| Terms | |
|---|---|
| Amanah | A principle whereby a trust relationship is placed onto another party for the performance of a certain obligation/responsibility in good faith such as for the safekeeping of an asset. This underpins fiduciary relationships and duties. |
| Amwal | Wealth. In a business context, Amwal refers to wealth that is contributed as capital in a partnership. Plural: mal. |
| Aqd Sahih | A legal and enforceable contract. |
| Aqd | Contract. |
| Aqidan | Two parties who have entered into a contract. |
| Ayn | A tangible/physical asset. |
| Batil | Null and void. |
| Commodity Murabaha/Tawrruq | A product designed to provide financing to a party in need of cash. The party will sell to his counterparty the required commodities a certain commodity/ies on a deferred payment basis. Subsequently, the purchaser will sell the same commodity/ies to a third party on a cash payment basis. Commodity Murabaha is best used for bridge financing, working capital financing, general funding purposes and all types of short-term and long-term financing where cash disbursement is essential. |
| Dhaman | Liability. |
| Dayn | Financial obligation. |
| Fatwa | An Islamic legal pronouncement issued by an expert in Shari'a law (mufti) on a Shari'a issue. . |
| Halal | Goods/commodities and services which are permissible under the Shari'a laws. |
| Haram | Goods/commodities and services which are prohibited under the Shari'a laws. |
| Hawala | Assignment of debt. |
| Ijara | A contract for the leasing of a property or asset with legitimate usufruct or benefit for a specified rent. The use of the property or asset in this instance must be Shari'a-compliant. |
| Ishtirak | Participation in a partnership. |
| Istisna | A contract for the sale of a specified asset or item that remains to be manufactured or constructed. Payment can be made on the spot or may be deferred. As per this contract, the seller delivers an asset or item as per the specifications of the purchaser to the purchaser on an agreed future date. The seller may manufacture or produce the asset themselves or is permitted to have this done through a third party. |
| Mudaraba (investment contract based on Fund Management) | A contract of partnership in profit whereby one party provides capital (Rab Al Mal) and the other party provides labour, efforts or expertise (Mudarib). Profit is shared between both parties as per agreed ratios, whereas the loss - if any - is borne by the fund provider alone except in circumstances where the loss is due to the gross negligence of the Mudarib. |
| Murabaha (Cost plus profit sale) | A contract of sale whereby the seller sells an item to the purchaser at a disclosed cost plus mark-up price. It is a mandatory requirement for the seller to inform the purchaser of the actual cost and mark-up price of the sale of the item. Payment can be on a cash or deferred payment basis but only on a fixed rate basis. |
| Mudarib | An expert who manages the investment fund and activity of the capital provider (Rab Al Mal) in a Mudaraba contract. |
| Musharaka (Venture Capital) | A contract of partnership between two or more partners whereby both parties provide capital to the investment activity. While the profit can be shared based on an agreed ratio, the loss shall be borne proportionate to the capital contribution by the parties. |
| Qard Hasan (benevolent finance) | A benevolent finance contract between two parties specifying that there will be no extra charges made over and above the finance amount. Any extra payment imposed by the lender or promised by the borrower is considered as riba (interest) and is thus prohibited. |
| Salam | A contract of the sale of goods whereby the goods are to be delivered at an agreed future date but the price and payment of the goods are determined and paid in advance. |
| Shari'a | The principles of Islam as textually provided in the Quran and Sunnah. |
| Shurut | Terms and conditions in Islamic law. |
| Sukuk | Certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services or (in the ownership of) the assets of particular projects or special investment activities. This holds true after receipt of the value of the sukuk, the closing of subscription and the employment of funds received for the purpose for which the sukuk was issued. |
| Takaful (Islamic Insurance) | Different from conventional insurance which involves the contract of buying and selling of protection, takaful is a contract between the takaful policyholders which are placed in a specific group, whereby everyone agrees to pay a certain amount of money as a contribution to compensate each other in cases of a loss/damage from an unforeseen event as suffered by any members of the group and the amount paid shall be taken out from the total sum collected from the contribution payment. |
| Wadi’ah | Safe custody of an asset or in banking terms, a deposit product |
| Waqf | Endowment. A charitable trust in the name of Allah, usually in perpetuity, and usually for the purposes of establishing the good deeds and contribution to benefit the society. |
| Wakala | A contract of agency whereby a principal (Muwakkil) appoints an agent (Wakeel) as their nominee or representative to perform a defined Shari'a-compliant activity on their behalf at a fee or without fee. A Wakala contract may be general or specific and for a limited tenure or for an unlimited tenure. |
| Waqf (Trust) | An act of endowment or dedication of asset(s) by way of retaining the asset(s) while distributing its benefits or returns among defined beneficiaries. |
| Zakat | A religious alms-giving obligation whereby Muslims should pay a certain percentage of their annual wealth to one of the eight categories of needy Muslims (asnāf). The objective is to redistribute wealth in order to purify wealth and souls. |