title: Daniele De Rossi

text: Regarded as one of the best midfielders in the world during his prime, De Rossi has been referred to as a "complete midfielder" because of his tackling, vision, awareness, passing range, strength, energy, and goal-scoring ability, which enable him to start counter-attacks or make attacking runs to advance into offensive positions after winning back possession. A quick, physical, hard-working and tenacious player, with good technique and an excellent ability to read the game, he has been praised for his ball skills, stamina, positional sense and ability in the air, as well as his powerful long-distance shooting; he is also an accurate penalty kick and set-piece taker. He has occasionally been criticised, however, for his aggression and tendency to pick up yellow cards unnecessarily.


title: Daniele De Rossi

text: De Rossi's ability to break down opposition plays and his adeptness at the box-to-box style of midfield play has led pundits to compare him to other world class box-to-box midfielders, such as Frank Lampard and Steven Gerrard. De Rossi has expressed admiration for Gerrard, as well as Roy Keane. Fellow former Roma and Italy midfielder Luigi Di Biagio likened De Rossi's playing style and position as a central midfielder to his own, due to their ability to assist their teams both offensively and defensively. De Rossi is considered to be one of the greatest Italian midfielders of his generation and of all time by pundits and managers. A former striker, De Rossi is a tactically intelligent and versatile player, who can play in various midfield positions, both in a defensive and attacking midfield role, or even as a central midfielder, as a "mezzala," and as a deep-lying playmaker, due to his ability to set the tempo of his team's play in midfield with short passes or create chances with long balls; on occasion, he has also played as a central defender or as a sweeper, or even as a false-attacking midfielder. His role has also been likened to that of a "metodista" ("centre-half," in Italian football jargon), due to his ability to dictate play in midfield as well as assist his team defensively. Due to his leadership and dedication on the pitch, he has been given the nickname "capitan futuro" ("future captain") by Roma fans and the media, as he was tipped to succeed Totti as Roma's captain.


title: Daniele De Rossi

text: Immediately after retirement, De Rossi stated his intention to become a coach, and he was quickly linked to several Serie A managerial vacancies between 2020 and 2021, such as Fiorentina, Crotone and Cagliari, all despite still not having the UEFA Pro Licence required to serve as head coach in the Italian top flight. In December 2020, De Rossi started the UEFA A licence course. On 18 March 2021, De Rossi was unveiled as Roberto Mancini's new assistant in charge of the Italian national team. On 11 July 2021, Italy won the UEFA Euro 2020 after a 3–2 victory on penalty shoot-out after a 1–1 draw on extra-time against England in the final.


title: Daniele De Rossi

text: He successively left the Italian team to complete his UEFA A coaching course; following that, he moved back to a role within the Italian Football Federation, this time as a technical collaborator for the Under-15 to Under-20 youth representatives. In January 2022, he agreed to return to join Roberto Mancini's staff to help for the 2022 FIFA World Cup qualification playoffs.


title: Daniele De Rossi

text: In September 2022, De Rossi was admitted to the UEFA Pro yearly coaching course organized by the Italian Football Federation, together with fellow 2006 FIFA World Cup winners Marco Amelia, Andrea Barzagli and Alessandro Del Piero.


title: Daniele De Rossi

text: De Rossi was born in Rome. He is the son of Alberto De Rossi, former Roma player and Roma's Primavera coach. He married Tamara Pisnoli on 18 May 2006, the mother of his daughter Gaia and ex-dancer of Mediaset, Sarabanda. The couple separated in early 2009. On 29 December 2006, according to a survey for the Italian edition of "Men's Health", he was named Italian athlete of the year for 2007.


title: Daniele De Rossi

text: De Rossi made his debut for Roma wearing the number 27 shirt, which he wore for two seasons. He then switched to the number 4, which he also wore during the 2006 World Cup. With the birth of his daughter on 16 June 2005, he changed to number 16 during the 2005–06 season, which one of his idols, Roy Keane, had also worn.


title: Daniele De Rossi

text: De Rossi was chosen as a Pringles spokesperson for Euro 2008, along with other top European football players such as Thierry Henry, Fernando Torres, Alexander Frei, Philipp Lahm and Michael Owen. He also appears in an Adidas "Dream Big" Commercial along with Steven Gerrard, Michael Ballack and David Beckham.


title: Daniele De Rossi

text: De Rossi is featured on the cover of the Italian edition of EA Sports' "FIFA 09" video game. The picture on the cover is taken from De Rossi's emphatic goal-scoring celebration after scoring against Internazionale in the Supercoppa Italiana in 2008.


title: Daniele De Rossi

text: De Rossi has a tattoo on his leg of a mocked-up triangular "hazard" sign of a tackle being performed, reflecting his tough-tackling reputation.


title: Daniele De Rossi

text: On 26 December 2015, De Rossi married his partner, English-born Italian actress and model Sarah Felberbaum, in a private ceremony in the Maldives; the couple had been in a relationship since 2011, and have a daughter together, Olivia Rose, born on 14 February 2014, and a son together, Noah, born on 3 September 2016.


title: Daniele De Rossi

text: In March 2016, he put his World Cup winner's medal in the coffin of Pietro Lombardi, who had been the kitman of the Italian national team in the 2006 World Cup.


title: Daniele De Rossi

text: On 9 April 2021, it was announced that De Rossi had become hospitalised in Rome due to COVID-19 symptoms; by 13 April, he had been discharged, and by 26 April, he had recovered.


title: Water for Elephants (film)

text: Water for Elephants is a 2011 American romantic drama film directed by Francis Lawrence and written by Richard LaGravenese, based on Sara Gruen's 2006 novel of the same name. It stars Reese Witherspoon, Robert Pattinson, and Christoph Waltz.


title: Water for Elephants (film)

text: The film was released in the United States on April 22, 2011. It received mixed reviews from film critics and grossed $117 million worldwide for a budget of $38 million.


title: Water for Elephants (film)

text: Charlie O'Brien, a circus owner, encounters an elderly man named Jacob Jankowski, who is separated from his nursing home group. Jacob reveals he had a career in the circus business and was present during one of the most infamous circus disasters of all time.


title: Water for Elephants (film)

text: In 1931, when Jacob was a 23-year-old veterinary medicine student taking his final exam at Cornell University, he learns that his parents were killed in a car accident. After the bank forecloses on the family home and in the midst of the Great Depression, he jumps onto a passing circus train. Jacob meets Camel, an employee with the Benzini Bros., who agrees to help Jacob obtain a job. Jacob meets ringmaster August, who after learning of Jacob's veterinary background, hires him to care for the animals. Jacob meets August's wife, Marlena Rosenbluth, and informs her that their star show horse has laminitis.


title: Water for Elephants (film)

text: August instructs Jacob to keep the horse performing as long as possible, but Jacob takes it upon himself to euthanize it. August is furious and he threatens to throw Jacob off the moving train to scare him into submission. However, August later expressed gratitude to Jacob for potentially saving Marlena from being injured by the sick horse. August soon procures Rosie, an Asian elephant, and assigns Jacob to train her. He invites Jacob to dinner with him and Marlena, and Jacob learns that August is possessive of her. After August passes out from drunkenness, Jacob and Marlena share a dance and nearly kiss.


title: Water for Elephants (film)

text: Jacob attempts but fails to train Rosie, and August beats her with a bullhook when she fails to follow orders. After Rosie runs off and nearly injures Marlena during a show, August savagely beats her. Jacob, with help from Marlena, Camel and his roommate Walter, clean her wounds and give her buckets of whisky to numb her pain. They unexpectedly learn that Rosie understands Polish commands. Rosie begins to perform beautifully and the circus enjoys a short period of success.


title: Water for Elephants (film)

text: Jacob and Marlena grow closer, and after escaping a prohibition raid at a restaurant, they kiss. Marlena expresses regret and Jacob considers quitting but can't bear to leave Rosie with August. When August later observes their chemistry, he abuses Marlena and cruelly taunts them. Marlena discovers that August plans to throw Jacob from the train and they run away together, hiding in a local hotel. They have sex but are ambushed by August's henchmen who drag Marlena away and beat up Jacob.


title: Water for Elephants (film)

text: Jacob covertly returns to the circus train, finds Marlena, and nearly kills August with a knife while he sleeps. Marlena tells Jacob that Camel and Walter were thrown from the train and killed and that several circus employees have become fed up with August's murderous cruelty and betrayal. The following day, they unlock all of the animal cages while an audience watches Marlena and Rosie's performance. Jacob attempts to find Marlena in the chaos, but August attacks him. Marlena tries to save Jacob from being beaten by August, but this causes the latter to turn his fury on her. August strangles Marlena while Jacob fights with August's lead henchman. Two circus employees save Jacob, and Rosie hits August on the back of the head with an iron stake, killing him and rescuing Marlena. The Benzini Bros. circus is officially shut down, and no one is charged with releasing the animals.


