Aa’mal

Plural of Amal (work) that is required in a partnership or based on which a partnership is formed

Abddan

See Sharikat Al-Amwal

Adl

Adl is a general term which conveys the meaning of justice, equitable dealings and fairness.

Afdal

The best approach or the preferred approach to something

Ahadith

Sayings and traditions of the Holy Prophet Muhammad (PBUH). Singular form is Hadith

Ahkam

Plural of hukm (rule); the ahkam of a contract (legal ef¬fects) as distinguished from its Huquq (rights of performance of the contract).

Ajal

Period; duration for which delivery is delayed.

Ajr

Ajr means compensation or wages charge for delivering services. In an Ijarah (lease) contract, the Ajr is the price paid by the hirer to the hired party in exchange for the services which the latter renders.

Ajr Al-Mithl / Ajrul Mithl

Reasonable wages; wages to which a person would be entitled under normal circumstances or customary in the community.

Al Aariyah

Gratuitous loan of non–fungible objects. Al-Aariyah means loan of a particular piece of property, the substance of which is not consumed by its use, without anything taken in exchange. In other words, it is the gift of usufruct of a property or commodity that is not consumed on use. It is different from Qard that is the loan of fungible objects which are consumed on use and in which the similar and not the same commodity has to be returned. It is also a virtuous act like Qard. The borrowed commodity is treated as liability of the borrower who is bound to return it to its owner.

Al Ghunm Bil Ghurm

This provides the rationale and the principle of profit sharing in Shirkah arrangements. Earning profit is legitimized only by engaging in an economic venture, risk sharing and thereby contributing to the economy. This important Shari’ah rule says that if you want to generate profit then take the risk to justify it.

Al Hisba

System of accountability in an Islamic state in order to check unlawful practices.

Al Kafalah

Literally, Kafalah means responsibility, amenability or surety-ship. Legally in Kafalah a third party becomes surety for the payment of debt. It is a pledge given to a creditor that the debtor will pay the debt; fine etc.

Al-Ajir Al Khas

A hired worker who is contracted to perform a specific task in a specific amount of time by one party.

Al-Khardj Bi Al-Damdn

A principle based upon a tradition; it is perhaps, the most influential principle in Islamic law, applies to contracts, damages, and even crimes.

Al-Maal

Al–Maal in the Islamic Law is the wealth an individual or an organization owns. It Includes Cash, tangible assets, consumable assets, goods in trade and debt receivables.

Al-Mofaviza

General Partnership (one of the types of partnership under Musharaka)

Al-Qard Al-Hassan

Loans fixed for a definite period of time without interest or profit sharing.

Al-Sarf

Meaning exchange for something of similar value. In pre-Islamic times it was exchange of gold for gold, silver for silver and gold for silver or vice versa. In Islamic law such exchange is regarded as “sale of price for price” (Bai al Thaman bil Thaman), and each price is consideration of the other. It also means sale of monetary value for monetary value – currency exchange.

Al-Wadia / Wadiah

This refers to deposits in trust, in which a person may hold property in trust for another, sometimes by implication of a contract.

Al-Wakala Al Mutlaqa

Absolute power of attorney.

Amal

Work; conduct.

Amanah

It refers to deposits in trust. Amanah entails absence of liability for loss except in breach of duty. Current Accounts are regarded as Amanah (trust).

Ameen / Amin

Custodian or guardian; trustee.

Amil

One who performs a task, an Agent. One who deserves compensation for some task which he does, such as the Mudarib (manager) in a Mudarabah contract.

Aqar

Real estate; Immovable property such as land, buildings, trees and so forth.

Aqd

Aqd is a central term in Islamic financial law, which essentially means, “contract “

Aqd Ghayr Azim

A contract that is terminable at the will of the parties, like partnership.

Arboon

Earnest money/Down payment; a non-refundable deposit paid by the client (buyer) to the seller upon concluding a contract of sale, with the provision that the contract will be completed during the prescribed period.

Ard

Literally meaning land.

Arif

An expert who is consulted in situations and has the ability to provide expert advice which requires an impartial, informed decision, such as the appraisal of property.

Ariyah

A contract in which one party loans another the use of some item for an indefinite period of time. Ariyah is generally used to refer to the neighborly lending of small articles.

Awqaf

A religious foundation set up for the benefit of the poor; property voluntarily transferred to a charity or trust so that it is use for public benefits.

