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• Relating to the sources of

Islamic law, it is the
customs and the usages of
a particular society.

• Merchandise, stock-in-trade. Jurists apply

this term in different connotations: (a)
sometimes it is applied to everything except
(b) sometimes it is applied to everything except
cash, eatables, garments and immovable
(c) sometimes it is applied to everything except
cash, measurable, weighable, animals and
immovable property.

• One-tenth. Tech: A tax on the agricultural

production of lands levied only on Muslims at
the rate of 10 per cent if the land is irrigated by
rainfall and at the rate of 5 per cent on the
artificially_ irrigated lands. Ushr is not levied, if
there is no production. It is also known as
Zakat al-ard. The Zakat is levied on moveable
property if it remains in one's possession for
one year, but the ushr is payable on each crop.

• The ushr is payable on the production of the

land even if the owner is a minor or a lunatic.
The ownership of land is not a condition for
ushr because it is payable on waqflands as well
as on the produce of the land being tilled under
a contract of Muzara. It is levied on the gross
production. The cost of the production is not
accounted for prior to the assessment of the
ushr. The ushr revenues are usually spent on
those accounts on which the Zakat is spent.

• One-tenth. Tech: al-Usher was imposed

on the merchants who came to Muslim
lands from non-Muslim countries which
had no treaty with Muslims. Eventually,
al-usher were extended to all the
caravans, whether for internal or
external trade, and to Muslim and non-
Muslim merchants.
• For a Muslim merchant, usher were the
same as 2.5 per cent annual Zakat on
merchandise. A Dhimmi had to pay
double what a Muslim paid, whereas a
merchant from a foreign country which
had no relations with Muslims had to pay
double what a Dhimmi paid. It used to be
an important source of revenue for the
Muslim state.

• Commission, Fees or
Wages in return of
services performance or
efforts on assignment.
Al-Fard Al-Kifa

• Socially, collectively or obligatory duty

to be performed such as marriage,
funeral or mosque gathering. It can also
be classified as the duties that an
individual cannot perform and State
take the responsibility as Tax
Collecting, Road Building, Water
Treatment, and Health Care etc.

• Any thing that is found

lying upon the ground and
takes away for the
purpose of preserving it in
the manner of a trust.

• To keep valuable items

in trust of the owner of
the item.

• Resale on discount from

the original declared

• Unconditional Power of

• Keeping valuable asset

as collateral against

• Safekeeping
Awkaf /Awqaf

• Institution for keeping

unclaimed assets for the
benefit of poor.

• Margin against the

purchase or equity of
buying party in
Morabaha Financing as
• Ahad: Decide
• Amal: Act
• Alam: Charity
• Ameer: Head of
• Amarat: Wealthy
• Ahasan: Blessings
• Ashab: Followers of
Prophet (PBUH)
• Ashara: Quarterly
• Adal: Justice
Bai' Al-Istijrar

• Supply contract or an agreement

between buyer and seller for
supplying agreed goods on
regular basis and on agreed price
with agreed mode of payment.
Bai Muajjal

• Deferred Payment Contract or Goods sale

on credit through a financing mode in
which seller allows the buyer to pay the
price of a commodity either in lump sum or
in pre-agreed installment within pre-agreed
at a future date in a lump sum or in
installments. The price of commodity is
pre-agreed with inclusion of financier
Bai al-Dayn

• Debt financing: Bai al-Dayn is a

short-term facility with a
maturity of not more than a
year. Only documents support
debts arising from bona fide
commercial transactions can
be traded.
Bai al Salaam

• Contract of sale of goods where

the price is paid in advance and
the goods are delivered in the
• Pre-paid purchase
Bai Bithaman Ajil

• Deferred payment sale of goods

on a deferred payment basis at
a price, which includes a profit
margin agreed to by both
• Baitul Maal: Treasury or
House of Wealth
• Baliegh: Matured after
reaching the age of 14
• Bait: Acceptance of Authority
Dinar or Dirham

• It is a ancient currency
introduce in the Arab
State in an early period.

• A requirement, or an emergency
situation that Sharia permits to
preserve life at any means and
assure the safety of an individual
or the community.

• An interpretation to the matter

that need the clarification in
accordance to the Islamic
Teaching which is given by the
Islamic Scholar having academic
qualification to issue such

• Duty

• Order or Degree by
Judge or State.

• Islamic jurisprudence in
accordance to the Islamic
Shariah and an important part
and the base of Islamic

• Jurist qualified in Islamic law and

Islamic Sharia according to the
five leading teachers: Maalik,
Abu-Hanifa, Shafi'e, Ibn-Hanbal
and Jaafar Siddiq.