title: Water for Elephants (film)

text: Back in the present, Jacob explains to O'Brien that he and Marlena took Rosie and got jobs with the Ringling Bros. and Barnum & Bailey Circus. Jacob finished his degree and worked as a circus veterinarian while Marlena continued to perform with Rosie. They purchased a farm, married, had 5 children, and kept Rosie until her death. He took on a job as a vet at the Albany zoo and after many happy years together, Marlena died peacefully. Not wanting to return to the lonely nursing home, Jacob asks for a job as a ticket taker, and O'Brien agrees.


title: Water for Elephants (film)

text: On a budget of $38 million, filming began on May 20, 2010 in Los Angeles, Piru, Fillmore in California, Chattanooga, Tennessee, Kensington and Chickamauga in Georgia. The filming wrapped up on August 4, 2010. This is the second time Witherspoon and Pattinson have costarred together as they had filmed a deleted scene from 2004's "Vanity Fair" in which he was her estranged son. Reshoots for the film were scheduled for mid January 2011.


title: Water for Elephants (film)

text: In the film "Water for Elephants" the elephant Rosie, whom Tai portrays, is severely abused. A spokesperson from the AHA assured people that all scenes of abuse in the film were the work of special effects and CGI, and that the moaning and crying sounds that Tai is seen making on film were audio tracks, and were not actually made by Tai.


title: Water for Elephants (film)

text: Controversy erupted, however, regarding concerns Tai was mistreated prior to filming. A video released by the Animal Defenders International (ADI) in 2011 shows footage of Tai allegedly being shocked with handheld stun guns and beaten around the body and legs with bull hooks, while in the care of "Have Trunk Will Travel" in 2005. The ADI contacted AHA, urging them to re-evaluate how they assess the use of animals in films and the statements being made which effectively endorse the use of performing animals.


title: Water for Elephants (film)

text: "Have Trunk Will Travel" responded to the video stating, "The video shows heavily edited and very short snippets, obviously taken surreptitiously six years ago, purporting mistreatment of our elephants. If there was truly any abuse going on why wait six minutes, much less six years?" and added "None of the footage being shown was taken during Tai's training for Water for Elephants."


title: Water for Elephants (film)

text: On review aggregate Rotten Tomatoes, the film holds an approval rating of 60% based on 199 reviews, with an average rating of 6.10/10. The site's critical consensus reads, "It's a tale tastefully told and beautifully filmed, but "Water for Elephants" suffers from a pronounced lack of chemistry between its leads." Metacritic, which assigns a weighted mean rating to reviews, the film has a score of 52 out of 100, based on 35 critics, indicating "mixed or average reviews".


title: Water for Elephants (film)

text: Roger Ebert of the "Chicago Sun-Times" gave the film three stars out of four, stating: "This is good sound family entertainment, a safe PG-13 but not a dumb one, and it's a refreshing interlude before we hurtle into the summer blockbuster season." Todd McCarthy of "The Hollywood Reporter" gave the film a positive review. He stated: "The Reese Witherspoon-Robert Pattinson film will please fans of Sara Gruen's best seller, but it lacks the vital spark that would have made the drama truly compelling on the screen."


title: Water for Elephants (film)

text: Kenneth Turan of the "Los Angeles Times" gave the film a positive review, stating that "despite the stars' lack of romantic chemistry, there's much to enjoy in this cinematic retelling of Sara Gruen's big top bestseller, starting with the spectacular circus setting." James Berardinelli, film critic for "ReelViews", wrote: "There's an old-fashioned vibe to "Water for Elephants"; it's the kind of movie Hollywood once turned out with regularity but rarely does anymore."


title: Water for Elephants (film)

text: Richard Corliss of "Time" stated: "The proceedings get so slow and saccharine that viewers will relish the film's moments of redeeming idiocy. In one of them, Marlena whispers to Jacob, 'Bring Rosie to my tent and don't tell anyone' — as if the roustabouts wouldn't notice a 12-ft.-tall, 10,000-lb. creature striding down the midway. Granted, they'd also take a look at his handler, the divoon Robert Pattinson; but Rosie has a pretty strong odor too, and that's what will stick to you after seeing "Water for Elephants"."


title: Water for Elephants (film)

text: Some critics, however, praised the film's cast. Mick LaSalle of the "San Francisco Chronicle" stated that Pattinson succeeded at holding his own at the center of a major feature and that Witherspoon, while an odd fit for the role, was "actress enough to make it work." He continued: "the affectionate but turbulent dynamic among [Christoph] Waltz, Pattinson and Witherspoon is endlessly watchable." Peter Travers of "Rolling Stone" also wrote that Pattinson and Witherspoon "smoldered" under the "golden gaze of Rodrigo Prieto's camera."


title: Water for Elephants (film)

text: "Water for Elephants" was released in theaters on April 22, 2011. In the United States and Canada, the film was released theatrically in 2,817 conventional theaters. The film grossed $6,924,487 during its opening day on April 22, 2011, with midnight screenings in 2,817 locations. Overall the film made $16,842,353 and debuted at #3 on its opening weekend. On its second weekend, it dropped to #4 and grossed $9,342,413 - $3,313 per theater. By its third weekend it dropped down to #6 and made $6,069,603 - $2,322 per theater. As of September 27, 2011 its final gross is $58,709,717 in the United States and $58,385,185 overseas, for a total of $117,094,902.


title: Water for Elephants (film)

text: The film was released on Blu-ray and DVD on November 1, 2011 in two physical packages: a 1-disc DVD and 2-disc Blu-ray/Digital Copy combo pack. As of Nov. 6, it has been on Direct TV Cinema.


title: Islamic banking and finance

text: Islamic banking, Islamic finance (), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics. Some of the modes of Islamic banking/finance include "Mudarabah" (profit-sharing and loss-bearing), "Wadiah" (safekeeping), "Musharaka" (joint venture), "Murabahah" (cost-plus), and "Ijara" (leasing).


title: Islamic banking and finance

text: Sharia prohibits "riba", or usury, defined as interest paid on all loans of money (although some Muslims dispute whether there is a consensus that interest is equivalent to "riba"). Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also "haram" ("sinful and prohibited").


title: Islamic banking and finance

text: These prohibitions have been applied historically in varying degrees in Muslim countries/communities to prevent un-Islamic practices. In the late 20th century, as part of the revival of Islamic identity, A number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community. Their number and size has grown, so that by 2009, there were over 300 banks and 250 mutual funds around the world complying with Islamic principles, and around $2 trillion was Sharia-compliant by 2014. Sharia-compliant financial institutions represented approximately 1% of total world assets, concentrated in the Gulf Cooperation Council (GCC) countries, Pakistan, Iran, and Malaysia. Although Islamic banking still makes up only a fraction of the banking assets of Muslims, since its inception it has been growing faster than banking assets as a whole, and is projected to continue to do so.


title: Islamic banking and finance

text: The industry has been lauded for returning to the path of "divine guidance" in rejecting the "political and economic dominance" of the West, and noted as the "most visible mark" of Islamic revivalism, its most enthusiastic advocates promise "no inflation, no unemployment, no exploitation and no poverty" once it is fully implemented. However, it has also been criticized for failing to develop profit and loss sharing or more ethical modes of investment promised by early promoters, and instead selling banking products that "comply with the formal requirements of Islamic law", but use "ruses and subterfuges to conceal interest", and entail "higher costs, bigger risks" than conventional ("ribawi") banks.


title: Islamic banking and finance

text: Although Islamic finance contains many prohibitions—such as on consumption of alcohol, gambling, uncertainty, etc. – the belief that "all forms of interest are "riba" and hence prohibited" is the idea upon which it is based.


title: Islamic banking and finance

text: The word ""riba"" literally means "excess or addition", and has been translated as "interest", "usury", "excess", "increase" or "addition".


title: Islamic banking and finance

text: According to Islamic economists Choudhury and Malik, the elimination of interest followed a "gradual process" in early Islam, "culminating" with a "fully fledged Islamic economic system" under Caliph Umar (634–644 CE).


title: Islamic banking and finance

text: Other sources ("Encyclopedia of Islam and the Muslim World", Timur Kuran), do not agree, and state that the giving and taking of interest continued in Muslim society "at times through the use of legal ruses ("ḥiyal"), often more or less openly," including during the Ottoman Empire.


title: Islamic banking and finance

text: Still another source (International Business Publications) states that during the "Islamic Golden Age" the "common view of "riba" among classical jurists" of Islamic law and economics was that it was unlawful to apply interest to gold and silver currencies, "but that it is not "riba" and is therefore acceptable to apply interest to fiat money – currencies made up of other materials such as paper or base metals – to an extent."


title: Islamic banking and finance

text: In the late 19th century Islamic Modernists reacted to the rise of European power and influence and its colonization of Muslim countries by reconsidering the prohibition on interest and whether interest rates and insurance were not among the "preconditions for productive investment" in a functioning modern economy. Syed Ahmad Khan, argued for a differentiation between sinful "riba" "usury", which they saw as restricted to charges on lending for consumption, and legitimate non-"riba" "interest", for lending for commercial investment.