Ayn

Ayn is term used by the classical jurists to refer to currency or ready money. The term “ayn” referes to gold, silver, coins, notes and any other form of ready cash. “Ayn” is often contrasted with dayn.

Badal

Substitute; substitute compensation.

Bai

Means purchase of anything. It is required under Islamic Shari’ah to document the purchase in the form of an agreement between two parties whereby the supplier agrees to supply a tangible asset or commodity on an agreed price and on an agreed mode of payment.

Bai Ajil Bi Ajil

It is a type of sale in which the sale price is paid immediately and the delivery of the sale item is delayed. This type of sale is also synonymous with Bai Al-Salam.

Bai Al Arboon

Deposit-secured sale. A sale agreement in which a security deposit is provided in advance as part payment towards the price of the commodity. The deposit is forfeited if the buyer does not meet his obligation. If the sale is completed Arboon deposit becomes part of the price.

Bai Al Wafa

Sale with a right with the seller, having the effect of a condition, to repurchase (redeem) the property by refunding the purchase price within a set time. According to majority of Fuqaha it is not permissible.

Bai Al-Inah

A loan in the form of a sale, called “Inah” (façade) because it is a sale in appearance only. This is accomplished by one’s buying back what one has sold for a lower price than that for which one originally sold it. The difference, ostensibly profit, is actually a loan. This type of transaction is void under Shari’ah because it is considered a cover –up for a Ribawi transaction.

Bai Dayn

Debt financing the provision of financial resources required for production, commerce and services through the sale and purchase of trade documents and papers. Bai Dayn is a short-term facility with a year or less maturity. Only documents evidencing debts arising from bona fide commercial transactions can be traded. Most scholars do not approve the sale of debt because this involves Riba and Gharar. The securitization of receivables is an example of sale of debt.

Bai Istijrar

When a supplier agrees to deliver to a client on a regular basis at an agreed price and mode of payment.

Bai Salam

Salam means a contract in which advance payment is made for goods to be delivered on a later date. The seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advance price fully paid at the time of contract. The objects of this sale are goods (to be produced, ploughed or manufactured) and cannot be gold silver or currencies.

Bait Al Mal

The treasury of the Muslim Community. The funds contained in the Bait Al-Mal are meant to be spent on the needs of the society.

Batil

Null and void

Buda’ah

Goods given to another for trading without giving wages or sharing profits (like a shopkeeper leaving his shop with another shopkeeper during his absence).

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Daman

This can be either (1) Contract of guarantee, security or collateral (2) Responsibility of entrepreneur/manager of a business; one of two basic relationships toward property, entailing bearing the risk of its loss.

Darura

Overriding necessity or an emergency. This is a condition in which aspects of the Shari’ah may be suspended in order to preserve life, or assure the safety of the Islamic community, or an individual.

Dayn

Dayn comes into existence as a result of any other contract or credit transaction. It is incurred either by way of rent or sale or purchase or in any other way which leaves it as debt to another. Duyun (debts) ought to be returned without any profit since they are advanced to help the needy and meet their demands and, therefore, the lender should not impose on the borrower more than he had given on credit.

Dhimmah

Dhimmah is a basic term in Fiqh Al-Mu’amalat which roughly corresponds to the concept of liability and/or responsibility of someone. A debt is said to be “established in someone’s Dhimmah” or he has debt to someone else. The Fuqaha also speak about a person’s Dhimmah “being occupied” and “being cleared”.

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Fadl (Riba)

A type of interest. Taking something of superior quality in exchange for the same kind of thing of poorer quality.

Faidah

Benefit. In investment context it means return on investment.

Falas

Literally meaning bankrupt

Faqih

Muslim jurist; A Muslim who is an expert in Fiqh; a Muslim who is knowledgeable of the rules of the Shariah and knows how these rules are related to the source texts upon which they are based.

Fasid

A forbidden term in a contract, which consequently renders the contract invalid.

Faskh

Undoing, dissolving, cancellation. Faskh is a term that refers to the dissolution of a contract or agreement. It has been described as the cancellation of a contract, such that affairs return to the state in which they were before the closing of the contract, without any addition or subtraction.

Fatwa

An authoritative legal opinion base on the Sharia (Islamic law). (Plural is Fatawa). A formal respond issued by an expert Faqih, called a mufti in response to a question.

