Islamic Finance By MUFTI MUHAMMAD TAQI USMANI

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Introduction to Islamic Finance 

MUFTI MUHAMMAD TAQI USMANI

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AUTHORS

MUFTI MUHAMMAD TAQI USMANI

ABOUT BOOK

Over the previous few decades, the Muslims are attempting to restructure their lives on the Islamic principles idea. As they have strong feeling about the political-economic dominance of the West, throughout past centuries, has disadvantaged them of the divine guidance, particularly within the fields of socio-economics. Therefore, after acquiring political freedom, the lots square measure try for the revival of their Islamic identity to arrange their collective life in accordance with the Islamic teachings. In the economic field, it absolutely was the most important challenge for such Muslims to reform their monetary establishments to bring them in harmony with the dictates of Shari‘ah. In associate degree setting wherever the entire financial set-up was supported interest, it absolutely was a formidable task to structure the monetary establishments on associate degree interest free basis. The individuals not familiar with the principles of Shari‘ah and its economic philosophy typically believe that abolishing interest from the banks and monetary establishments would create them charitable, instead of industrial, considerations which provide monetary services while not a come. Obviously, this can be completely a wrong assumption. In keeping with Shari‘ah, interest free loans square measure meant for cooperative and charitable activities, and not ordinarily transactions for industrial, except in a very restricted vary. Up to now as industrial funding thinks about, the Islamic Shari‘ah incorporates a completely different set-up for that tancity. As previously discussed the principle is that the person lending cash to a different person must decide whether or not he needs to assist the other party or he wants to share his profits. If he want to give assistance to receiver, he has to rescind from any claim to any further quantity. His principal can be secured and secured, however no quantity come over and on top of the principal is legitimate. However if he's advancing cash to share the profits attained by the opposite party, he will claim a stipulated proportion of profit truly attained by him, and should share his loss also, if he suffers a loss. It is therefore obvious that exclusion of interest from monetary activities doesn't essentially mean that the financier cannot earn a profit. If funding is supposed for an advert purpose, it can be based on the conception of lost and profit sharing, for which musharakah and mudarabah are designed since the terribly inception of the Islamic law merchant.
There are, however, some sectors wherever funding on the idea of musharakah or mudarabah isn't possible or possible for one reason or another. For such sectors the up to date students have suggested another instruments which might be used for the purpose of funding, like murabahah, ijarah, salam or istisna. Since last twenty years, these modes of funding square measure getting used by the Islamic banks and monetary formations. However of these instruments don't seem to be the substitutes of interest within the strict sense, and it will be wrong to presume that they'll be used precisely within the same fashion as interest is employed. They need their own set of principles, philosophy and conditions while not that it's not allowed in Shari‘ah to use them as modes of funding. Therefore the content of their basic conception and relevant details might result in confusing the Islamic funding with the traditional system based mostly on interest. The present book could be a revised assortment of my completely different articles that aimed toward providing basic data concerning the principles and precepts of Islamic finance, with special relevancy the modes of financing utilized by the Islamic banks and non-banking monetary institutions. I actually have tried to clarify the essential conception underlying these instruments, the required necessities for his or her satisfactoriness from the Shari‘ah position, and therefore the correct methodology of their application. I actually have conjointly handled the sensible problems concerned within the application of those instruments and their attainable solutions within the light of Shari‘ah. In my capability as chairman / member of the Shari‘ah Supervisory Boards of variety of Islamic banks in numerous elements of the planet, I found the points of weakness in their operations caused chiefly by the shortage of clear perception of the relevant rules and principles of Shari‘ah. This expertise emphasized the necessity for the current book within which I actually have tried to discuss the relevant subject in a very easy manner which can be simply understood by a typical reader WHO had no opportunities to check
The Islamic monetary principles thorough. This humble effort, I hope, can facilitate to know the basic principles of Islamic finance and therefore the details of distinction between typical and Islamic banking. might God Ta‘ala settle for this humble effort, honour it together with his pleasure and create it beneficial for the readers.
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