51 terms
Islamic finance glossary
Banks use these words without explaining them, which is how a fee ends up sounding like a favour. Each one is defined here in a single plain sentence first, then properly.
A
B
- Bai' al-Inahبيع العينةbay' al-'īnah
- Selling something to someone on credit and buying it straight back for less cash, so they get money now and owe more later.
- Bursa Suq Al-Sila'سوق السلعsūq al-sila'
- A Malaysian commodity trading platform built so banks can carry out the commodity buying and selling that tawarruq contracts require.
D
F
- Fatwaفتوىfatwā
- A scholar's or council's formal answer to a religious question.
G
H
I
- Ibra'إبراءibrā'
- A rebate: the bank giving up part of what you owe, usually when you pay early.
- IFSB
- Islamic Financial Services Board: the Kuala Lumpur-based body that writes prudential standards for Islamic finance, the equivalent of banking supervision rules rather than religious rulings.
- IIFAمجمع الفقه الإسلامي الدوليMajma' al-Fiqh al-Islāmī al-Duwalī
- The International Islamic Fiqh Academy, the OIC's own council of scholars, whose resolutions carry great weight across the Muslim world.
- Ijarahإجارةijārah
- A lease: renting the use of something, or someone's services, for a fee.
- Israfإسرافisrāf
- Wasteful overspending, which Islamic law treats as wrong in itself.
- ISSC
- Internal Shariah Supervision Committee: the in-house scholar panel required at Islamic banks in some countries, notably the UAE.
- Istisnaاستصناعistiṣnā'
- Commissioning something to be built or made, with payment arranged as you both agree.
K
M
- Makruhمكروهmakrūh
- Disliked but not forbidden: better avoided, no sin if you do it.
- Maysirميسرmaysir
- Gambling: gaining at someone else's expense purely on chance.
- Mudarabahمضاربةmuḍārabah
- A partnership where one side puts up the money and the other does the work, and they share the profit.
- Muqassahمقاصةmuqāṣṣah
- Set-off: cancelling what you owe against what you are owed, so only the difference is paid.
- Murabahahمرابحةmurābaḥah
- A sale where the seller tells you what the goods cost and what profit is being added, and you pay later.
- Musharakahمشاركةmushārakah
- A partnership where everyone contributes money and shares the profits and the losses.
- Mushtabahمشتبهmushtabah
- Doubtful: a grey area where the ruling is unclear, which cautious people avoid.
Q
- Qabdقبضqabḍ
- Taking possession of what you bought, either physically or in a way the law treats as equivalent.
- Qard Hasanقرض حسنqarḍ ḥasan
- A loan on which the lender gets back exactly what was lent and nothing more.
R
- Rahnرهنrahn
- Security or collateral: property pledged so the lender can be repaid from it if you do not pay.
- Ribaرباribā
- Any extra amount a lender gets back on top of what was lent, which Islamic law forbids.
- Riba al-fadlربا الفضلribā al-faḍl
- Getting more back than you gave when swapping two lots of the same thing, like trading one kilo of good dates for two kilos of poor ones.
- Riba al-nasi'ahربا النسيئةribā al-nasī'ah
- The extra you are charged simply for being given more time to pay.
- Ribawiربويribawī
- Describes the categories of goods, such as gold, silver and money, whose exchange has to follow strict equal-and-immediate rules.
S
- SAC
- Shariah Advisory Council: Malaysia's national body whose rulings on Islamic finance bind the industry and are a reference for the courts.
- Sadaqahصدقةṣadaqah
- Voluntary charity, given whenever you choose and in any amount.
- Salamسلمsalam
- Paying in full today for goods that will be delivered later.
- Shariah boardهيئة الرقابة الشرعيةhay'at al-riqābah al-shar'iyyah
- The panel of scholars inside a bank that decides whether its products are religiously acceptable.
- Sukukصكوكṣukūk
- Islamic investment certificates that give the holder a share in real assets rather than a claim to interest.
T
- Ta'widhتعويضta'wīḍ
- Compensation for money the bank actually lost because you paid late.
- Tabarru'تبرعtabarru'
- A donation or voluntary contribution, given without expecting anything back.
- Takafulتكافلtakāful
- Islamic insurance, where members contribute to a shared pool that pays out to whoever suffers a loss.
- Takyif fiqhiتكييف فقهيtakyīf fiqhī
- Working out which classical contract a modern product actually matches.
- Tawarruqتورقtawarruq
- Buying something on credit and selling it on for cash, so you end up with money now and a bigger bill later without paying interest.
U
- Ujrahأجرةujrah
- A fee or wage paid for a service done for you.
W
Z
- Zakatزكاةzakāh
- The compulsory annual charity payment Muslims make on wealth they have held for a year.