• Ambiguity, vulnerability, chance or risk.

Like any sale or purchase of commodity
which is not present at spot or a sale
that involve risk or hazard of one party
of the transaction. Also an act of
dishonesty by ignorance by one or
more parties of a contract..

• The following are some examples:

• Selling goods that the seller is unable to deliver
• Selling known or unknown goods against an
unknown price, such as selling the contents of a
sealed box
• Selling goods without proper description, such
as shop owner selling clothes with unspecified
• Selling goods without specifying the price, such
as selling at the 'going price'

• Making a contract conditional on an

unknown event, such as when my
friend arrives if the time is not
• Selling goods on the basis of false
• Selling goods without allowing the
buyer the properly examine the goods

• The sayings of Prophet

Muhammad, May Peace Be
upon Him as an
explanation of Holy Quran.

• Permissible in accordance to
Holy Quran. An activity may be
economically sound but may not
be allowed in the Islamic society
if it is not permitted by the

• Hajj means pilgrimage to Mecca

and other holy places and
performed at a specific period,
one week from the 8th day of the
Islamic month of Zil-Hajj to the
13th day of that month in the
Islamic lunar calendar.
Hannefi laws

• Islamic school of law

founded by Imam Abu
Hanifa. Followers of this
school are known as
Hannefi .

• Bill of exchange, Promissory Note,

Cheque or Draft. Technically it is kind of
a negovciable instrument or act in which
a debtor passes on the responsibility of
payment of his debt to a third party who
owes the former a debt. Thus the
responsibility of payment is ultimately
shifted to a third party.

• Hawala is also an act for settling international

accounts, by transferring funds. The term was
also used historically in public finance during
the Abbasids period to refer to cases where
the state treasury could not meet the claims
presented to it and it directed the claimants to
occupy a certain region for a specified period
of time and procure their claims themselves by
taxing the people.

• This method was also known as

'Tasabbub'. The taxes collected and
transmitted to the central treasury were
known as 'Mahmul', while those
assigned to the claimants were known
as 'Musabbub'.

• Unlawful transactions, goods or

acts which are not permissible
under Islamic law.

• Gift awarded voluntarily in return

for loan given.

• Letting equipment or asset on lease. Leasing is

also a lawful method of earning income
according to Islamic law. In this method, a real
assets such a machine, a car, a ship, a house,
can be leased by one person (lessor) to the
other (lessee) for a specific period against a
specific price. The benefit and cost of the each
party are to be clearly spelled out in the contract
so as any ambiguity (Gharar) may be avoided.
Ijarah Thumma Al-Bai'

• Leasing and subsequently purchase in

two contracts undertaken and
subsequently as follows:
• 1. Ijarah contract (leasing/renting); and
• 2. Bai' contract (purchase)
Ijarah Thumma Al-Bai'

• In Ijarah contract hirer leases the goods

from the owner at an agreed rental over
a specified period. Upon expiry of the
leasing period, the hirer enters into a
Bai' contract to purchase the goods
from the owner at an agreed price.
Ijarah wa Iqtina

• Lease to Purchase same as Ijarah

without committing to buying the
equipment at the end of the lease
period. Fees previously paid constitute
part of the purchase price. This type of
lease to purchase agreement is
commonly used for home financing.

• Lease Purchase like in Ijarah, except

that the client is committed to purchase
the equipment at the end of the rental
period. It is pre-agreed that at the end of
the lease period the client will purchase
the equipment at an agreed price from
the bank, with rental fees paid to date,
forming part of the price.

• Effort, hard work or

thoroughness. Technically
making an effort to derive or
formulate a rule of law on the
basis of evidence found in the
Islamic teaching.

• Belief, Faith or Convection


• A contract of getting hold of of goods by

specification or order where the price is
paid progressively in accordance with
the progress of a job. An example would
be for the purchase of a house to be
constructed, payments are made to the
developer or builder according to the
stage of work completed.

• Gathering

• predetermined price for performing

any service. Technically applied in
the model of Islamic banking on
Bank charges and commission
which are taking to mean to be
Ju’alal by the jurists and regard as

• It is a guarantee provided by a
person to the owner of goods
who had placed his goods with a
third party. The guarantor and the
3rd party must meet any
subsequent claim by the owner
for his goods.

