interest (riba) and promote risk-sharing, asset backing, and ethical investments.

Riba is prohibited in Islam because it involves making money from money without any effort or risk-taking, which is seen as exploitative. Instead, Islamic finance encourages fair profit-sharing and risk-sharing.

Conventional finance operates based on interest and allows for speculation and uncertainty. Islamic finance, on the other hand, prohibits interest and emphasizes ethical investments, asset backing, and risk-sharing partnerships.

The key principles include:

• Prohibition of interest (riba).
• Prohibition of uncertainty or speculation (gharar).
• Promotion of risk-sharing (mudarabah and musharakah).
• Prohibition of investing in unethical or haram activities (e.g., alcohol, gambling, pork).

Organizations consult with Shariah scholars who provide guidance and oversight to ensure that financial products and transactions comply with Islamic principles. They also conduct regular audits and reviews.

Common modes include:

• Murabaha (cost-plus financing).
• Mudarabah (profit-sharing partnership).
• Musharakah (joint venture partnership).
• Ijara (leasing).
• Sukuk (Islamic bonds).
• Qard al-Hasan (benevolent loan).

No, Islamic finance principles can benefit anyone seeking ethical and socially responsible investment options. Many non-Muslims also use Islamic financial products due to their adherence to ethical guidelines and risk-sharing principles.

Islamic finance uses a concept called Takaful, which is based on mutual cooperation and shared responsibility among participants. It operates without interest and adheres to Shariah principles, ensuring that risk is shared among all participants.