title: Islamic banking and finance

text: However, in the 20th century, Islamic revivalists/Islamists/activists worked to define all interest as "riba", to enjoin Muslims to lend and borrow at "Islamic Banks" that avoided fixed rates. By the 21st century this Islamic Banking movement had created "institutions of interest-free financial enterprises across the world". Loans are permitted in Islam if the interest that is paid is linked to the profit or loss obtained by the investment. The concept of profit acts as a symbol in Islam as equal sharing of profits, losses, and risks.


title: Islamic banking and finance

text: The movement started with activists and scholars such as Anwar Qureshi, Naeem Siddiqui, Abul A'la Maududi, Muhammad Hamidullah, in the late 1940 and early 1950s.


title: Islamic banking and finance

text: They believed commercial banks were a "necessary evil," and proposed a banking system based on the concept of "Mudarabah", where shared profit on investment would replace interest. Further works specifically devoted to the subject of interest-free banking were authored by Muhammad Uzair (1955), Abdullah al-Araby (1967), Mohammad Najatuallah Siddiqui, al-Najjar (1971) and Muhammad Baqir al-Sadr.


title: Islamic banking and finance

text: The involvement of institutions, governments, and various conferences and studies on Islamic banking (Conference of the Finance Ministers of the Islamic Countries held in Karachi in 1970, the Egyptian study in 1972, The First International Conference on Islamic Economics in Mecca in 1976, and the International Economic Conference in London in 1977) were instrumental in applying the application of theory to practice for the first interest-free banks. At the First International Conference on Islamic Economics, "several hundred Muslim intellectuals, Sharia scholars and economists unequivocally declared ... that all forms of interest" were "riba".


title: Islamic banking and finance

text: By 2004, the strength of this belief (which is the basis of Islamic finance) was demonstrated in the world's second largest Muslim country—Pakistan—when a minority (non-Muslim) member of the Pakistani parliament questioned it, pointing out that a scholar from Al-Azhar University, (one of the oldest Islamic Universities in the world), had issued a decree that bank interest was not un-Islamic. His statement resulted in "pandemonium" in the parliament, a demand by members of leading Islamist political party to immediately respond to these allegedly derogatory remarks, followed by a walkout when they were denied it. When the upset members of parliament returned, their leader (Sahibzada Fazal Karim), stated that since the Pakistan Council of Islamic ideology had decreed that interest in all its forms was "haram" (forbidden) in an Islamic society, no member of parliament had the right to "negate this settled issue".


title: Islamic banking and finance

text: The council's decree notwithstanding, over the years a minority of Islamic scholars (Muhammad Abduh, Rashid Rida, Mahmud Shaltut, Syed Ahmad Khan, Fazl al-Rahman, Muhammad Sayyid Tantawy and Yusuf al-Qaradawi) have questioned whether "riba" includes all interest payments. Others (Muhammad Akran Khan) have questioned whether "riba" is a crime like murder and theft, forbidden by Sharia (Islamic law) and subject to punishment by human beings, or simply a sin to be inveighed against, with the reprimand left to God, since "neither the Prophet nor the first four caliphs nor any subsequent Islamic government ever enacted any law against "riba"."


title: Islamic banking and finance

text: With an increase in the Muslim population in Europe and the current lack of supply, opportunities will arise for the important role which Islamic finance plays in Europe's economy. In particular, Luxembourg is emerging as a leader and hub for Islamic funds.


title: Islamic banking and finance

text: While revivalists like Mohammed Naveed insist Islamic Banking is "as old as the religion itself with its principles primarily derived from the Quran", secular historians and Islamic modernists see it as a modern phenomenon or "invented tradition".


title: Islamic banking and finance

text: It is argued that the fundraising business of Zubayr ibn al-Awwam were practically a Banking with zero interests. Zubayr pioneering this practice by technically modified the money keeping service to be a loan which Zubayr obligated to pay off, while Zubayr also got privilege to manage the money he kept to do his business. The practice of Zubayr to accept deposits from peoples while not charging any interest to his clients were causing Zubayr to suffered an inflated debt of 2,000,000 Dinar during his death. However, al-Zubayr invested the deposit moneys of the clients for his own lucrative businesses, so his inheritors managed to settle his debts, while still leaving many heritage for his family. After his death, his son Abdullah ibn Zubayr sold the property for 1.600.000 dinar, This practice was allowed according to classical scholar consensus, such as Ibn Taymiyyah in his Majmu Fatawa.


title: Islamic banking and finance

text: According to Timur Kuran, by "the tenth century, Islamic law supported credit and investment instruments" that were "as advanced" as anything in the non-Islamic world, but prior to the 19th century there were no "durable" financial institutions "recognizable as banks" in the Muslim world. The first Muslim majority-owned banks did not emerge until the 1920s.


title: Islamic banking and finance

text: An early market economy and an early form of mercantilism, sometimes called "Islamic capitalism", was developed between the eighth and twelfth centuries. The monetary economy of the period was based on the widely circulated currency the gold dinar, and it tied together regions that were previously economically independent.


title: Islamic banking and finance

text: A number of economic concepts and techniques were applied in early Islamic banking, including bills of exchange, partnership ("mufawada", including limited partnerships, or "mudaraba"), and forms of capital ("al-mal"), capital accumulation ("nama al-mal"), cheques, promissory notes, trusts (see "Waqf"), transactional accounts, loaning, ledgers and assignments. Muslim traders are known to have used the cheque or "ṣakk" system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. Organizational enterprises independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced during that time. Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.


title: Islamic banking and finance

text: In the middle of the 20th century, some organizational entities were found to offer financial services complying with Islamic laws. The first, experimental, local Islamic bank was established in the late 1950s in a rural area of Pakistan which charged no interest on its lending.


title: Islamic banking and finance

text: In 1963, the first modern Islamic bank on record was established in rural Egypt by economist Ahmad Elnaggar to appeal to people who lacked confidence in state-run banks. The profit-sharing experiment, in the Nile Delta town of Mit Ghamr, did not specifically advertise its Islamic nature for fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the Gamal Nasser regime. Also in that year the Pilgrims Saving Corporation was founded in Malaysia (although not a bank, it incorporated basic Islamic banking concepts).


title: Islamic banking and finance

text: The Mit Ghamr experiment was shut down by the Egyptian government in 1968. Nonetheless, it was considered a success by many, as by that time there were nine similar banks in the country. In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank, which as of 2016 was still in business in Egypt.


title: Islamic banking and finance

text: The influx of "petro-dollars" and a "general re-Islamisation" following the Yom Kippur War and 1973 oil crisis encouraged the development of the Islamic banking sector, and since 1975 it has spread globally.


title: Islamic banking and finance

text: In 1975, the Islamic Development Bank was set up with the mission to provide funding to projects in the member countries. The first modern commercial Islamic bank, Dubai Islamic Bank, was established in 1979. The first Islamic insurance (or "takaful") company – the Islamic Insurance Company of Sudan – was established in 1979. The Amana Income Fund, the world's first Islamic mutual fund (which invests only in Sharia-compliant equities), was created in 1986 in Indiana.


title: Islamic banking and finance

text: From 1980 to 1985, Islamic investments underwent a "spectacular expansion" throughout the Muslim world, attracting deposits with the promise of "great gains" and "religious guarantees" supplied by Islamic jurists who were "recruited to issue fatwas denouncing conventional banks and recommending their Islamic rivals." This growth was temporarily reversed in 1988 in the largest Arab Muslim country, Egypt, when the Egyptian state – worried that Islamist movements were building up a "war chest" and being given financial independence – reversed its tacit support for the industry, and launched a media campaign against Islamic banks. The ensuing financial panic led to the bankruptcy of some companies.


title: Islamic banking and finance

text: In 1990 an accounting organization for Islamic financial institutions (Accounting and Auditing Organization for Islamic Financial Institutions, AAOIFI), was established in Algiers by a group of Islamic financial institutions.


title: Islamic banking and finance

text: Also in that year the Islamic bond market emerged when the first tradable "sukuk" – the Islamic alternative to conventional bonds – were issued by Shell MDS in Malaysia. In 2002, the Malaysia-based Islamic Financial Services Board (IFSB) was established as an international standard-setting body for Islamic financial institutions.


title: Islamic banking and finance

text: By 1995, 144 Islamic financial institutions had been established worldwide, including 33 government-run banks, 40 private banks, and 71 investment companies. The large US-based Citibank began to offer Islamic banking services in 1996 when it established the Citi Islamic Investment Bank in Bahrain. The first successful benchmark for the performance of Islamic investment funds was established in 1999, with the Dow Jones Islamic Market Index (DJIMI).


title: Islamic banking and finance

text: Also in the 1990s, a false start was made in Islamic banking in the UK, where bankers declared returns "interest" for tax purposes, while insisting to depositors they were actually "profit" and so not "riba". Islamic scholars issued a fatwa stating they had "no objection to the use of the term 'interest'" in loan contracts for purposes of tax avoidance provided the transaction did not actually involve "riba", and the Islamic bankers used the term for fear that lack of tax deductions available for interest (but not profit) would put them at a competitive disadvantage to conventional banks. Muslim customers were not persuaded, and a "bad taste" was left "in the mouth" of the market for Islamic financial products. The Islamic Bank of Britain, the first Islamic commercial bank established outside the Muslim world, was not established until 2004.