• Gambling or playing games of

chance with the intention of
making an easy, unearned profit;
a form of Gharar.
• Trust Financing, Skill financing,
Financing keeping the experience and
reputation of professional. Modarib
(Professional) is managing trustee while
Rab El-Maal (Financier) responsibility is
to invest the funds In case both shall
agree on pre-agreed accrued and pre-
costing profitability and relative share of
any profits.
Monfa Al Sharikat

• Profit-sharing between parties

of financial agreement by
dividing profit on a pre-
determined ratio. Losses are
borne by the provider of

• Professional who make

efforts in a Modaraba contract
or person or party who acts
as entrepreneur.

• An economic business
deal or an act between two
or more parties for a
specific purpose.

• Mode of Financing for trading

purpose. A contract of sale in
which the seller declares his cost
and profit of the commodity that
the Morahib need and request.

• User and consumer of goods

received under Morabaha
financing mode.

• Mode of Financing which is an agreement under

which the Financier provides funds which are
come together with the funds of the business
enterprise and others. All providers of capital are
entitled to participate in the management but not
necessarily required to do so. The profit is
distributed among the partners in predetermined
ratios, while the loss is borne by each partner in
proportion to his contribution.

• Professional who manage

the transaction under
Musharaka Mode of
Financing Agreement.

• Financing Agreement for

Irrigation purpose or to develop
the irrigation system or irrigation
to farms and agricultural fields.

• Financing It is a contract in which

one person agrees to till the land
of the other person in return for a
part of the produce of the land.

• Exemption limit for the payment

of Zakat. It is different for
different types of wealth.
Qard al Hasana

• A virtuous loan. A loan with

the stipulation to return the
principal sum in the future
without any increase.
Qard Hassan

• An interest-free loan given for

either welfare purposes or for
fulfilling short-term funding
requirements. The borrower is
only obligated to repay back the
principal amount of the loan.
Qard Hasan

• An interest-free loan given

mainly for welfare purposes.
The borrower is only required
to pay back the amount
Qard ul Hassan

• benevolent loan A loan or debt

extended which is absolutely free from
interest. The borrower is only required
to repay the principal amount borrowed,
but he may pay an additional amount at
his absolute discretion, as a token of

• Gambling. Technically, an agreement in

which possession of a property is
contingent upon the occurrence of an
uncertain event. By implication it applies
to those agreements in which there is a
definite loss for one party and definite gain
for the other without specifying which
party will gain and which party will lose.

• Thinking & Discussing


• Skill financing. Ancient

name of Modaraba
• Qanoon: Law
• Qanoon-e-Riasat: Law of State
• Qanoon-e-Qudrat: Law of the
• Qanoon-e-Shahadat: Law of
• Qanoon-e-Wirasat: Law of
• Qanoon-e-Milkiat: Law of
• Qanoon-e-Haq: Right of Law

• Person who invests the

capital in Financial

• Owner of capital

• Collateral

• An excess or increase. Technically, an

increase in principal of a loan
transaction or in exchange of a
commodity, accrues to the owner
(lender) without giving an equivalent
counter value or recompense in return
to the other party. It covers interest both
on commercial and consumer loans.

• This term literally means an increase or

addition. Technically it denotes any
increase or advantage obtained by the
lender as a condition of the loan. Any risk-
free or "guaranteed" rate of return on a
loan or investment is riba. Riba, in all
forms, is prohibited in Islam. In
conventional terms, riba and "interest"
are used interchangeably.

• Literally, an increase or addition.

Technically it denotes in a loan
transaction any increase or advantage
obtained by the lender as a condition of
the loan. In a commodity exchange it
denotes any disparity in the quantity or
time of delivery.

• A sale transaction in which a commodity is

exchanged for the same commodity but
unequal in amount and the delivery of at least
one commodity is postponed. To avoid riba-al-
buyu, the exchange of commodities from both
sides should be equal and instant. Riba-al-
buyu was prohibited by the prophet
Mohammad to forestall riba (interest) from
creeping into the economy from the back door.
Riba al-fadl

• Usury of trade. It is an
alternative term for Riba al-
Riba al-Diyun

• Usury of debt
Riba al-Nasia

• Increment on the principal of a loan payable by

the borrower. It refers to the practice of lending
money for any length of time on the
understanding that the borrower would return to
the lender at the end of this period the amount
originally lent together with an increment in
consideration of the lender having granted him
time to pay. The increment was known as riba al-
Nasia. It was in vogue in Arabia in the days of
the Prophet Muhammad.

• Banking instrument of the

early Muslim period. It was a
payment order to draw money
from the bank.
• Rasad: Logistic for Goods
• Rah-gu-zari: Octori or Tool Tax.
• Riasat: State
• Riasat Al Falai: Welfare Stare
• Raiees: Rich or
Prominent Person
• Rukun: Member
• Sadaqah: Charitable giving.