Fiqh

Muslim jurisprudence; it covers all aspects of life, religious, political, social or economic. In addition to religious observances (Prayer, Fasting, Zakat and pilgrimage) it covers family law, inheritance, social obligations, commerce, criminal law, constitutional law and international relations, including war. The whole corpus of Fiqh is based primarily on the Quran and the Sunnah and secondarily on Iijma and Ijtihad.

Fiqh Al-Mu’amalat

Islamic commercial jurisprudence or the rules of transacting in a Shari’ah compliant manner.

Fuduli

A party is described as “Fuduli” whenever it transacts (e.g. sells, rents, etc) with someone else’s property without the permission of the Shari’ah (e.g. Wakala). Such is the case when a party does not own the property with which it transacts and is not the Wakil (authorized representative) or Wali (guardian) of the true owner.

Fuqaha

Plural of Faqih, qualified specialists in Fiqh, or jurists.

Gharar

Uncertainty in a contract of exchange as to the existence of the subject – matter of the contract and deliverability, quantity or quality of the subject-matter. It also involves contractual ambiguity as to the consideration and the term of the contract. Such ambiguity will render most contracts void.One of three fundamental prohibitions in Islamic finance (the other two being Riba and Maysir). Gharar is a sophisticated concept that covers certain types of Haram uncertainly in a contract. It is an exchange in which one or more parties stand to be deceived through ignorance of an essential element of the exchange. The prohibition on Gharar is often used as the grounds for criticism of conventional financial practices such as short selling speculation and derivatives.

Gharim

A debtor who does not possess the funds with which to repay his debt. A Gharim is one whose funds, after repayment of his debt, would not equal the Nisab.

Ghasb

The wrongful appropriation of property by force.

Hadith

A successively transmitted report of an utterance, deed, affirmation or characteristic of the Prophet Muhammad (PBUH).

Hak Tamalluk

A tradable asset in the form of ownership rights.

Halal

Permissible, lawful, said of a deed which is not prohibited by Allah, opposite of Haram. This concept differentiates Islamic economics from conventional economics.

Ghasb

The wrongful appropriation of property by force.

Hadith

A successively transmitted report of an utterance, deed, affirmation or characteristic of the Prophet Muhammad (PBUH).

Hak Tamalluk

A tradable asset in the form of ownership rights.

Halal

Permissible, lawful, said of a deed which is not prohibited by Allah, opposite of Haram. This concept differentiates Islamic economics from conventional economics.

Hamil

Literally meaning surety; the term is used by some jurists for Kafil.

Hamish Gedyyah

Security deposit. An amount of money paid by the purchase orderer upon request of the seller to make sure that the orderer is serious in his/her order of the asset. Such deposit is non-refundable and can be applied towards the order, in case the orderer pulls out of the deal.

Haqq

Literally the truth or the righteous thing. In the Fiqh of financial transactions, the term Haqq signifies a right which a party possesses, for example the creditors right to payment.

Haram

Impermissible, unlawful, opposite of Halal.

Harikat Amal

Partnership in which participation by the partners is based on labor or skill, but the partnership has to be of the type Inan or Mufawadah.

Hawala

Literally, it means transfer; legally it is an agreement by which a debtor transfer his/her claim to another – contract of assignment of debt. It also refers to the document by which the transfer takes place. Bill of exchange, promissory note, cheque, draft are also technically a form or type of Hawala in Islamic finance.

Hawl

The term Hawl is used by the jurists to describe the amount of time which must pass before a Muslim in possession of funds equaling or exceeding the exemption limit (Nisab) must pay Zakat on his wealth. In the case of cash, gold and silver it is one Islamic year i.e. a lunar year of app.354 days.

Heelah

Legal device. Plural us Hiyal

Hiba

Gift, donation. It is the transfer of a determinate property (Mal) without any material consideration.

Hila

Forbidden structure. A transaction which appears permissible, but is in fact structured in an un-Islamic way.

Hizim

Binding contract.

Hudud

The boundary between what is Halal (lawful) and what is Haram (unlawful) set by Allah.

Hujjah

Legal proof or authority.

Hukm / Hukum

Verdict; rule; command; prescription; the Hukm of a contract is a term for the legal effects of the contract.

Hukman

Constructively; legally, though not actually.

Ibahah

Permissibility.

Ihtikar

Hoarding of any commodity or good, in anticipation of an increase in price. This is a prohibited practice.

Ijab and Gubool

Ijab is the “Offer” in a contract and Gubool is the “Acceptance” of an offer.

Ijarah

Letting of an asset on lease or sale of a definite usufruct of an asset in exchange for a definite reward. It is an arrangement under which the Islamic banks lease equipments, buildings or other facilities to a client, against an agreed rental.

