Islamic Finance in Islamic Economy

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Islamic Finance in Islamic Economy by Mind Map: Islamic Finance in Islamic Economy

1. Ijarah

1.1. contract of sale of the right to use an asset over a period

1.2. a lease contract

1.3. Subject matter

1.3.1. lawful and for defined use

1.3.2. real object - lawful & determined

1.3.3. for a specific period

1.4. Principle

1.4.1. Offer & acceptance

1.4.2. 2 parties: bank (Lessor) & customer (lessee)

1.4.3. contract object includes rental amount & service

2. Salam

2.1. provide financing for agricultural related SME

2.2. benefit purchaser

2.2.1. prevent riba

2.2.2. purchase at cheaper price

2.2.3. able to finance agricultural expense ((seller))

2.3. purchase commodity for deferred delivery, immediate payment

2.4. 5 pillars

2.4.1. buyer

2.4.2. seller

2.4.3. price

2.4.4. product

2.4.5. Offer and acceptance (sighah)

2.5. Parallel salam

2.5.1. bank enters into salam contract with farmer and parallel salam with third party concurrently

2.5.2. cannot be from same entities

3. Istisna'

3.1. contract to manufacture, build or construct assets

3.2. important to determine selling price & specification on subject matter

3.3. Payment

3.3.1. In advance

3.3.2. Deferred

3.3.3. Instalment

3.4. Parallel istisna'

4. Murabahah

4.1. Cost + Agreed mark up

4.2. Mark up contract

4.2.1. not loan based on interest

4.3. Condition

4.3.1. Cost of capital disclosed

4.3.2. No interest involved

4.3.3. Activities are transparent

4.3.4. Advance payment/deposit allowed

4.4. Bank purchase good then deliver to customers

5. -

6. Mudarabah

6.1. contract between rabbulmal & mudarib

6.1.1. IB - rabbulmal

6.1.1.1. New Topic

6.1.2. Entrepreneur - mudarib

6.2. Loss borne by rabbulmal

6.2.1. misconduct/negligence: by mudarib

6.2.2. mudarib: lose value of effort/labour

6.2.3. deducted from Mudarabah capital

6.3. -

6.4. -

6.5. -

6.6. -

6.7. Profit based on PSR

6.8. -

6.9. 2 principles: 1. offer & acceptance 2. capital

6.10. Capital in form of asset - use FV

7. Musyarakah

7.1. contract of joint partnership

7.2. capital providers may participate in management

7.3. Profit based on PSR

7.4. Loss- proportion of capital contribution

7.5. each partner = agent

7.6. Principles

7.6.1. Offer & acceptance

7.6.2. Capital

7.6.3. Competent

7.6.4. Share of profits & loss

7.7. 2 types

7.7.1. Permanent/Constant Musyarakah

7.7.1.1. maintain ownership portion

7.7.1.2. for income generation projects

7.7.2. Diminishing Musyarakah

7.7.2.1. customer buys bank's shares until full ownership is obtained

7.8. -