This course is designed to provide professional knowledge of Islamic Banking and Takaful. Target audiences of this course are Students, professionals, who want to make career in growing field of Islamic Finance and Takaful.

Course Contents

Introduction to Banking:

  • Bank: Origin, History, Evolution
  • Role and Functions of Bank
  • Bank’s operation: Deposit side and Asset Side

Islam and Economics:

  • Islamic Economic System: Similarities and Differences with Economic Systems of the World.
  • Islam and Economics: Basic Prohibitions and Compliance
  • Riba & Its Prohibition
  • What is Riba (Interest)?
  • Riba definitions. And its application in modern scenario.
  • Prohibition of Riba in Islam & Other Faiths
  • Social,Ethical and Economic consequences of Riba

Riba in Modern Banking and Finance.

  • Types of Riba.
    • Riba tul Nissayah
    • Riba tul Fadle
    • Simple and Compound
    • Usurary and Commercial Interest
  • Prohibition of Riba in Quran
    • Sura Rume
    • Sura Al Imran
    • Sura Nisa
    • Sura Baqara
  • Prohibition of Riba in Hadees:Analysis of Hadees literature
  • Economic and Social consequences of Riba
  • Some Argument and their analysis on Riba

Introduction to Islamic Law of Contract

  • Contract :
  • Different Definitions
  • Types of Contract:
    • Binding , Non-Binding
    • Compensatory , Non-Compensatory
  • Element of Contract:
    • Contactors, Form,Subject matter and Consideration
    • Capacity of Contracting parties
    • Subject matter:
    • Form of Contract
  • Prohibition of Gharar
  • Gharar (Uncertainity)
  • Gharar in Quran
  • Gharar in Hadith
  • Conditions for Gharar to become effective (major, contract core, contract not essential, related to commercial contracts)
  • Causes of Gharar
  • Gharar in existence of subject matter (not in existence, not in ownership, not in possession)
  • Gharar in transferring the possession of subject matter (sale of debt/receivable)
  • Gharar due to ambiguity (Jihalat) in various matters
  • Ambiguity in the wording of the contract (two trades in one contract, two contracts in one, contract contingent on a future event, future contract, contract related to token money and option sale)
  • Ambiguity in subject matter (wrt determination, specification, quality, quantity)
  • Ambiguity in price (sale without specification of price, sale at market price, istijrar, use of benchmark)
  • Ambiguity in the period of payment of price

Introduction to Islam and Shariah

  • General principles of contract in the Quran and Sunnah
  • Definition and elements of a contract
  • Definition and elements of a contract
  • Difference between Aqd and promise
  • Form / wording of a contract (kinds, necessary conditions, causes of offer cancellation)
  • Subject matter of a contract (legality, existence, determination, delivery)
  • Elements of a contract
  • Contractual capacity of contracting parties
  • Circumstances affecting legal capacity of a person
  • Kinds of contract
    • Valid / Sahih contract (kinds, causes of suspension)
    • Irregular / Fasid contract (causes of irregularity)
    • Void / Batil contract (causes of invalidity including Riba and Gharar)
  • Difference between valid and irregular contract
  • Difference between irregular and void contract
  • Classification of contracts
    • As per function (tamlikat, isqatat, itlaqat, taqyidat, tawsiqat, ishtirak, uqud al hifz)
    • Uqud al Muawadat (commutative contracts)
    • Uqud al Tabarru (gratuitous contracts)
    • As per time of completion
    • Specific contracts
    • Contract of Sale
  • Definition of Mal (subject matter)
  • Classification of Mal
  • Conditions for validity of sale
  • Prohibited sale contracts in Islamic law
  • Salam – a special kind of sale (differences between salam & ordinary sale)
  • Istisna (differences between Istisna and salam)
  • Murabaha
  • Bai Muajjal

Islam and Economics: Basic Prohibitions and Compliance

  • Islamic law of options / Khiyarat
    • Khiyar al Shart (condition)
    • Khiyar al Tayin (determination)
    • Khiyar al Ruyah (inspection)
    • Khiyar al Ayb (defect)
    • Khiyar al Wasf (description)
  • Delegating authority (agency contract)
  • Agency / Wakalah (conditions, subject matter, termination)
  • Modern agency contracts (Murabah – real life case)
  • Unauthorized agency / Fuduli
  • Guardianship / Wilayah
  • Contract of Kafalah (Garantee or suretyship) and Hawalah (Assignment of debt)
  • Kinds of Kafalah
  • Rules related to Kafalah
  • Letter of Credit and Kafalah
  • Validity, kinds and effects of Hawalah
  • Contract of Rahn (Pledge)
  • Kinds of Rahn
  • Rules related to Rahn
  • Contemporary forms of Rahn (Show and discuss actual security / pledge documents or promissory notes)