Ijarah Al-Muntaha Bi-Tamlik

Ijarah ending with ownership. Also see Ijarah Wa Iqtina

Ijarah Mawsufah

A concept whereby an Islamic lease may be set for a future date (subject to the rent commencing after delivery of the asset or payable “on account” in advance.)

Ijarah Thumma Bai

The principle governing an Ijarah contract at the end of the lease period, when the lessee buys the asset for an agreed price through a purchase contract.

Ijarah Wa Iqtina

A contract under which the Islamic bank finances equipment, building or other facilities for 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. There are similar transactions of various names, among them Ijarah Al-Muntaha Bi-Tamlik.

Ijma

Consensus of all or majority of the leading qualified jurists on a certain Shariah matter.

Ijtihad

It refers to an endeavor of a qualified jurist to derive or formulate a rule of law to determine the true ruling of the divine law in a matter on which the revelation is not explicit or certain, on the basis of Nass or evidence found in the Holy Qur’an and the Sunnah.

Ikhtilat

Mixing of shares so that they can no longer be separated.

Iktinaz

Hoarding wealth without fulfilling legal obligations on it.

Inan

Rein of an animal; type of partnership; see Sharikat Al-Inan.

Inan Khass

The Inan partnership that is formed for a particular project or for trading in a particular commodity or in a restricted agency arrangement granted to the partner.

Intifaq

Granting of concessions relating to real estate, e.g. right of passage (e.g. right to place a beam on the wall of neighbor etc.)

Intiha’

End; termination; termination or dissolution of a partnership.

Iqalah

Negotiated rescission.

Iqtisad

The term is used in modern standard Arabic to denote the field of economics.

Irtihan

Pledging; mortgaging.

Ishtirak

Equivocally; participation; partnership

Isqat

The extinction of a right.

Istidanah

Raising or building up credit through credit purchases. It however does not apply to the raising of cash loans.

Istihqaq Al-Ribh

Entitlement to profit; basis for entitlement to profit.

Istihsan

It is a doctrine of Islamic law that allows exception to strict legal reasoning, or guiding choice among possible legal outcomes, when considerations of human welfare so demand.

Istijrar

To buy different quantities from a single seller over a period of time. Sometimes it is also referred to transactions whereby seller delivers different quantities in different installments to complete the full purchases.

Istishari

Consultant

Istisna'a

A contractual agreement for manufacturing goods, asset and/or projects, allowing cash payment in advance or during pre-agreed phases with delivery and payment in future.

Istithmar

Investment

Ittifakeyyah

Agreement

Iwad

Compensation or counter-value.

Ja’iz

Permissible; permissible contract.

Jahala or Jahl

Ignorance, lack of knowledge, indefiniteness and ambiguity in a contract, leading to Gharar.

Jizya

A tax imposed on non-Muslims who are under Muslim country.

Ju’alal

A term applied by some in Islamic banking for banks charges and commission that have been interpreted to be Juálal by the jurists and thus considered lawful.

Jua'alah or Ji’alah

Literally, Joalah constitutes wages, pay, stipend or reward. Legally, it is a contract for performing a given task against a prescribed fee in a given period. A similar contract is “Ujrah” in which any work is done against stipulated wage or fee.

Kafalah

Assumption of the responsibility for debt repayment or surety-ship; a standard Islamic financial transaction in which X (the Kafil) agrees to assume responsibility for the debts of Y (the Makful‘ Anhu).

Kafalah Bi Al-Thaman

Surety for paying the price or sum if unpaid by the person originally liable.

Kafalah Binnafs

Bail; surety for producing the body of the person wanted.

Kafil

Surety; person providing the surety; guarantor

Kali Bil Kali

The term Kali refers to something delayed; appears in a maxim forbidding the sale of Kali Bil Kali i.e. the exchange of a delayed counter value for another counter value.

Khalt

Mixing of shares; see Ikhtilat.

Kharaj Bi-Al-Daman

Gain accompanies liability for loss. See also Al-Ghunm Bil Ghurm

Kharij

To produce.

Khiyar

Simply means Options. The options can be to one or more of the parties in a sales contract to rescind the sale, upon the appearance of a defect, for example.

Khiyar Al-Ayb / Al-Naqisa

Option of Defect. The option extended to one or more of the parties in a sales contract to rescind the sale, if the purchaser finds a defect in the object of the sale transaction.