title: Islamic banking and finance

text: By 2008 Islamic banking was growing at a rate of 10–15% per year and continued growth was forecast. There were over 300 Islamic financial institutions spread over 51 countries, as well as an additional 250 mutual funds complying with Islamic principles. Worldwide, approximately 0.5% of financial assets were estimated to be under Sharia-compliant management according to "The Economist" magazine.


title: Islamic banking and finance

text: But as the industry grew it also drew criticism (from M.T. Usmani among others) for not progressing from "debt-based contracts", such as "murabaha", to the more "genuine" profit and loss sharing mode, but instead moving in the opposite direction, "competing to present themselves with all of the same characteristics of the conventional, interest-based marketplace".


title: Islamic banking and finance

text: During the global financial crisis of 2008, Islamic banks were not initially impacted by the 'toxic assets' built up on the balance sheets of US banks as these were not Sharia-compliant and not owned by Islamic banks. In 2009, the official newspaper of the Vatican ("L'Osservatore Romano") put forward the idea that "the ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service". (The Catholic Church forbids usury but began to relax its ban on all interest in the 16th century.)


title: Islamic banking and finance

text: However, the drop in valuation of real estate and private equity – two segments heavily invested by Islamic firms – following the collapse of Lehman Brothers Islamic did hurt Islamic financial institutions.


title: Islamic banking and finance

text: As of 2015, $2.004 trillion in assets were being managed in a Sharia-compliant manner according to the State of the Global Islamic Economy Report. Of these $342 billion were "sukuk". The market for Islamic "Sukuk" bonds in that year was made up of 2,354 sukuk issues, and had become strong enough that several non-Muslim majority states – UK, Hong Kong, and Luxemburg – issued "sukuk."


title: Islamic banking and finance

text: There are multiple Shari'ah-compliant indexes, created by Shari'ah screening of companies. Such indexes include DJIM, S&PSI, MSCI and country-based indexes like KMI-Pakistan and SCM-Malaysia.


title: Islamic banking and finance

text: To be consistent with the principles of Islamic law (Sharia) – or at least an orthodox interpretation of the law—and guided by Islamic economics, the contemporary movement of Islamic banking and finance prohibits a variety of activities, some not illegal in secular states:


title: Islamic banking and finance

text: Money on the most common type of Islamic financing – debt-based contracts – "must be made from a tangible asset that one owns and thus has the right to sell – and in financial transactions it demands that risk be shared." Money cannot be made from money. Another statement of the Islamic banking theory of finance is: "Money has no intrinsic utility; it is only a medium of exchange."


title: Islamic banking and finance

text: In general, Islamic banking and finance has been described as having the "same purpose" as conventional banking but operating in accordance with the rules of Sharia law (Institute of Islamic Banking and Insurance), or having the same "basic objective" as other private entities, i.e. "maximization of shareholder wealth" (Mohamed Warsame). In a similar vein, Mahmoud El-Gamal states that Islamic finance "is not constructively built from classical jurisprudence". It follows conventional banking and deviates from it "only insofar as some conventional practices are deemed forbidden under Sharia."


title: Islamic banking and finance

text: A broader description of its principles is given by the Islamic Research and Training Institute of the Islamic Development bank,


title: Islamic banking and finance

text: "The most important feature of Islamic banking is that it promotes risk sharing between the provider of funds (investor) on the one hand and both the financial intermediary (the bank) and the user of funds (the entrepreneur) on the other hand ... In conventional banking, all this risk is borne in principle by the entrepreneur."


title: Islamic banking and finance

text: Some proponents (Nizam Yaquby) believe Islamic banking has more far reaching purposes than conventional banking, and declare that the "guiding principles" for Islamic finance include: "fairness, justice, equality, transparency, and the pursuit of social harmony", although others describe these virtues as the natural benefits of following Sharia. (Taqi Usmani describes the virtues as guiding principles in one section of his book on Islamic Banking, and benefits in another.)


title: Islamic banking and finance

text: Nizam Yaquby, for example declares that the "guiding principles" for Islamic finance include: "fairness, justice, equality, transparency, and the pursuit of social harmony". Some distinguish between Sharia-"compliant" finance and a more holistic, pure and exacting Sharia-"based" finance. "Ethical finance" has been called necessary, or at least desirable, for Islamic finance, as has a "gold-based currency". Taqi Usmani declares that Islamic banking would mean less lending because it paid no interest on loans. This should not be thought of as presenting a problem for borrowers finding funds, because – according to Usmani – it is in part to discourage excessive finance that Islam forbids interest. Zubair Hasan argues that the objectives of Islamic finance as envisaged by its pioneers were "promotion of growth with equity ... the alleviation of poverty ... [and] a long run vision to improve the condition of the Muslim communities across the world."


title: Islamic banking and finance

text: Some (such as convert Umar Ibrahim Vadillo) believe the Islamic banking movement has so far failed to follow the principles of Sharia law, or at least failed to follow them sufficiently strictly.


title: Islamic banking and finance

text: On the other hand, Usmani preached that an Islamic economy free of the "imbalances" in society – such as concentration of "wealth in the hands of the few", or monopolies which paralyze or hinder market forces – would "follow" from obeying "divine injunctions" by banning interest (along with other Islamic efforts). (Later in his book "Introduction to Islamic Finance", he argues that Islamic principles should include "the fulfillment of the needs of the society" giving "preference to the products which may help the common people to raise their standard of living", but that few Islamic banks have followed this path.) Another source (Saleh Abdullah Kamel), described the changes anticipated for the Muslim community by following Islamic approach to economics, banking, finance, etc., as a "move towards economic development, creation of the value added factor, increased exports, less imports, job creation, rehabilitation of the incapacitated and training of capable elements".


title: Islamic banking and finance

text: The Sharia law that forms the basis of Islamic banking is itself based on the Quran (revealed to the Islamic prophet Muhammad) and "ahadith" (the body of reports of the teachings, deeds and sayings of the Islamic prophet Muhammad that often explain verses in the Quran).


title: Islamic banking and finance

text: Prohibition of "gharar" is based on "ahadith" declaring as forbidden "gharar" the sale of things like "the birds in the sky or the fish in the water". "Maisir" is thought to be banned by verses 2:219, 5:90, and 91 in the Quran.


title: Islamic banking and finance

text: However, "the Islamic evaluation" of modern banking centers around the definition of interest on loans as "riba." Twelve verses in the Qur'an deal with "riba", the word appearing eight times in total, three times in verses , and once in , , , and . "Riba" is mentioned numerous times in "ahadith", including Muhammad's Farewell Sermon.


title: Islamic banking and finance

text: A number of orthodox scholars point to Quranic verses (2:275–2:280) as declaring "riba" "categorically prohibited" and "unjust" ("zulm"), and defining it to mean any payment "over and above the principal" of a loan. (Although at least one source states "it is commonly argued" that "riba" is "defined by hadith".)


title: Islamic banking and finance

text: "Those who devour usury shall not rise again except as he rises, whom Satan of the touch prostrates; that is because they say, 'Trafficking (trade) is like usury.' God has permitted trafficking, and forbidden usury. Whosoever receives an admonition from his Lord and gives over, he shall have his past gains, and his affair is committed to God; but whosoever reverts – those are the inhabitants of the Fire, therein dwelling forever. God blots out usury, but freewill offerings He augments with interest. God loves not any guilty ingrate. Those who believe and do deeds of righteousness, and perform the prayer, and pay the alms – their wage awaits them with their Lord, and no fear shall be on them, neither shall they sorrow. O believers, fear you God; and give up the usury that is outstanding, if you are believers. But if you do not, then take notice that God shall war with you, and His Messenger; yet if you repent, you shall have your principal, unwronging and unwronged.And if any man should be in difficulties, let him have respite till things are easier; but that you should give freewill offerings is better for you, did you but know. " ()


title: Islamic banking and finance

text: According to the orthodox, an "increase over the principal sum" in "loans of cash" are riba. An increase over the principal sum in "financing a purchase" of some product or commodity is another matter. These are "not" riba – according to the orthodox interpretation – at least in some circumstances. (These are sometimes known as "credit sales".) According to noted Islamic scholar Taqi Usmani, this is because in Quran aya 2:275 (""they say, 'Trafficking (trade) is like usury,' [but] God has permitted trafficking, and forbidden usury"") "trafficking (trade)" refers to credit sales such as "murabaha", the "forbidden usury" refers to charging extra for late payment (late fees), and the "they" refers to non-Muslims who did not understand why if the first was allowed both were not. For this reason (according to Usmani) it is "not" true that "whenever price is increased taking the time of payment into consideration, the transaction comes within the ambit of interest". Instead of "principal" and "interest rate", the credit taker is paying "cost" and "profit rate". (Another difference with conventional finance is that there is no penalty for late payment.)


title: Islamic banking and finance

text: While Usmani and other Islamic Banking pioneers envisioned credit sales like "murâbaḥah" being a limited part of the Islamic Banking industry and subordinate to profit and loss sharing, it has become the "most common" mode of Islamic financing.