Introduction to Islamic Finance

  • Why Islamic Finance: Belief in divine guidance
  • What is Islamic Finance: Difference between capitalist and Islamic economy
  • Asset-Backed Financing
  • Concept of Capital and entrepreneur in Islam.
  • Present practice of Islamic Banks
  • Partnership Based Mode of Islamic Banking & Finance Mudarabah & Musharakah)
    • Musharakah
    • Cocept of Musharakah
    • The basic rules and Features of Musharakah.
    • Distribution of Profit & Loss in Musharakah.
    • The nature of the Capital
    • Management of Musharakah
    • Termination of Musharakah
    • Musharakah as Mode of Finance
  • Mudarabah
    • Business of the Mudaraba
    • The basic rules and Features of Mudarabah
    • Distribution of Profit & Loss in Mudarabah
    • Combination of Musharkah and Mudarabah
    • Mudarabah as Mode of Finance
    • Application of Mudarabah and Musharakah in Islamic Banks
  • Housing Finance on the basis of Diminishing Musharakah
    • Determine the Rental in Diminishing Musharakah
    • Unit Sale mechanism in Diminishing Musharakah
    • Diminishing Musharakah as Ideal product for Islamic Housing Finance.
  • Saving Accounts and Term Deposit on the basis of Mudarabah
    • Creation of Pool
    • Nature of Pool
    • Mudaraba with pool
    • Weightages and Distribution of Profit and loss
    • Provisioning of Profit
  • Trade Based Mode of Islamic Banking & Finance (Murabahah, Musawamah, Salam & Istisna)
  • Basic Rules & Kind of Bai ( Trade) in Islamic Banking and Finance.
  • Some Basic Type’s of Bai ( Murabahah, Salam, Istisna, Tawarruq, Musawamah Surf, Urboon, Eenna, Touliya, Wadhia etc )
  • Bai according to Quality (Bai Salah, Bai Fasid, Bai Batil, Bai Maqoof, Bai Majool, Bai Muqayaddah, Bai Mu’ajal etc )
  • Murabahah
    • Basic Features of Murabaha
    • Murabaha as financing mode
    • Stages involve in Murabaha Transaction.
    • Shariah compliance & legal documentation of Murabaha contract.
    • Murabaha in International Trade.
    • Practical aspects & issues of Murabahah
  • Salam and Istisna
    • Basics of Bai Istisna & Bai Istisna
    • Difference between Salam & Istisna
    • Practical implementation of Salam & Istisna
  • Ijarah and its Application in Islamic Bank
    • Ijarah (Islamic Lease)
    • Introduction and Brief Perspective of Ijarah.
    • Sharia’h alternative of Conventional Leasing – Ijarah.
    • Ijarah (Operating Lease) vs. conventional leasing (Financial Leasing)
    • Sharia’h compliance of Ijarah
    • Legal framework & documentations for ijarah products
    • Basic feature of Ijarah contract & Its Operational Mechanism
    • Practical aspects & Issues of Ijarah.
    • Practical Implementation of Ijarah
    • Ijarah as ideal mode for vehicle, Machinery & Fixed asset Financing.
    • Some common misconception of Ijarah.

Advance Topics in Islamic Finance Industry: Takaful, Fund Management, Risk Management and Sukuk

  • Takaful (Islamic Insurance)
    • Introduction to Takaful ( Islamic Insurance )
    • Takaful in Islamic Era.
    • Basic Features of Takaful.
    • Structural & Operational details of Takaful.
    • Structure of Takaful Products
    • Operation and performance of Takaful.
    • Legal and regularity framework in Takaful.
    • Organizational Principles, Basis, Value Proposition, Law,
    • Ownership, Management Status, Management and Invest Status in Conventional Insurance and Takaful Legal and Regularity requirement of Takaful.

Different Models, Products & Type of Takaful

  • Different Takaful Models.
  • Mudarabahah Model
  • Wakalah Model
  • Wakalah Waqf Model
  • Takaful products and Its Applications.
  • General Takaful Products
  • Family Takaful Products.
  • Other Kind of Takaful
    • Re – Takaful

Risk Management in Islamic Banking & Finance

  • Introduction of Risk and Its Management.
  • Concept of Risk and Its Type
  • Use of Derivative, Future, Hedging & Swaps Instruments.
  • Islamic Perspective for Risk Management
  • Fundamentals of risk Management in Islam.
  • Risk Management of Islamic Banking
  • Type of Risk in Islamic Banking and Financial Instruments ( other than insurance )
  • Credit Risk, Equity Risk, Market Risk, Liquidity Risk, Rate of Return Risk, Operational Risk, Political Risk, Internal Risk, External Risk etc.
  • Hedging in Islamic Banking
    • Concept of Hedging in Islam.
    • Hedging Product according to Islamic Perspective.
    • Conventional vs. Islamic hedging instruments

Types and Structure of Sukuk (Islamic Bond)

  • Different Types of Sukuk
  • Different type of Sukuk
    • (Ijarah Sukuk, Murabahah Sukuk, Salam Sukuk, Istisna Sukuk etc.)

Course Conductor

Mufti Ismail Desai