Principle: bank on our principles

Glossary

A

'Aqd

A contract that is executed between two or more parties.

'Adl

Justice.

'Arbun

A non-refundable deposit or down payment on a sales contract in which the buyer has not paid the full price or taken possession of the goods. The buyer retains the right to cancel the sales contract.

Akhlaq

The moral and ethical behaviour of a person or group.

Al-adl

Justice.

Arbun

A non-refundable deposit or down payment on a sales contract in which the buyer has not paid the full price or taken possession of the goods. The buyer retains the right to cancel the sales contract.

F

Fiqh

Islamic Jurisprudence

Fiqh Al Muamalat

Islamic commercial jurisprudence.

G

Gharar

Any uncertainty or ambiguity within a contract, transaction or business dealing.

H

Hadith

A narrative record of the sayings of the Prophet Muhammad (PBUH).

Halal

Lawful/permitted in Islam.

Haram

UnLawful/prohibited in Islam.

Hawala

The transfer of money, debt or an obligation from one person to another.

Hiba

A gift.

I

Ijara

A bilateral lease contract allowing the transfer of the usufruct of an asset rather than the sale of the asset.

Ijara Muntahia Bi Tamleek

Lease with condition of acquisition at the end of the original lease agreement or in stages throughout the agreement.

Ijara wa Iqtina

Lease with transfer of ownership at the end of the original lease agreement.

Ijma’

The consensus of a majority of leading and qualified jurists on a Sharia’a matter.

Istisna'

An agreement often used to finance projects including manufacturing, construction and infrastructure where the payment is either deferred or immediate with the delivery of the project deferred until completion.

K

Kafala

Suretyship or guarantee.

M

Mu'amalat

Commercial transactions

Mudaraba

Partnership contract where one party provides the funding and the other party manages the project. This product is a sub-set of Musharaka.

Mudarib

The party in a contract that provides the knowledge and skill required to complete the funded project.

Murabaha

A cost plus financing transaction which includes an agreed profit margin, the payment is deferred for an agreed period of time.

Musawama

Negotiations of a sale

Musharaka

A flexible partnership contract between two or more parties who all contribute capital towards the funding of a project or asset. Profits are pre- agreed with any losses being shared on the basis of the contributed capital.

P

Parallel Salam

A parallel contract to an existing Salam contract to hedge the Salam position. The contract is often for an outright sale with deferred delivery but could be arranged with payment at a later date using a Letter of Credit or guarantee to secure the payment.

Q

Quran

The Islamic holy book and primary source of Sharia’a

R

Rab al Mal

Party in a contract, such as a Mudaraba that provides the capital

Rahn

A pledge.

Re-Takaful

Islamic re-insurance undertaken to reduce excessive concentration risks by Takaful companies.

Riba

Generally translated as interest or usury but also means an excess or unfair gain. Riba is usually classified as either Riba al-fidl or Riba-am-naseeyah.

Riba al-Fadl

Is an exchange of commodities or money in unequal amounts.

Riba an-Naseeyah

Is a money for money exchange with a deferral, interest is charged for the deferral. Riba an-Naseeyah is the same as interest in the conventional market.

S

Salam

A Salam is a contract for the purchase of a commodity for immediate payment with deferred delivery.

Sarf

The purchase and sale of currency at spot for equal value.

Sharia'a

Islamic Law derived mainly from the Quran and Hadith

Sukuk

Plural of the Arabic word Sakk meaning certificate. Sukuk is a certificate representing a participation and ownership rights in an underlying asset. Sukuk are often referred to as an Islamic Bond however there are some inherent differences.

Sunnah

Words or actions of the Prophet Muhammad

T

Tabarru'

Non-commercial donation or gift where there is no benefit or commercial advantage for the donor.

Takaful

Islamic insurance comparable to mutual insurance with the insured donating their contribution to a mutual fund.

Tawarruq

Purchase of a commodity on a Murabaha basis that is immediately sold on to a 3rd party at spot for cash.

W

Wa'd

A unilateral Promise, where an undertaking or promise is made by one party to do or not do something at a future date.

Wakala

A contract of agency where a party/person is appointed to perform a specific task for a certain fee.