title: Islamic banking and finance

text: The distinction between credit sales and interest has also come under attack from critics such as Khalid Zaheer and Muhammad Akram Khan – criticizing it from opposite points of view. Zaheer considers profit from credit sales to be "riba", the same as interest, and notes the lack of enthusiasm of orthodox scholars – such as the Council of Islamic Ideology – for credit sales-based Islamic Banking, which they (the council) call "no more than a second best solution from the viewpoint of an ideal Islamic system".


title: Islamic banking and finance

text: Khan calls the distinction "frivolous and laboured", a way of charging interest using another name, necessary because businesses "cannot survive where cash and credit prices are equal".


title: Islamic banking and finance

text: Others note that in terms of standard accounting practice and truth-in-lending regulations getting 90 days credit on a Rs 10000 product and paying an extra Rs 500, cost very nearly the same and is considered very nearly the same as paying in cash, using a three-month loan at 20% per annum.


title: Islamic banking and finance

text: Paying more for credit when buying a product ("an exchange of commodities for money") does not violate Sharia law, but exchange of "one unit of money for another of the same denomination" ("an exchange of money for money") and charging for credit "is" a violation of Sharia. The cash loan is different because "money has no intrinsic utility".


title: Islamic banking and finance

text: Other orthodox supporters (such as Kahf) have defended the Sharia-compliance of the practice saying that among other things, attaching commodities to money in finance prevents money from being used for speculative purposes. Critics report widespread abuses of "synthetic" "murabaha", which are loans with interest in all but name.


title: Islamic banking and finance

text: One of the pioneers of Islamic banking, Mohammad Najatuallah Siddiqui, suggested a two-tier "mudarabah" model as the basis of a "riba"-free banking. The bank would act as the capital partner in "mudarabah" accounts with the depositor on one side and the entrepreneur on the other side. (Another pioneer Taqi Uthmani called "mudarabah" and another profit-sharing form of finance "musharakah", the "real and ideal instruments of financing in Shari‘ah".) This model would be supplemented by a number of fixed-return models—mark-up ("murabaha"), leasing ("ijara"), cash advances for the purchase of agricultural produce ("salam") and cash advances for the manufacture of assets ("istisna"'), etc. In practice, the fixed-return models, in particular "murabaha" model, became the industry staples, not supplements, as they bear results most similar to the interest-based finance models. Assets managed under these products far exceed those in "profit-loss-sharing modes" such as "mudarabah" and "musharakah".


title: Islamic banking and finance

text: The time value of money – the idea that there is greater benefit in receiving money now rather than later, so that savers/investors/lenders should be compensated for delayed gratification – has been called one of the "most significant" arguments in favor of charging interest on loans. As such, some Islamic finance supporters have opposed the concept, arguing that some consumption – such as eating – can only be done over time, and discounting for time encourages negative outcomes such as unsustainable production like desertification, since the desertification comes in the discounted future.


title: Islamic banking and finance

text: However, since Islamic banking also calls for rewarding delayed gratification in the form of "return on investment" on both profit-sharing and credit sales, Islamic scholars and economists have tended to insist that time value of money is a valid concept "provided the rate of discount is the 'rate of return' on capital rather than the rate of interest," a position critics find specious.


title: Islamic banking and finance

text: The opposite of credit sales (i.e. the opposite of charging more in exchange for giving the buyer time to pay) is reduced charges for early payment. This is considered "haram" by the four Sunni schools of jurisprudence ("Hanafi", "Maliki", "Shafi'i", "Hanbali"), but not by all jurists according to Ridha Saadullah. He notes that such reductions have been permitted by some companions of the Prophet and some of their followers. This position has been advanced by Ibn Taymiyya and Ibn al-Qayyim, and it has, more recently, been adopted by the Islamic "Fiqh" Academy of the OIC. The Academy decided that "reduction of a deferred debt in order to accelerate its repayment, whether at the request of the debtor or the creditor is permissible under "Shariah". It does not constitute forbidden "riba" if it is not agreed upon in advance and as long as the creditor-debtor relationship remains bilateral. ..."


title: Islamic banking and finance

text: As noted above, the primary focus of Islamic banking is on financing without interest to avoid "riba", while trade is not an issue (per the Quranic statement that ""God has permitted trade and forbidden riba [usury]"". However trade transactions that involve gambling ("maisir"), or excessive risk ("bayu al-gharar") are "not" permitted. Among the financial instruments and activities common in conventional finance that are considered forbidden (or at least Islamically problematic) by many Islamic scholars and Muslims are:


title: Islamic banking and finance

text: On the other hand, at least one Islamic scholar (Mohammed Hashim Kamali) finds "nothing inherently objectionable" in selling and using options, which like other kinds of trade is "mubah" (permissible) in fiqh, and "simply an extension of the basic liberty that the Quran has granted". And both Islamic finance practitioners and critics find benefit in at least some uses of derivatives and short selling – managing risk in times of financial trouble, improving market efficiency and employee productivity.


title: Islamic banking and finance

text: At least some in the Islamic finance industry use derivatives and make short sales, and permissibility of this is a subject of "heated debate".


title: Islamic banking and finance

text: Global standards for trading Islamic profit-rate and currency swap derivatives were set in 2010 with the "Hedging Master Agreement" (see below).


title: Islamic banking and finance

text: A "Shariah-certified" short-sale had been created by some Shariah-compliant hedge funds. However both have been criticized as un-Islamic.


title: Islamic banking and finance

text: Sharia-compliant banking grew at an annual rate of 17.6% between 2009 and 2013, faster than conventional banking, and is estimated to be $2 trillion in size,


title: Islamic banking and finance

text: As of 2010, Islamic financial institutions operate in 105 countries. Statistics differ on which country has the largest Islamic banking sector. According to the 2016 World Islamic Banking Competitiveness Report (see table), Saudi Arabia, Malaysia, United Arab Emirates, Kuwait, Qatar, and Turkey represented over 87% of the international Islamic banking assets. A 2006 report by ISI Analytics also lists Saudi Arabia at the top and Iran as insignificant. In Qatar, Islamic banking assets were valued at $97 billion at the end of 2017, accounting for nearly 81% of total Islamic finance assets, according to QFC Authority chief executive officer Yousuf Mohamed al-Jaida. The country also announced the launch of an energy-focused Islamic bank with $10 billion capital in 2019, which would make it the biggest Islamic lender for energy projects in the world.


title: Islamic banking and finance

text: However, according to Ibrahim Warde, Shia-majority Iran dominates Islamic banking with $345 billion in Islamic assets, Saudi Arabia with $258 billion, Malaysia $142 billion, Kuwait with $118 billion and UAE with $112 billion. Islamic banks in UAE also provides Islamic investment programs which are Shariah compliant. And according to Reuters, Iranian banks accounted for "over a third" of the estimated worldwide total of Islamic banking assets, (although sanctions have hurt Iran's banking industry and "its Islamic financial system has evolved in ways that will complicate ties with foreign banks"). According to the latest central bank data, Iran's banking assets as of March 2014 totalled 17,344 trillion riyals or $523 billion at the free market exchange rate.


title: Islamic banking and finance

text: According to The Banker, as of November 2015, three out of ten top Islamic banks in the world based on return on assets were Iranian.


title: Islamic banking and finance

text: Because compliance with shariah law is the "raison d'être" of Islamic finance, Islamic banks and banking institutions that offer Islamic banking products and services should establish a Shariah Supervisory Board (SSB) – to advise them on whether or not some proposed transactions or products follows the Sharia, and to ensure that the operations and activities of the banking institutions comply with Shariah principles.


title: Islamic banking and finance

text: Since the beginning of modern Islamic finance, the work of the Shariah boards has become more standardized.


title: Islamic banking and finance

text: Among the organizations that have issued guidelines and standards for Shariah compliance are the AAOIFI, Fiqh Academy of the OIC, Islamic Financial Services Board (IFSB) (2009). The guidelines and standards are not regulations though, and each Islamic financial institution has its own SSB, which are not generally obliged to follow them.


title: Islamic banking and finance

text: As of 2013, regulators in Bahrain, Indonesia, Jordan, Kuwait, Lebanon, Malaysia and Pakistan have developed guidelines for SSBs in their respective jurisdictions. Some countries, like Indonesia, Kuwait, Malaysia, Pakistan, Sudan, and the UAE have centralized SSBs (In Malaysia that SSB is called the Shariah Advisory Council, and was set up at Bank Negara Malaysia (BNM).) A number of Shariah advisory firms have now emerged to offer Shariah advisory services to the institutions offering Islamic financial services.


title: Islamic banking and finance

text: The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), has been publishing standards and norms for Islamic financial institutions since 1993. By 2010, it had issued "25 accounting standards, seven auditing standards, six governance standards, 41 "shari'ah" standards and two codes of ethics." (By 2017 it had issued 94 standards in the "areas of Shari’ah, accounting, auditing, ethics and governance".) Although it is an independent body, its "pronouncements on the acceptability or otherwise of contractual structures in relation to Islamic financial instruments are to be viewed in the same vein as regulatory edicts." Its standards are mandatory for Islamic financial institutions in Bahrain, Sudan, Jordan and Saudi Arabia, and recommended for other Muslim countries and Islamic financial institutions according to Muhammad Akram Khan.