Khiyar Al-Ru’ya

Option of Inspection. It should be not be necessary, as the sale of something not present does not concord with the requirement of certainty.

Khiyar Al-Shart

Option of Condition. An option in a sale contract concluded at the time of signing the agreement, giving one of the two parties to the contract a right to cancel the sale within a stipulated time.

Khiyar Al-Tay’in

Option of Designation. The buyer may designate one of several objects offered for a fixed price. Effectively, once the parties agree, suspended contracts are made. When the buyer makes the designation, one suspended contract comes into force, the other suspended contact are regarded as never having existed.

Khiyarat

Plural of Khiyar (option).

Kihayr Izin

Contract terminable at the will of either party.

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Mahjoor

A person who is prevented or restrained to do business by law or Shari’ah.

Mal

Wealth, money, property, any valuable thing which can be possessed.

Manfaa

The usufruct or benefit derived from an asset. Ijarah is defined as a sale of Manfaa (see Ijarah above). Manfaa in other words is the yield which a utilizable property produces.

Maqasid

The general objectives or higher purposes of Islamic law. These are generally understood to include things such as justice, the preservation of life, the betterment of society etc.

Masareef

Expenses

Maysir

Gambling, a game of chance. Originally a game of chance played by the Arabs before Islam, Maysir came to refer to any game of chance. One of three fundamental prohibitions in Islamic finance (the other two being Riba and Gharar).

Milkiyat Al-Khadamat

The right to service that may be securitized through a pre-sale, with the sukuk holders benefiting from periodic distribution of underlying payments or service delivery.

Milkiyyah

Ownership

Mirath

Inheritance.

Mithli (Fungible goods)

Goods that can be returned in kind, i.e. gold, for gold, silver for silver, US $ for US $, wheat for wheat etc.

Mokawil

Contractor

Motawir

A natural or legal person licensed to carry on the activity of buying /selling properties for developing .

Mu’amalah

A financial transaction. Fiqh Al-Mu’amalat is the traditional Islamic discipline concerned with the jurisprudence of financial transactions.

Mubah

Object that is lawful, i.e. something permissible to use or trade in.

Mudaraba

An investment partnership, whereby the investor (the Rab Al Maal) provides capital to the entrepreneur or the investment manager or the fund manager (the Mudarib) in order to undertake a business or investment activity. While profits are shared on a pre-agreed ration, losses are born by the investor alone. The Mudarib loses only his share of the expected income.

Mudarib

The entrepreneur or investment manager or fund manager in a Mudarabah who puts the investor’s funds in use in the project or portfolio in exchange for a share of the profit. A Mudarabah is similar to a diversified pool of assets held in a discretionary asset management portfolio.

Mufawadah

Means unlimited partnership

Mugharasah

A type of agricultural contract in which a land owner and a worker agree that, in return for the worker’s planting and tending of fruit-bearing trees on the land owner’s field, the landowner will assign to him a share of the orchard’s harvest.

Murabaha

A sale contract of a tangible asset for a profit mark-up over and above the cost of the asset and an agreed mode of payment (payment can be spot or deferred but often defined in form of Installments). In Murabaha the seller has to reveal the cost to the buyer. The bank buys an item and sells it to the customer on a deferred basis. The price includes a profit margin agreed by both parties.

Musaqah

A type of partnership in which the owner of an orchard agrees to share a stipulated portion of the produce of the orchard’s trees with a worker, in exchange for the latter’s irrigation of the garden.

Musawamah

Musawamah is a general kind of sale in which price of the commodity to be traded is bargained between seller and the purchaser without any reference to the price paid or cost incurred by the former.

Musharaka

An investment partnership in which all partners are entitled to a share in the profits of a project in a mutually agreed ratio. It is also interchangeable with the word Sharikah or Sharika (see below for further explanation on different types of partnership). Losses are shared in proportion to the amount invested. All partners to a Musharaka contribute funds and have the right to exercise executive powers in that project, similar to a conventional partnership structure and the holding of voting stock in a limited company. There are two main forms of Musharaka (1) Permanent Musharaka and (2) Diminishing Musharaka.

Musharaka Mutanaqisah

See Musharaka first. Also called Diminishing Musharaka. This allows equity participation and sharing of profits on a pro rata basis, and provides a method through which one partner can keeps on reducing its equity in the project, ultimately transferring ownership of the asset to the participants.

