Pillars of Islamic Finance

AIMS only offers Islamic consultancy services that are compliance with Sharia. The core value of any Sharia compliance activity is based on value addition or value creation. Islamic Finance is easy to understand and is based on five main pillars.

THE BAN ON INTEREST

Interest must not be charged or paid on any financial transaction, as interest (or the intrinsic value of the money) is deemed unlawful by Sharia. Money cannot be used to create more money or add value to money.

THE BAN ON UNCERTAINTY OR SPECULATION

Uncertainty in contractual terms and conditions is forbidden.However, risk taking is allowed when all the terms and conditions are clear and known to all parties. Speculation in all forms or shape is generally non permissible.

THE BAN ON FINANCING ECONOMIC SECTORS

Financing of industries deemed unlawful by Sharia such as gambling, alcohol, weapons, work, phonographic or others that are interest based are forbidden. Additional limitations and restrictions may apply based on the underlying situation.

THE PROFIT AND LOSS SHARING PRINCIPLE

Parties to financial transaction must share in the risks and rewards attached to it. No transaction in Islamic finance can be subject to guaranteed returns while third parties can generally guarantee the performance on the customer itself.

THE ASSET-BACKING PRINCIPLE

Each financial transaction must refer to tangible, identifiable underlying asset.Islamic finance should consider creating or adding value on socio-economic uplift of the overall society.