Islamic finance contracts

Monzer Kahf

Description

TRANSACTIONS (ISLAMIC JURISPRUDENCE) , INVESTMENTS , FINANCING , CONTRACTS , ISLAMIC BANKS , ISLAMIC ECONOMICS , SILENT PARTNERSHIP , PROFITS , OWNERSHIP

Sujets

• Islam

Informations

• Publié par: Monzer Kahf
• Date de parution: 01 janvier 2013
• Nombre de lectures: 3
• EAN13: 9796500082219
• Langue: English
• Poids de l'ouvrage: 19 Mo

Extrait

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COPY RIGHTS MONZER KAHF© January 2013 THE AUTHOR IS THE ONLY OWNER OF COPY RIGHT NO PART OF THIS BOOK MAY BE REPRODUCED IN ANY FORM WITHOUT PRIOR APPROVAL OF MONZER KAHF 22 MARBLEHEAD, IRVINE CALIFORNIA 92620 USA

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Thanks and Appreciation At the outset of this new book, I like to extend my thanks and appreciation to all those who helped me make it available to my readers. Special thanks to mycolleagues, the professors at the Master’sProgram in Islamic Finance in the Qatar Faculty of Islamic studies for the continuous discussion and dialogue which helpedcrystallize and formulate my ideas as put forward in this book. Special thanks and appreciation to my wife Mayssun al Mubarak for her patience seeing me indulged with my computer for many hours, days and nights for over three years. Thanks also to my daughter Noma who has also borne the inconvenience of leaving her alone with her mother while working on my computer. My thanks should also go to those who helped me among the assistants in the Qatar Faculty of Islamic Studies especially Marwa al Azb who helped transcribing and typing several early draft of most of the ďook’s chapters. Also Isŵail Yahaya, who also helpedinserting many of the attention boxes insert texts in the book. I should confess that I’ŵ the soul responsiďle person for any mistakes which still exist in the book. Finally, this book is a product of research, discussions, training and teaching over a period of more than thirty years. I present it by the grace and blessing of Allah who helped me reach this stage of making this book available to my readers. Irvine, California, th The 27 of Jan, 2013 th (corresponding to the 10of Raďi’ 1, 1ϰϯϰh.

Prof. Dr. Monzer Kahf Coordinator, MSc. Islamic Finance Program Qatar Faculty of Islamic Studies-Hamad Bin Khalifa University Doha, Qatar

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CONTENTS

INTRODUCTION1 Chapter 1 :MᾹL, OWNERS(IP AND S(ARI’A(9 Introduction11 ͳ.ͳ Kinds of Māl13  Angle No. 1: Criteria of Hurtfulness13  Angle No. 2: Protected and Non-protected Māl15  Angle No. 3: Free or Non-free Māl17  Angle No. 4: Standardized (م) Non- or Standardized Māl ȋمق)18 Angle No. ͷ: Estate and Personal Māl20 Angle No. ͸: Fixed Māl and Mobile Māl20 Angle No. ͹: Tangible and Intangible Māl21 Angle No. ͺ: Mute Māl versus Income/Increment  Generating Māl22 ͳ.ʹ Ownership and Authority over Māl or Property23 Usufruct (م) and the Right to Benefit (عتا )25 Inaccessible Property (رما لم)26 ͳ.͵ Acquiring a Māl27 ͳ.Ͷ Objective of Shari’ah ȋرا دم)33 Chapter 2: WHAT ARE THE ISLAMIC FINANCE CONTRACT? 37  Introduction39  Definition and Components of Finance Contracts41  Definition of Finance44  The General Conditions of Islamic Financial Contracts46  Aptitude or Qualification of Parties Who Give Consent47  Balance50 The Moral Commitment57 Shari’ah Permissibility59 Realism62 Categories of Islamic Finance Contracts68

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According to their Nature68 According to their Features or Characteristics69 Chapter 3 :73RETURN IN ISLAMIC FINANCE Why is Riba Prohibited75  What Justifies Earning in Islamic Finance?76  Ownership and Risk77 Ownership of Added Wealth and Other People’s Rights80  Does Capital Have a Claim on Return?82  Islamic Finance and the Debt Economy86 Does the Shari’ah Prefer Taking Risk88 Necessary Condition and Sufficient Conditions for Earning93 Methodologies of Islamic Finance95 Added Conditions into Islamic Finance Contracts96 Delinquency Fines97 The Third Party Guarantee99 Ceiling on Profit105  Conversion of Conventional into Islamic Finance 107 Chapter 4 :SALE-BASED ISLAMIC FINANCE  CONTRACTS 109 Introduction111  Sale-based Nominate Finance Contracts113  Deferred-payment Sale113  Salam Contract120  Definition of Salam and its Main Features120  Conditions of Salam120 Conditions of Success of Salam Finance125 Istisna’ Contract127 Chapter 5 :IJARAH (LEASE CONTRACT) 131 Definition133  Responsibilities of Contracting Parties136  Responsibility of the Lessor136  Responsibility of the Lessee139  Characteristics of Ijarah142  Why Take Ijarah Contract?148 Issues in Ijarah Applications150

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Sale of Lease Contracts152 Discounting150 Securitization 152 Chapter 6 :SHARING FINANCE CONTRACTS155 Introduction157  Sharikah158  Principle159  Definition159  Types of Sharikah160 Sharikat al-Milk (Co-ownership)160 Sharikat al-ǮAqd ȋContractual SharikahȌ162  Definition163 Characteristics of Musharakah163 Muzara’ah and its Derivatives168  Principle168 Definitions168 Characteristics168 Mudarabah172 Definition172 Mudarabah Application175  Conditions of Mudarabah Contract178 Financing Elements in All Sharing Finance Contracts179 Chapter 7 :LOAN AND OTHER CONTRIBUTORY  CONTRACTS 183 Introduction185  Overview of Contributory Contracts186  Lending and Loan Contract188  Definition188  Characteristics of the Loan Contract189  Effect of Loan Characteristics191 Components of Loan Contracts193 Documentation Loan 196 Some Other Rulings of the Loan Contract196 Application of Loan Contract in Islamic Banking199  Current Accounts199 Loans to Customers202 Loans as Employees’ Fringe Benefit203 The Gift Contract (با د)203

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Important Rulings of the Gift Contract204  Application of al-Hibah in Islamic Finance207  The Waqf Contract (قوا د)210 Components of Waqf Contract210  Objectives of Waqf212  Kinds of Waqf 213  Characteristics of Islamic Waqf216  Application of Waqf in Islamic Finance: Waqf and  Trust220 Chapter 8 :SALE ON ARBUN 225 Introduction 227 Shari’ah Ruling and Foundation of Arbun Sale228  Disapproval of the Arbun Sale228  Approval of the Arbun Sale229  Characteristics of Arbun Sale230  Application of Arbun in Contemporary Islamic Finance232 Arbun and Margin of Seriousness 233 Arbun in DzIslamic Mutual Fundsdz235 Arbun and Short Sale of Shares, Commodities and  Currencies236 Arbun and Options238 Chapter 9 :HYBRID CONTRACTS 241 Introduction243  How Did It Start?245  Definition of an Islamic Bank246  Differences between Islamic and Conventional Banks247  Implications of Financial Intermediation and Wakalah  (Agency) for Islamic Finance Contracts247  Traditional Hybrid Islamic Finance Contracts249 Financing Murabahah249  Definition250 Objective250 Characteristics250  Risks in Murabahah252 Suitability of Murabahah to Bank Financing253 Mechanism and Sequential Steps of Murabahah  Financing253 Alternative to Murabahah: Musharakah with a First

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