• The way of Allah as shown by

the Qur'an and the Sunnah of
the Prophet Muhammad. The
term is used to refer to the
Islamic law.

• Islamic jurisprudence, based upon

defined sources and methods of
determining precedent. The primary
source is the Quran. In order, the
secondary sources include hadith
(Sunnah), consensus, logical deduction
and analogy, and past practice.
Literally, a path to pure water.
Sharia Supervisory Board

• The scholars responsible for

insuring that products and
operating procedures comply
with the Islamic principles of

• Islamic common law derived from

3 sources: the Quran; the Hadith
(sayings of the Prophet
Muhammad); and the Sunnah
(practice and traditions of the
Prophet Muhammad).

• A contract between two or more

persons who launch a business
or financial enterprise to make

• Musharaka

• A type of banking instrument used for the

delegation of credit during the Muslim period,
especially the Abbasids period.
• It was used to collect taxes, disburse
government dues and transfer funds by
• It was the most important banking instrument
used by traveler merchants.

• In some cases Suftajah were payable at a

future fixed date and in other cases they were
payable on sight.
• Suftajah is distinct from the modem bill of
exchange in some respects.
• Firstly, a sum of money transferred by
Suftajah had to keep its identity and payment
had to be made in the same currency.

• Exchange of currencies could not take place

in this case.
• Secondly, Suftajah usually involved three
persons. 'A' pays a certain sum of money to 'B'
for agreeing to give an order to 'C' to pay back
to 'A'.
• Third, a Suftajah could be endorsed. The
Arabs had been using endorsements (Hawala)
since the days of the Prophet Muhammad.
Sallallahu Aalaihi

• (SAW) This is a salutation used

by Muslims whenever referring to
the Prophet Muhammad. It is
abbreviated as 'SAW'. It means
'peace and blessings of God be
upon him'.
• Tawan: Tax or Penalty
• Taawon: Cooperation
• Tehrir: Written
• Tijarat: Trading
• Tajir: Trader
• 1. Mutual support which is the basis of
the concept of Insurance or solidarity
among Muslims.
• 2. This is a form of Islamic insurance
based on the Quranic principle of
Ta'awon or mutual assistance.
• It provides mutual protection of assets
and property and offers joint risk
sharing in the event of a loss by one of
its members.

• Takaful is similar to mutual insurance in

that members are the insurers as well as
the insured.
• Conventional insurance is prohibited in
Islam because its dealings contain
several haram elements including gharar
and riba, as mentioned above.

• Brotherhood, fraternity. Tech: The

interrelationships of Muslims in the
society are regulated by a sense of
• It is the basis of mutual benevolence in
the society.
• Some of the economic relations are also
governed by ukhuwah.

• Grant of land or property by state or by

an individual free of cost, along with
rights of ownership.
• AI-umra are unencumbered grants,
which the descendants of the grantee
inherit as any other property.

• But in certain cases the donor may

condition its use by the donee during
the latter's life-time.
• In such a case the gift is inherited by the
donor and his heirs and is not passed
on to the heirs of the donee.

• A weight of varying magnitude. Tech:

Equivalent to 40 dirhams or 119.07
• It is known as uqiyah al-fiddah in
distinction to uqiyah al-ashya, which is
equal to 7.5 dirhams or 23.782 grams.

• A safe custody contract

between the depositor
(customer) and the
custodian (bank).

• Nominating another person to

act. A situation where a person
nominates or appoints another
person to act on his behalf.
• In Letter of Credit or Wakalah
Contract The bank acts as the
agent of the customer.

• Remittance. Transfer of funds/debt

from the depositor's/debtor's
account to the receiver's/ creditor's
account where a commission may
be charged for such service.

• The Waqf property can

neither be sold nor inherited
or donated to anyone. Awqaf
consists of religious
foundations set up for the
benefit of the poor.

• An oath which may land one in disaster.

• A false oath made in order to
appropriate the property of someone
else unlawfully.
• Such an oath is called al-ghamus, since
it takes its bearer to the fire of Hell.

• Obligation which is
prescribed by Islam on all
persons having wealth
above an exemption limit at
a rate fixed by the Shariah.
Zakat al-Fitr

• Payable by every Muslim

able to pay, at the end of
Ramadan (the month of
Zakat al-Nafs

• Poll Tax.
Zakat al Maal

• An annual rates on the wealth of a

Muslim (above a certain level).
• The rate paid, differs according to
the type of property owned.
• This tax is earmarked for amongst
others for the poor and needy.
• Zamin: Guarantor
• Zamanat: Guarantee
• Zahir: Clarity