Mastering Islamic Finance: A practical guide to Sharia-compliant banking, investment and insurance
A practical guide to Sharia-compliant banking, investment and insurance
The Mastering Series

A practical and accessible guide to Islamic finance that helps demystify the differences with conventional banking, enabling practitioners to develop Sharia compliant products for customers.

The Islamic Finance industry is estimated to be worth $1.2 trillion and is growing globally at over 10% per year. Mastering Islamic Finance will give practitioners an understanding of Islamic finance, from the basic techniques, through to advanced applications. Helping to demystify and clarify the differences with conventional banking, it will enable practitioners to develop Sharia compliant products for customers.

According to Sharia law there are strict rules on how financial services and products can be designed; in Islamic Finance money cannot make money and the subject of the finance must be an asset or a verifiable, real trade or business activity. Sharia compliant financial instruments have been devised to enable Muslims to abide by the principles of Islam and still make the most of their money.

Mastering Islamic Finance will equip readers with an understanding of Islamic financial instruments so they can sensibly apply them in practice. For each instrument there is a definition of the concept and how it differs from its equivalent in conventional banking. There are also examples and case studies to highlight practical applications.

About the author
Publisher’s acknowledgements

Author's acknowledgements

Part 1: Background

1. The Islamic Finance Phenomenon

Introduction

The Islamic finance phenomenon

Why does Islamic finance exist?

Why is Islamic finance now a sizeable and growing market?

Key challenges facing the industry

Conclusion

2. Islam – key beliefs, principles and practices

Introduction

Belief system

Key practices – the five pillars of action

Importance of the Qur’an and the Sunnah

Interpretation of the sharia

The role of scholars and sharia supervisory boards in Islamic finance

Conclusion

3. How Islamic finance differs from conventional banking

The Islamic economic model

Key Islamic finance principles

Conclusion

4. Valid commercial contracts in Islamic finance

Introduction

Key conditions for validity of contracts

Integrity of contractual arrangements

Status and use of promises

Part 2: Islamic Finance in Practice

5. Key transaction types in Islamic finance

Introduction

Equity type: transactions

Mudarabah (Partnership; one party contributes capital)

Musharakah (Partnership; both parties contribute capital)

Asset finance:

Murabaha (Sale of an asset at a known profit mark up)

Ijara (Leasing of an asset)

Istisn’a (Sale of an item to be constructed or manufactured)

Salam (Sale of fungible item yet to be produced)

Other key transaction types:

Wakala (Agent providing services to a Principal)

Hawalah (Transferring a debt)

Rahn (Providing security)

Kafalah (Providing a guarantee)

Conclusion

6. Sukuk

Introduction

Definition

Mechanics of a sukuk transaction

Types of sukuk

Asset-based versus asset-backed sukuk

Sukuk and the secondary market

A strong future for sukuk

Conclusion

7. Sharia-compliant investments and wealth management

Introduction

Sharia-compliant investments

Zakat by Iqbal Nasim

Sharia compliant estate distribution and Islamic wills by Haroon Rashid

Conclusion

8. Takaful – Islamic insurance

Introduction

Sharia perspective on conventional insurance

Takaful – the Islamic alternative

Takaful models

Types of takaful policy

The future of the takaful industry

Conclusion

9. The future of Islamic finance

Introduction

Recommendations for success by IFSB and IDB/IRTI

Opinion pieces

The Christian view of usury by Robert Van De Weyer

The future of Islamic finance by Dr Sayd Farook

The secret to long term success: get the direction of travel right by Faizal Karbani

Index