Mushtarri

Buyer / Purchaser

Muzabanah

Muzabanah is a transaction in which the owner of fruit trees agrees to sell his fruit for an estimated equivalent amount of the dried fruit, such as palm fruit for dates or grapes for raisins. Muzabanah was prohibited by the Prophet because of the strong element of Gharar present in such a transaction.

Muzara’a

A contract in which one person works the land of another person in return for a share in the produce of the land.

Najash

The prohibited practice of deceiving and inciting a potential buyer during the course of pre-sale negotiations or bidding by egging him on, either through insincere bidding on the part of a spectator (such as bidding with no intention of buying and merely in order to have the would-be buyer raise his bid), or false statements on the part of the seller himself (such as the seller claiming that the commodity is of greater value than its true worth).

Nasi’atan

By way of Nasiah, that is, with a delay in the delivery of one or both counter-values in a contract of exchange (bai).

Nisab

The exemption limit for the payment of Zakah. A Muslim who possesses wealth below the nisab is exempted for paying Zakah, while a Muslim who possesses wealth at or above this exemption limit is obliged to pay Zakah.

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Permanent Musharaka

See Musharaka first. In this type of Musharaka, the length of contract is unspecified, making it suitable for financing projects where funds are committed over a long period.

Qabd

Literally meaning seizing or taking possession of the exchange commodity in an exchange transaction, such as the exchanger taking possession of the silver which he traded for his own gold. Its being immediate is a necessary condition for the validity of currency exchange.

Qard

Qard means to give anything having value in the ownership of the other by way of virtue so that the latter could avail of the same for his benefit with the condition that same or similar amount of that thing would be paid back on demand or at the settled time. It is that loan which a person gives to another as a help, charity or advance for a certain time. The repayment of loan is obligatory. Loans under Islamic law can be classified into Salaf and Qard, the former being loan for fixed time and the latter payable on demand. (See Salaf). Loan of fungible object including money; under Islamic law it is Interest free even if extended for business.

Qard Hasan

An interest free loan. Repayment is for the same amount as the amount borrowed. The borrower can pay more than the amount borrowed so long as it is nor stated by contract.

Qimar

Qimar means gambling. It is a type of prohibited arrangement in which the acquisition of property is contingent upon the occurrence of an uncertain event, as is the case in gambling.

Qiraad

Another name given to the contract of Mudarabah, from the word Qard.

Qiyas

Literally it means measure, example, comparison or analogy. Technically, it means a derivation of the law on the analogy of an existing law if the basis of the two is the same; it is one of the sources of Islamic law.

Qubul

Acceptance.

Rab Al–Maal

An investor or owner of capital in a Mudaraba contract (see Mudaraba above).

Rabb Al-Ard

Owner of land, owner of the land in Musaqah / Musaqat and Muzara’ah contracts.

Raghabah

Property, which belongs to all people. Neither state nor individuals can prevent others from its lawful use.

Rahn

An arrangement whereby a valuable asset is placed as collateral, pledged or mortgaged for a debt. The collateral may be disposed of in the event of a default.

Ras Al-Mal

The capital. The money or property which an investor (Rab Al-Mal) invests in a profit- seeking venture, often in a partnership (Musharakah) such as a Mudarabah or Shirkah arrangement.

Re-Takaful

Reinsurance based on Islamic principles. It is a mechanism used by the Takaful companies to protect their retained business by achieving geographic spread and obtaining protection, above certain threshold values, from larger specialist reinsurance companies.

Riba

Any increase in a loan or sale transaction which accrues to the lender, seller or buyer without the provision of an equivalent counter-value to the other party. In Islam, Riba is one of the most abhorrent of all sins which is absolutely prohibited. Riba encompasses various types of illicit gain, of which banking interest is one example.

Riba Al Fadl

Riba Al Fadl (excess) is the quality premium in exchange of low quality with better quality goods e.g. dates for dates, wheat for wheat etc – a excess in the exchange of Ribawi goods within a single genus.

Riba Al-Jahiliyya

Pre-islamic Riba which is prohibited and is exemplified by the lender asking the borrower at maturity date if he will settle the debt or increase it. Increase usually occurs by charging interest on the debt initially accrued.

Riba Al-Nasi’a

Riba Al-Nasi’a or Riba of delay is due to exchange not being immediate with or without excess in one of the counter values. It is an increment on principal of a loan or debt payable. Interest, in all modern banking transactions, falls under purview of Riba Al-Nasi’a.

