 What is Islamic Shari’a?
The main sources of Islamic shari’a (law) are the principles and teachings of Holy Quran and the practices and teachings (Sunna & Hadith) of Holy Prophet Mohammed (PBUH)
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Why Islamic Finance?
Islamic banking is a rapidly growing phenomena in the global financial markets.
There has always been a demand among Muslims for financial products and services that conform to the Shari’a (Islamic law). Based on this demand, a number of banks all over the world have started offering products and services that are in compliance with Shari’a.
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It appears that Islamic banking has been around for some time. Why is it then that Islamic banking seems to have grown so quickly for the last 5 to 10 years only?
The increase in demand is due to the growing awareness among the consumers for Shari’a compliant solutions, as well as the availability of new innovative Shari’a compliant financing structures that meet the sophisticated financial needs of consumers.
Furthermore, during the last few years adequate required regulatory monitoring and control structures through central and government bodies are now given attention which was not there before. This has provided critical impetus to this sector.
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Is Islamic banking also available in non-Muslim countries?
Yes, such as UK, USA, France, Canada, China, Russia, Singapore etc.
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What is the difference between Islamic banking and Conventional banking?
The main difference between Islamic and conventional is that Islamic banks prohibit interest. Unlike conventional banks, Islamic banks disallow lending money to money but rather promote trade (buy and sell) transactions and partnerships.
In Islamic banking, wealth can be generated through legitimate trade and investment. Any gain related to this trading is shared between the person providing the capital and the person providing the expertise.
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What is non-interest banking? How can non-interesting banking be viable?
Unlike Conventional banking which is primarily interest- based, Islamic banking avoids “Riba” – also considered interest – which means money cannot be lent to make money. However in non-interest banking, money is used to buy an asset and the bank thereafter earns a profit by selling the asset at a higher price or leasing the asset for periodic rentals.
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Aren't Islamic banking products in essence simply repackaged conventional banking products?
Whilst it may appear so, this is not the case. The underlying difference is in the methodology & product structure that forms the basis of the transaction. Money cannot be lent to make money. There must be some underlying productive asset that is either traded or leased. Hence Islamic banking transactions are real asset based whilst conventional banking transactions are financial asset based.
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What are the facts & figures of Islamic Finance?
Presently approximately 300 IFIs and Islamic windows are operating globally with an estimated size of over USD 900 billion and growing at a rate of 15% annually – Malaysia, Saudi Arabia, Bahrain, UAE, Kuwait, Qatar, Sudan, Iran, Pakistan, Bangladesh, Egypt. Indonesia, Brunei etc.
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How can CBD, which is primarily interest-based, offer Islamic baking products?
CBD is a customer-driven financial institution and the reason we provide Islamic products is to serve a genuine financial need amongst our clients. This is again demand driven and a full spectrum of products will be offered to our valued clients.
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Since CBD is an interest-based bank, what would be an acceptable source of funding for Attijari Al Islami?
The source of funds would be customers, and Bank(s). The Islamic funds will be segregated from conventional funds, and will not be invested or mixed in those activities which are prohibited by Shari’a.
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Who are your shari’a board members and what is their role?
The Attiijari AL Islami Supervisory committee comprises three of the most leading scholars in the field of Islamic banking :
Dr. Hussein Hamid Hassan – Chairman Attijari AL islami
Dr. Ojeil Jassim AL Nashmi – Member Attijari AL Islami Shari’a Board
Dr. Ahmed Abdullah – Member Attijari AL Islami Shari’a Board.
The role of these scholars is to review the operations of Attijari Al Islami (the Islamic division of CBD), supervise its development of Islamic products, and determine the shari’a compliance of these products.
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Do you employ only Muslims?
No, we employ the best person for the job regardless of colour, creed, gender, ethnicity etc. We are committed to the equal opportunities policy.
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What Islamic products Attijari Al Islami is offering to clients?
At CBD, we constantly strive to provide financial solutions that meet the requirements of our customers. Attijari Al Islami offers Islamic banking products/services which combine our financial expertise with your enduring values.
Following are the products offered for consumer and commercial segments:
Consumer:
Current accounts, savings accounts, general investments accounts (time deposit).
Financing products : Car Finance and home lease
Corporate and Commercial : LCs Collections and guarantees
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What is Qard al Hasan?
A loan extended without interest; gracious loan without interest in which the benefit to be derived is gifted by the owner to the beneficiary .
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What constitutes Riba?
Simply, riba is interest. "Any amount, big or small, over the principal, in a contract of loan or debt is "riba" and it is prohibited by the Quran, regardless of whether the loan is taken for the purpose of consumption or for some production activity."
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What is Wakala?
A contract of agency in which one person appoints someone else to perform a certain task on his behalf, usually against a certain fee.
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What are the Major modes of Islamic banking finance?
Following are the main modes of Islamic banking finance:
Murabah
Literally, it means a sale on mutually agreed profit. Technically, it is a contract of sale in which the seller declares his cost and profit. Islamic banks have adopted this as a mode of financing. As a financing technique, it involves a request by the client to the bank to purchase certain goods for him. The bank does that for a definite profit over the cost, which is stipulated in advance.
Ijarah
Ijarah is a contract of a known and proposed usufruct against a specified and lawful return or consideration for the service or return for the benefit proposed to be taken, or for the effort or work proposed to be expended. In other words, Ijarah or leasing is the transfer of usufruct for a consideration which is rent in case of hiring of assets or things and wage in case of hiring of persons.
Ijarah wa iqtina
A contract under which an Islamic bank finances equipment, building or other assets to the client against an agreed rental together with a unilateral undertaking by the bank or the client that at the end of the lease period, the ownership in the asset would be transferred to the lessee. The undertaking or the promise does not become an integral part of the lease contract to make it conditional. The rentals as well as the purchase price are fixed in such manner that the bank gets back its principal sum alongwith with profit over the period of lease.
Istisna’a
It is a contractual agreement for manufacturing goods and commodities, allowing cash payment in advance and future delivery or a future payment and future delivery. A manufacturer or builder aggress to produce
Mudarabah
A form of partnership where one party provides the funds while the other provides expertise and management. The latter is referred to as the Mudarib. Any profits accrued are shared between the two parties on a pre-agreed basis, while loss is borne only by the provider of the capital.
Musharakah
Musharakah means a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses in the joint business. It is an agreement under which the Islamic bank provides funds, which are mixed with the funds of the business enterprise and others. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions.
Bai al-Salam
This term refers to advance payment for goods which are to be delivered later. Normally, no sale can be effected unless the goods are in existence at the time of the bargain. But this type of sale forms an exception to the general rule provided the goods are defined and the date of delivery is fixed. The objects of this type of sale are mainly tangible things but exclude gold or silver as these are regarded as monetary values. Barring these, bai salam covers almost all things which are capable of being definitely described as to quantity, quality and workmanship.
One of the conditions of this type of contract is advance payment; the parties cannot reserve their option of rescinding it but the option of revoking it on account of a defect in the subject matter is allowed. It is also applied to a mode of financing adopted by Islamic banks. It is usually applied in the agricultural sector where the bank advances money for various inputs to receive a share in the crop, which the bank sells in the market. This kind of sale (Salam) also used nowadays as a mode of financing that is also called ‘Parallel Salam’.
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