title: Islamic banking and finance

text: The International Islamic Financial Market – a standardization body of the Islamic Financial Services Board for Islamic capital market products and operations – was founded in November 2001 through the cooperation of the governments and central banks of Brunei, Indonesia and Sudan. Its secretariat is located in Manama Bahrain. It is not a regulatory body and its recommendations are "not implemented by most Islamic banks". Faleel Jamaldeen differentiates its controlling body (Islamic Financial Services Board) from the other Islamic Financial standards organ, the AAOIFI, saying,the AAOIFI sets best practices for handling the financial reporting requirements of Islamic financial institutions, IFSB standards are mainly concerned with the identification, management, and disclosure of risk related to Islamic financial products.


title: Islamic banking and finance

text: Individual countries also have accounting standards. The Institute of Chartered Accountants of Pakistan issues Islamic Financial Accounting Standards (IFAS).


title: Islamic banking and finance

text: The Islamic Interbank Money Market was established by Bank Negara Malaysia on 3 January 1994, and has developed instruments to manage the liquidity needs of the Islamic financial institutions – "funding and adjusting portfolios over the short term".


title: Islamic banking and finance

text: The Islamic Financial Services Board was founded on 3 November 2002 at Kuala Lumpur by central banks of Bahrain, Iran, Kuwait, Malaysia, Pakistan, Saudi Arabia, Sudan along with the Islamic Development Bank, AAOIFI, and IMF.


title: Islamic banking and finance

text: As of April 2015, the 188 members of the IFSB comprise 61 regulatory and supervisory authorities, eight international inter-governmental organisations, and 119 market players (financial institutions, professional firms and industry associations) operating in 45 jurisdictions. From 2002 to 2012 it issued 17 standards, guiding principles and notes.


title: Islamic banking and finance

text: Its objective is to standardize and harmonize the operation and supervision of Islamic financial institutions, standards and capital adequacy, risk management and corporate governance in consultation with a wide array of stakeholders and after following a lengthy process. It complements the task of the Basel Committee on Banking Supervision. As of 2015 it had published 17 standards and six guidance notes.


title: Islamic banking and finance

text: Islamic International Rating Agency started operations in July 2005 in Bahrain. It is sponsored by 17 multilateral development institutions, banks and other rating agencies.


title: Islamic banking and finance

text: The Dow Jones Islamic Market Index (DJIMI) was established in 1996. The Index has been approved by Fiqh Academy of the OIC. It uses three levels of screening—eliminating businesses involved in activities not allowed by Islamic law (alcohol, pork, gambling, prostitution, pornography, etc.); eliminating companies whose total debts divided by their 12-month average market capitalization are 33% or more of their total sources of funds; eliminating companies that have 'impure income or expenditure' (including, of course, interest) of more than 5–10 per cent of their income or expenditure (eliminating businesses with "any" 'impure income' being considered impractical).


title: Islamic banking and finance

text: In 2006, Citigroup launched the Dow Jones Citigroup Sukuk Index. The sukuk making up the Index must be at least $250 million in size, have a maturity of at least one year and a minimum rating of BBB-/Baaa3. In 1998, the FTSE Global Islamic Index was launched. It has 15 Islamic indices for various regions.


title: Islamic banking and finance

text: In 2007, the MSCI Islamic Index series was launched, one of the "MSCI 'Faith-Based' Indexes". It is constructed from the conventional MSCI country indices and covers 69 developed, emerging and frontier markets, including regions such as the Gulf Cooperation Council and Arabian markets.


title: Islamic banking and finance

text: Although no Muslim country has yet banned interest on loans completely, suggestions have been made as to how to deal with monetary policy when central banks operate in an interest-free environment and there are no longer any interest rates to lower or raise. Economist Mohammad N. Siddiqi has proposed that central banks offer "refinance facilities" to expand or contract credit as needed to deal with inflation or deflation.


title: Islamic banking and finance

text: He also proposes that short term credit for the production sector of the economy, be estimated by the central banks and the provided by them by manipulating the "refinance ratio" and the "lending ratio".


title: Islamic banking and finance

text: According to economist and Islamic finance critic Feisal Khan, a "true" or strict Islamic banking and finance system of profit and loss sharing (the type supported by Taqi Usmani and the Shariah Appellate Bench of the Supreme Court of Pakistan) would severely cripple central banks' ability to fight a credit crunch or liquidity crisis that leads to a severe recession (such as happened in 2007–8). This is because if credit was provided by taking "a direct equity stake in every enterprise" (the PLS approach) it would contract in a credit crunch. But situations like this – when financiers are "less and less sure of the creditworthiness of their financial sector counterparties" and essentially stop lending to even the biggest and most stable borrowers or even other banks – is exactly the time when credit expansion and "flooding" the economy with liquidity is needed to prevent widespread business bankruptcy and unemployment.


title: Islamic banking and finance

text: Banking makes up most of the Islamic finance industry. Banking products are often classified in one of three broad categories, two of which are "investment accounts":


title: Islamic banking and finance

text: Most Islamic finance is in banking, but non-banking finance such as "sukuk", equity markets, investment funds, insurance ("takaful"), and microfinance,


title: Islamic banking and finance

text: These products – and Islamic finance in general – are based on Islamic commercial contracts and contract law, with many products named after a particular contracts (e.g. "mudaraba") although they are combinations of more than one contract.


title: Islamic banking and finance

text: While the original Islamic banking proponents hoped profit-loss sharing (PLS) would be the primary mode of finance replacing interest-based loans,


title: Islamic banking and finance

text: long-term financing with profit-and-loss-sharing mechanisms is "far riskier and costlier" than the long term or medium-term lending of the conventional banks – according to critics such as economist Tarik M. Yousef – and has "declined to almost negligible proportions". Loans are permitted in Islam if the interest that is paid is linked to the profit or loss obtained by the investment. The concept of profit acts as a symbol in Islam as equal sharing of profits, losses, and risks.


title: Islamic banking and finance

text: A "mudarabah" or "mudharabah" contract is a profit sharing partnership in a commercial enterprise. One partner, "rabb-ul-mal", is a silent or sleeping partner who provides money. The other partner, "mudarib", provides expertise and management. The arrangement is similar to venture capital in conventional finance, in which a venture capitalist finances an entrepreneur, who provides management and labor.


title: Islamic banking and finance

text: Profits are shared between the parties according to a pre-agreed ratio, usually either 50%–50%, or 60% for the "mudarib" and 40% for "rabb-ul-mal". If there is a loss, the "rabb-ul-mal" loses the invested capital, and the "mudarib" loses the invested time and effort. The sharing of risk reflects the view of Islamic banking proponents that under Islam, the user of capital – labor and management – should not bear all the risk of failure. Sharing of risk, according to proponents, results in a balanced distribution of income, and prevents financiers from dominating the economy.


title: Islamic banking and finance

text: Like "mudaraba", "musharakah" is also a profit and loss sharing partnership, but one where investment comes from all the partners, all partners are given the option of participating in the management of the business, and all partners share in losses according to the ratio ("pro rata") of their investment.


title: Islamic banking and finance

text: "Musharakah" may be "permanent" or "diminishing". It is often used in investment projects, letters of credit, and the purchase or real estate or property. Use of "musharaka" is not great. In Malaysia, for example, the share of "musharaka" (or at least permanent "musharaka") financing declined from 1.4 percent in 2000 to 0.2 per cent in 2006


title: Islamic banking and finance

text: "Musharaka al-Mutanaqisa", (literally "diminishing partnership"), is a popular type of financing for major purchases such as housing. In it, the bank and purchaser (customer) have joint ownership of a purchased asset with the customer also leasing the asset. As the customer gradually paying off the cost the bank's equity share diminishes from all but the customer percentage of downpayment to nothing.


title: Islamic banking and finance

text: If the customer defaults and the asset is sold, the bank and the customer split the proceeds according to each party's current equity.


title: Islamic banking and finance

text: It would assist at this point to highlight how "Musharaka al-Mutanaqisa" is different than conventional banking mortgages, so that the salient difference, both in terms of law and practice is understood. To assist in this understanding, let's first see how regular mortgages work in the United States:


title: Islamic banking and finance

text: Once a buyer wishes to purchase a home, she approaches the lender and requests a loan. The lender in turn, if buyer qualifies, will lend money to buy the house, and the bank will usually set a fixed percentage of interest to be paid to the lender. Each payment to lender will then include a return of the portion of principal and the interest accrued on the remaining balance for that period. Over time, the entire principal is paid back to the lender, together with all the interest that is due. In terms of the ownership of the house, the buyer/borrower/debtor will have legal title to the house during the term of repayment and thereafter too. In the county title records office, the borrower will have a title deed showing the buyer as the title holder, and not the bank. Any diminishing value of the house is the risk of the borrower and not the bank. On the other hand, any appreciation is also of the borrower and the bank cannot ask for more principal due to the appreciation. Hence, the bank and the borrower know at the outset the exact obligations to each other. The bank, in an effort to secure its loan, will place a lien (a charge) on the property, so that if the borrower does not repay the loan, the bank gets the right to foreclose on the borrower's right to hold title and have the title be transferred to the bank (or the house be auctioned and the proceeds received by bank). In the U.S., most states have a judicial foreclosure process where the bank asks the court to sell the property to recover the balance of its loan and accrued interest, plus any other costs of the suit.