Ribah

Is from Rayb which literally means “doubt or suspicion and refers to the income which has the semblance of Riba or which raises doubts in the mind about its rightfulness. It covers all income derived from injustice to or exploitation of, others.

Ribawi

Goods subject to Fiqh rules on Riba in sales, variously defined by the schools of Islamic Law: items sold by weight and by measure, foods etc.

Rukn

Element; part of an act without which the act is not complete or valid; essential ingredient or element of a contract; singular of Arkan.

Rusoom

Fees or Charges

Sadaqah

Voluntary charitable contribution; see also Zakah

Salaf or Loan / Debt

The word Salaf literally means a loan which draws forth no profit for the creditor. In wider sense, it includes loans for specified periods, i.e. short, intermediate and long-term loans. Salaf is another name of Salam as well wherein price of the commodity is paid in advance while the commodity or the counter value is supplied in future; thus the contract creates a liability for the seller. Amount given as Salaf cannot be called back, unlike Qard, before it is due. (see Qard).

Salam

Advance payment for goods which are to be delivered at a specified future date. Under normal circumstances, a sale cannot be affected unless the goods are in existence at the time of the bargain. However this type of sale is an exception provided the goods are defined and the date of delivery is fixed. The objects of sale must be tangible goods that can be defined as to quantity, quality and workmanship. Also see Bai Salam

Samsarah

Brokerage, agency, business of commission. See Simsar.

Sarf

Contract for the exchange of gold, silver, and currencies whether the currency or commodity exchanged is the same from both sides or is different, that is, whether dinars are exchanged with dinars or dinars are exchanged with Dirhams.

Shari’ah

The term Shari’ah refers to divine guidance as given by the Holy Quran and the Sunnah of the Prophet Muhammad (PBUH) and embodies all aspects of the Islamic faith, including beliefs and practice.

Sharik

Partner.

Sharikah Al-Ammah

General partnership; a partnership in which each partner is a general attorney for the other partners; a partnership that permits trading in all types of goods.

Sharikah Al-Sanai

Same as Sharikah Al-Abdan

Sharikah Al-Wujuh

Partnership based on credit-worthiness of the partners in which the ratio of profit and loss is based on the li¬ability borne, but the partnership has to be of the type Inan or Mufawadah.

Sharikat Al- Aqd

A partnership created through contract as opposed to co-ownership that may be the result of a joint purchase or agree¬ment or it may result from inheritance or from some other legal situation.

Sharikat Al-Amwal

A partnership in which participation is based on the contribution of wealth by all partners, but the partnership has to be of the type Inan or Mufawadah. Also called Sharikat Al-Abdan

Sharikat Al-Ibahah

Common rights of individuals to gather possesses and own free commodities.

Sharikat Al-Inan

A basic contract of partnership based on agency in which participation may either be on the basis of wealth or labor or credit-worthiness, and in which equality of contribution or legal capacity is not necessary.

Sharikat Al-Jabr

Mandatory co-ownership created by an act of law, like inheritance.

Takaful

Based on the principle of mutual assistance, Takaful provides mutual protection of assets and property and offers joint risk-sharing in the event of a loss by one of the participants. Takaful is similar to mutual insurance in that members are the insurers as well as the insured.

Sharikat Al-Mafalis

A partnership between persons whose assets have been reduced to copper coins and who have to buy on the basis of credit-worthiness; see Sharikat Al-Wujuh.

Sharikat Al-Milk

Co-ownership. Sharikat Al-Mudarabah: see Mudarabah.

Sharikat Al-Taqabbul

Partnership for the acceptance of work, which is the same thing as a partnership based on labor or skill.

Sharikat Al-Wujuh

A situa¬tion where two or more persons are buying goods on credit and it requires the physical presence of all the partners at the time of purchase.

Sharikat Al-Zimam

A situa¬tion where two or more persons are buying goods on credit without the physical presence of all of the partners at the time of the purchase.

Shart

A necessary condition, a stipulation in a contract, something which needs to exist or be present in order for something (like a transaction) to be valid. Also a condition or stipulation in a contract. Plural of Shart is Shurut.

Shira’ Bi Al-Nasiah

A credit-purchase.

Shirkah

A contract between two or more persons who launch a business or financial enterprise to make profits. In the conventional books of Fiqh, the partnership business has been discussed under the option of Shirkath that, broadly, may include both Musharaka and Mudarabah.

Shurut

Plural of Shart. Conditions; the name given to the art of conveyancing in Islamic law.

