Musaqah
A
contract in which the owner of the garden shares its produce with another
person in return for his services in irrigating the garden.
Muzara'a
A
contract in which one person agrees to till the land of the other person in
return for a part of the produce of the land.
Qard
Hasan (Interest free loans)
Most
of the Islamic banks also provide interest free loans (Qard Hasan) to their
customers. If this practice is not possible on a significant scale, even then, it
is adopted at least to cover some needy people. Islamic view about loan (Qard)
is that it should be given to borrower free of charge.
Qimer
Gambling.
Technically, an agreement in which possession of a property is contingent upon
the occurrence of an uncertain event. By implication it applies to those
agreements in which there is a definite loss for one party and definite gain
for the other without specifying which party will gain and which party will
lose.
Riba
This
term literally means an increase or addition. Technically it denotes any
increase or advantage obtained by the lender as a condition of the loan. Any
risk-free or "guaranteed" rate of return on a loan or investment is
riba. Riba, in all forms, is prohibited in Islam. In conventional terms, riba
and "interest" are used interchangeably.
Shariah
/ Sharia / Shari'a
Islamic
canon law derived from 3 Primary sources: the Quran; the Hadith (sayings of the
Prophet Muhammad); and the Sunnah (practice and traditions of the Prophet
Muhammad), and three Secondary sources Qiyas (Analogical deductions and
reasoning), Ijma (Consensus of Islamic Scholars) and Ijtihad (Legal reasoning).
Shirkah
A
contract between two or more persons who launch a business or financial
enterprise to make profit. Shirka = musharaka.
Suftajal
A
banking instrument used for the delegation of credit and was used to collect
taxes, disburse government dues and transfer funds by merchants. In some cases
suftajahs were payable at a future fixed date and in other cases they were
payable on sight. Suftajah is distinct from the modem bill of exchange in some
respects. Firstly, a sum of money transferred by suftajah had to keep its
identity and payment had to be made in the same currency. Exchange of
currencies could not take place in this case. Secondly, Suftajah usually
involved three persons. 'A' pays a certain sum of money to 'B' for agreeing to
give an order to 'C' to pay back to 'A'. Third, a Suftajahs could be endorsed.
Sukuk
A
certificate entitling the holder to the benefits of the income stream of the
assets backing the certificate. Equivalent to a Fixed income bond.
Takaful
This
is a form of Islamic insurance based on the Quranic principle of Ta'awon or
mutual assistance. It provides mutual protection of assets and property and offers
joint risk sharing in the event of a loss by one of its members. Takaful is
similar to mutual insurance in that members are the insurers as well as the
insured. Conventional insurance is prohibited in Islam because its dealings
contain several haram elements including gharar and riba, as mentioned above.
Waqf
Detention.
Technically appropriation or tying-up of a property in perpetuity so that no
propriety rights can be exercised over the usufruct. The Waqf property can
neither be sold nor inherited or donated to anyone. Awqaf consists of religious
foundations set up for the benefit of the poor.
Zakah/Zakat
A
tax which is prescribed by Islam on all persons having wealth above an
exemption limit at a rate fixed by the Shariah. According to the Islamic belief
Zakah purifies wealth and souls. The objective is to take away a part of the
wealth of the well-to-do and to distribute it among the poor and the needy. It
is levied on cash, cattle, agricultural produce, minerals, capital invested in
industry, and business etc. The distribution of Zakah fund has been laid down
in the Qur'an (9:60) and is for the poor, the needy, Zakah collectors, new
converts to Islam, travellers in difficulty, captives and debtors etc. It is
payable if the owner is a Muslim and sane. Zakah is the third pillar of Islam.
It is an obligatory contribution which every well-off Muslim is required to pay
to the Islamic state, in the absence of which individuals are required to
distribute the Zakah among the poor and the needy as prescribed by the Shariah.
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PRAGMATIC WEALTH MANAGEMENT PVT. LTD.
Head
Office:
102,
1st Floor, Topaz Society,
Dr.
Nair Road, Agripada, Mumbai Central (E), Mumbai 400011
Tel: +91-8108178683
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