title: Islamic banking and finance

text: How is then "Musharaka al-Mutanaqisa" going to address the interest portion of the payment from borrower to the bank. The concept of title here then becomes critical, because the Islamic bank will still come up with the money to buy the house, but the bank will buy the house in partnership with the homeowner. Together the bank and the borrower will become "tenants in common" and the local recorder office will show both the bank and the buyer as joint owners. The percentage of ownership of the house at this point will be based on money ratio between bank and buyer. Let's assume buyer paid 10% and the bank paid 90% of the price. However, since the bank will not be living in the house, the buyer will agree to a rental payment for the use of the 90% of the portion of the property. In addition, buyer will also agree to buy a certain percent of the bank's portion on a monthly basis. Hence, buyer pays rent for usage, and also an amount to buy out the bank's portion. Since there is no interest being paid, this form of ownership (in partnership) is acceptable under shariah. At the end of the agreed rental term, the buyer will have bought out all of the 90% portion of the partnership, and buyer can then ask the bank to dissolve the partnership. The recorder's office will have a new title deed recorded, whereby the bank ceases to be a tenant-in-common with the buyer, and the buyer becomes the entire title holder (whether alone or with spouse, or any other entity as chosen by buyer).


title: Islamic banking and finance

text: The essence of both transactions is different, and that is based on the outset as to who exactly legally has title to the house at the outset. The other difference is that the monthly payments by buyer in Islamic banking are rent and partnership buyout payments, and not return of principal and interest as they are in conventional banking. Economically then, the Islamic bank also shares in the risk of house value dropping, where in the conventional banking model the bank has not taken any risk of depressed values. The opposite is true also, where both the Islamic bank and the buyer gain if house is sold for more than the book value of the partnership. In conventional banking, the bank does not benefit from rising prices.


title: Islamic banking and finance

text: Skeptics of the Islamic banking argue that the result is the same: the buyer makes monthly payments to own the house, much like a conventional mortgage. But has the risk of home ownership not been shared in Islamic banking? If it has legally, then it is not the same as the conventional mortgage transaction.


title: Islamic banking and finance

text: Asset-backed or debt-type instruments (also called contracts of exchange) are sales contracts that allow for the transfer of one commodity for another commodity, the transfer of a commodity for money, or the transfer of money for money. They include "Murabaha", "Musawamah", "Salam", "Istisna’a", and "Tawarruq".


title: Islamic banking and finance

text: "Murabahah" (or "murabaha") is an Islamic contract for a sale where the buyer and seller agree on the markup (profit) or "cost-plus" price for the item(s) being sold.


title: Islamic banking and finance

text: In Islamic banking it has become a term for both a marked-up price and deferred payment – a way of financing a good (home, car, business supplies, etc.) whereby the bank buys the good and resells it to the customer at higher price (informing the customer of the price increase), and offering to take payment in installments or in a lump sum.


title: Islamic banking and finance

text: "Murabahah" has also come to be the most common type of Islamic finance. One estimate is that 80% of Islamic lending is by "Murabahah". This is despite the fact that (according to Uthmani) Islamic finance Shari‘ah supervisory boards "are unanimous" in agreement that "Murabahah" loans "are not ideal modes of financing", and should be used only "when more preferable means of finance – ""musharakah", "mudarabah", "salam" or "istisna"' – are not workable for some reasons".


title: Islamic banking and finance

text: "Murabahah" differs from conventional finance (such as mortgages for homes or hire purchase for furniture or appliances), in that the fixed return with which the bank is compensated is called "profit" and not interest, and that the financier may not keep for itself any penalties for late payment.


title: Islamic banking and finance

text: Economists have questioned whether "Murabahah" is actually distinct from debt- and interest-based finance. The fact that there is a principal and a payment plan means that there is an implied interest rate, based on conventional banking interest rates such as LIBOR. Others complain that in practice most ""murabaḥah"" transactions do not involve actual buying or selling of goods or commodities, but are merely cash-flows between banks, brokers and borrowers. In contrast to LIBOR, Islamic banks lend money based on their own reference rate known as the Islamic Interbank Benchmark Rate which "uses expected profits from short-term money and a forecasted return on the assets of the bank receiving funds".


title: Islamic banking and finance

text: In Islamic jurisprudence ("fiqh"), "Bai-muajjal", also called "bai'-bithaman ajil", or BBA, is a credit sale or deferred payment sale, i.e. the sale of goods on a deferred payment basis. In Islamic finance, the "bai' muajjal" product also involves the price markup of a "murabahah" contract, and a "murabahah" product involves a "bai-muajjal" deferred payment. Thus the terms and are often used interchangeably, (according to Hans Visser), or "in practice ... used together" (according to Faleel Jamaldeen).


title: Islamic banking and finance

text: However, according to another (Bangladeshi) source, "Bai' muajjal" differs from "Murabahah" in that the client, not the bank, is in possession of and bear the risk for the goods being purchased before completion of payment. And according to a Malaysian source, the main difference between BBA (short for bai'-bithaman ajil) and "murabaha" – at least as practiced in Malaysia – is that "murabaha" is used for medium and short term financing and BBA for longer term.


title: Islamic banking and finance

text: is a financing arrangement where the financier/bank buys some asset from the customer on spot basis, with the financier's payment constituting the "loan". The asset is then sold back to the customer who pays in installments over time, essentially "repaying the loan". Since loaning of cash for profit is forbidden in Islamic Finance, some scholars do not believe "Bai' al 'inah" is permissible in Islam. According to the Institute of Islamic Banking and Insurance, it "serves as a ruse for lending on interest", but "Bai' al inah" is practiced in Malaysia and similar jurisdictions.


title: Islamic banking and finance

text: A "Musawamah" (literally "bargaining") contract is used if the exact cost of the item(s) sold to the bank/financier either cannot be or is not ascertained. "Musawamah" differs from "Murabahah" in that the "seller is not under the obligation to reveal his cost or purchase price". "Musawamah" is the "most common" type of "trading negotiation" seen in Islamic commerce.


title: Islamic banking and finance

text: "Istisna" (also "Bia Istisna" or "Bai' Al-Istisna") and "Bia Salam" (also "Bai us salam" or just "salam") are "forward contracts" – customized contracts where immediate payment is made for goods in the future – goods not yet manufactured, built, or harvested.


title: Islamic banking and finance

text: "Istisna" contracts (literally, a request to manufacture something) are limited by Islamic fiqh to use for manufacturing, processing, or construction, and may be applied in these regards within the sphere of supply chain management, while salam "can be effected on anything" — except gold, silver, or currencies based on these metals.


title: Islamic banking and finance

text: On the other hand, a salam contract cannot be cancelled unilaterally, the full price must be paid in advance, and the time of delivery must be specified – restrictions that do not apply to "istisna".


title: Islamic banking and finance

text: In a "istisna" contract, the financer/bank can makes payments in stages, to finance raw materials (in the case of manufacturing), or construction materials (in the case of the construction project). When the product/structure is finished and sold, the bank can be repaid.


title: Islamic banking and finance

text: "Salam" contracts predate "istisna" and were designed to fulfill the needs of small farmers and traders. Salam is a preferred financing structure and carries higher order of "Shariah" compliance than contracts such as "Murabahah" or "Musawamah".


title: Islamic banking and finance

text: Examples of use of "istisna" in the Islamic finance world include use by the Kuwait Finance House and the Barzan gas project in Qatar. Examples of banks using "Salam" are ADCB Islamic Banking and Dubai Islamic Bank.


title: Islamic banking and finance

text: is a leasing or renting contract. In traditional Islamic jurisprudence ("fiqh"), it means a contract for the hiring of persons, services, or the "usufruct" of a property, generally for a fixed period and price.


title: Islamic banking and finance

text: In Islamic finance, "al Ijarah" usually refers to a leasing contract that also includes a sales contract. Property such as plant, office automation, or motor vehicle, is leased to a client for stream of rental and purchase payments, so that the end of the leasing period coincides with completion of purchase payments and transfer of ownership to the lessee, and otherwise follows Islamic regulations.


title: Islamic banking and finance

text: There are several types of "ijarah" in Islamic finance ("operating ijarah" or "ijarah tashgheeliah", are leases without sales and finance):


title: Islamic banking and finance

text: "Ijarah thumma al bai"' (hire purchase) and "Ijarah wa-iqtina" ("lease and ownership") involve the leasing/renting/hiring of a good, paid in installments and ending with its purchase (or option to purchase) by/for the customer. Both involve two contracts – a lease and a transfer of ownership of the asset or the property – that should be recorded in separate documents.