Sighah

(Sighat Al-Aqd) Sighah is a term used by the Fuqaha to refer to the formal exchange which takes place between the contractual parties indicating their willingness to enter into the contractual agreement and therefore constitutes the contract itself. The Sighah is a Rukn (integral element) of the Islamic contract and essentially consists of an offer (Ijab) on the part of one contractual party and an acceptance (Qabul) on the part of the other, either of which may be verbal, written or even gestural, depending on the circumstances under which the contract is closed.

Simsar

Broker, agent like travel agent or estate agent. Also see Samsarah.

Suftajah

A bill of exchange between three parties (the payor, the payee and the transmitter), which was used for the delegation of credit during the Muslim period, especially the Abbasides period. It was used to collect taxes, disburse government dues, transfer funds by merchants and was commonly used by travelling merchants. Suftajahs could be payable on a future fixed date or immediately.

Sukuk

An asset – backed / based instrument which is structured in accordance with Shariah and may be traded in the market. A Sukuk represents proportionate beneficial ownership in the underlying asset, which will be leased to the client to yield the return on the Sukuk.

Ta’amin

Insurance

Ta’yin

Ascertainment of the goods sold through weight or measure.

Tabarru'

A contract where a participant agrees to donate a pre-determined percentage of his/her contribution (to a Takaful fund) to provide assistance to fellow participants. In this way he fills his obligation of joint guarantee and mutual help should another participant suffer a loss. This concept eliminates the element of Gharar from the Takaful contract.

Tahjir

Earmarking a piece of wasteland that has no owner by an individual in order to rehabilitate it. (This establishes the right of ownership on such land).

Takhsis

Restriction; restriction of the meaning of a text.

Tamweel

Financing

Tawarruq

Reverse Murabaha. A form of finance allowed by Shari’ah under the doctrine of “necessity” under which a commodity is arranged to be sold to the buyer which it can sell immediately through its broker to avail cash with defer payment as agreed by the parties.

Thiqah

A person who has the legal responsibility for holding title in property for the benefit of another.

Ujrah

The financial charge of using services or Manfaat (wages, allowance, commission, etc).

Umooleh

Comission

Urn Al-Shurut

conveyancing; drafting of legal documents.

Urudh

Plural of ‘Ardh: property that includes goods, and even real estate.

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Wa'ad

Promise, undertaking. A promise, such as is found in purchase and sale undertakings used in certain Islamic finance transactions; a promise to buy or sell certain goods in a certain quantity at a certain time in future at a certain price.

Wadheeah

Sale at a loss.

Wadiah

The safekeeping of goods with a discount on the original stated cost. An Islamic bank acts as the keeper and trustee of depositors funds. It guarantees to return the entire deposit, or any part of it, on the depositor’s demand. (CHECK)

Wajib

Compulsory, obligation as distinguished from Wujub (duty).

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. In terms of Takaful operations, Wakala refers to an agency contract, which may involve a fee for the agent.

Wakalah Ammah

General agency.

Wakalah Khassah

Special Agency with specific assignment.

Wakalah Qasirah

Restricted agency with limited assignment.

Wakil

Agent

Wali

Guardian

Waqf

Endowment. A charitable trust in the name of Allah, usually in perpetuity, and usually for the purposes of establishing the Deen of Islam, teaching useful knowledge, feeding the poor or treating the sick. Plural of Waqf is Awqaf.

Wasiyyah

Will, testament, bequest. The statement of a Muslim in which he/she details the manner in which his/her wealth is disposed of after his/her death.

Wilayah

Guardianship.

Wilayat Al-Istidanah

Authority granted by one partner to another to buy on credit beyond the limit of the capital of the partnership

Wilayat al-istidanah.

Authority granted by one partner to another to buy on credit beyond the limit of the capital of the partnership

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Zakat

An obligatory contribution which every wealthy Muslim is required to pay to the Islamic state, or to distribute amongst the poor. It is an annual, specified wealth tax to be paid to specific people by a Muslim possessing a minimum net worth above their basic needs. Literally, purifying dues.

Zakat Al Fitr

Zakat which is payable by every Muslim able to pay at the end of Ramadan. This is also called Zakat al Nafs (poll tax)

Zaakat Al Maal

An annual levy on the wealth Muslim above a certain level. The rate paid differs according to 6the type of property owned.

Zimmah

Equivalent of legal personality in positive law; receptacle for the capacity for acquisition; see ahd