Introduction to Islamic Finance
MUFTI MUHAMMAD TAQI USMANI
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.