title: Islamic banking and finance

text: The two modes differ in that in "Ijarah wa-iqtina" (or "ijara muntahia bittamleek") sale/ownership transfer is "an option given to the lessee" and cannot be a precondition. In "ijara thumma bay"' sale is part of the contract.


title: Islamic banking and finance

text: In a "forward ijarah" or "ijara mawsoofa bi al dhimma" Islamic contract, the service or benefit being leased is defined, rather than the particular unit providing that service/benefit.


title: Islamic banking and finance

text: In contemporary Islamic finance, it is used to finance construction (of a home, office, factory, etc.) combined with a "Istisna" contract. The party begins leasing the asset after "taking delivery" of it.


title: Islamic banking and finance

text: Among the complaints made against "ijara" are that in practice some rules protecting the customer are overlooked, that its rules provide weaker legal standing and consumer protection and less flexibility than conventional mortgage loan or car finance, as well as higher costs.


title: Islamic banking and finance

text: contract/product where the client/customer can raise cash to be repaid later by buying and selling some readily saleable asset.


title: Islamic banking and finance

text: An example of this would be a customer wishing to borrow $1000 in cash having their bank buy $1,100 worth of a commodity such as iron from a supplier, buying the iron from the bank on credit with 12 months to pay the $1100 back, immediately selling the metal back to the bank for $1000 cash to be paid on the spot. The bank resells the iron to the supplier. (This would be the equivalent of borrowing $1000 for a year at an interest rate of 11 per cent.)


title: Islamic banking and finance

text: Like "Bai' al inah" mentioned above, the greater complexity of this transaction means more fees and higher costs than a conventional bank loan, but (in theory) compliance with shariah law because of the tangible assets that underlie the transactions .


title: Islamic banking and finance

text: However, critics complain that "billions of dollars" of putative commodity-based tawarruq transactions have evaded the required commodity trades; and Islamic scholars both contemporary and classical have forbidden the practice. Nonetheless, as of 2012 Islamic banks using "Tawarruq" include the United Arab Bank, QNB Al Islamic, Standard Chartered of United Arab Emirates, and Bank Muamalat Malaysia.


title: Islamic banking and finance

text: Taqi Usmani insists that "role of loans" (as opposed to investment or finance) in a truly Islamic society is "very limited", and that Shariah law permits loans not as an ordinary occurrence, "but only in cases of dire need".


title: Islamic banking and finance

text: A shariah-compliant loan is known as "Qardh-ul Hasan", (also "Qard Hasan", literally: "benevolent loan" or "beneficence loan"). It is often described as an interest-free loan extended to needy people.


title: Islamic banking and finance

text: Such loans are often made by social service agencies, or by a firm as a benefit to its employees, rather than by Islamic banks. They are analogous to the microcredit of conventional finance, when it does not provide for an interest.


title: Islamic banking and finance

text: Quoting the Islamic prophet Muhammad, some sources insist that lenders may not gain "any advantage or benefits" from the loan, let alone interest.


title: Islamic banking and finance

text: However, some Islamic banks offer products called "qardh-ul hasan" which charge lenders a management fee,


title: Islamic banking and finance

text: and others have savings account products called "qardh-ul hasan," (the "loan" being a deposit to a bank account) where the debtor (the bank) may pay an extra amount beyond the principal amount of the loan (known as a hibah, literally gift) if the extra is not an obligation of the account/loan agreement.


title: Islamic banking and finance

text: "Hawala" (also "Hiwala", "Hewala", or "Hundi"; literally "transfer" or "trust") is a widely used, informal "value transfer system" for transferring funds from one geographical area to another, based not on wire transfers but on a huge network of money brokers (known as "Hawaladars") throughout the Muslim world.


title: Islamic banking and finance

text: "Hawala" was not started as an "halal" alternative to conventional banking transfers, since electronic wire transfers have not been found in violation of sharia. However, "hawala" has the advantage of being available in places wire transfer is not, and predates conventional banking remittance systems by many centuries.


title: Islamic banking and finance

text: In the first half of the 20th century it lost ground to instruments of the conventional banking system, but regained it starting in the late 20th century with the economic migration of Muslim workers to wealthier countries in the West and the Gulf and their need to send money home. Dubai has traditionally served as a hub.


title: Islamic banking and finance

text: "Hawala" is based on a short term, discountable, negotiable, promissory note (or bill of exchange) called "Hundi", transferred from one debtor to another. After the debt is transferred to the second debtor, the first debtor is free from his/her obligation. Recipient of the funds often identify themselves with passwords given to them by the sender. Hawaladars are often small traders who work at "hawala" as a sideline or moonlighting operation. Hawaladars networks are usually family or clan-based, and enforcement of the contracts is based on these networks rather than the power of the state.


title: Islamic banking and finance

text: "Kafala" (literally "guarantee), is called "surety" or "guaranty" in conventional finance. A third party accepts an existing obligation and becomes responsible for fulfilling someone's liability.


title: Islamic banking and finance

text: "Rahn" (collateral or pledge contract) is property pledged against an obligation. A "rahn" contract is made in order to secure a financial liability. According to Mecelle, "rahn" is "to make a property a security in respect of a right of claim, the payment in full of which from the property is permitted." Hadith tradition states that the Islamic prophet Muhammad purchased food grains on credit pledging his armor as "rahn".


title: Islamic banking and finance

text: In a "Wakalah" contract, a person (the principal or "muwakkel") appoints a representative (the agent or "wakil") to undertake transactions on his/her behalf, that the principal does not have the time, knowledge or expertise to perform themselves – similar to a power of attorney agreement in conventional legal terms. Wakalah should be a non-binding contract for a fixed fee. The agent's services may include selling and buying, lending and borrowing, debt assignment, guarantee, gifting, litigation and making payments, and are involved in numerous Islamic products like "Musharakah", "Mudarabah", "Murabaha", "Salam" and "Ijarah".


title: Islamic banking and finance

text: An example of "wakalah" is found in a "mudarabah" profit and loss sharing contract (above) where the "mudarib" (the party that receives the capital and manages the enterprise) serves as a "wakil" for the "rabb-ul-mal" (the silent party that provides the capital)


title: Islamic banking and finance

text: From the point of view of depositors, "Investment accounts" of Islamic banks – based on profit and loss sharing and asset-backed finance – play a similar role to the "time deposits" of conventional banks. (For example, one Islamic bank – Al Rayan Bank in the United Kingdom – talks about "Fixed Term" deposits or savings accounts). In both, the depositor agrees to hold the deposit at the bank for a fixed amount of time. In Islamic banking return is measured as "expected profit rate" rather than interest.


title: Islamic banking and finance

text: "Demand deposits" of Islamic financial institutions, which provide no return, are structured with "qard al-hasana" (also known as "qard", see above in Charitable lending) contracts"," or less commonly as "wadiah" or "amanah" contracts, according to Mohammad O. Farooq.


title: Islamic banking and finance

text: At least in one Muslim country with a strong Islamic banking sector (Malaysia), there are two main types of investment accounts offered by Islamic banks for those investing specifically in profit and loss sharing modes – restricted or unrestricted.


title: Islamic banking and finance

text: Some have complained that UIA accounts lack transparency, fail to follow Islamic banking standards, lack of customer representation on the board of governors, and have sometimes hidden poor performance from investors.


title: Islamic banking and finance

text: Islamic banks also offer "demand deposits", i.e. accounts which promise the convenience of returning funds to depositors on demand, but in return usually pay little if any return on investment and/or charge more fees.


title: Islamic banking and finance

text: Because demand deposits pay little if any return and "Qard al-hasana" (mentioned above) loans are forbidden to pay any "stipulated benefit", the Qard mode is a popular Islamic finance structure for demand deposits. In this design, customer deposits constitute "loans" and the Islamic bank a "borrower" who guarantees full return of the "lenders" deposits.


title: Islamic banking and finance

text: However, critics (M.O. Farooq, Mohammad Hashim Kamali) see conflicts between qard's role in demand deposits and the dictates of traditional Islamic jurisprudence. "Qard al-hasana" loans are intended to be acts of charity to the needy who are allowed lenient repayment.


title: Islamic banking and finance

text: Islamic banks, on the other hand, are multi-million or billion dollar profit-making institutions, and their depositor/lenders typically expect to be able to withdraw their deposits on demand rather than be asked to be lenient with the bank.


title: Islamic banking and finance

text: A further issue is that at least some conventional banks do pay a modest interest on their demand/savings deposits, and Islamic banks often feel a need to compete with them, finding an (at least putative) shariah compliant technique to do so. The means that has been used is "Hibah" (literally "gift"), in the form of prizes, exemptions, etc., which officially differ from the conventional banks' interest/"riba" in not being legally stipulated or time bound.


title: Islamic banking and finance

text: Its use has nonetheless has been attacked by at least one scholar as "entry of "riba" through the back door".


title: Islamic banking and finance

text: Two other contracts sometimes used by Islamic finance institutions for pay-back-on-demand accounts instead of "qard al-hasanah",


title: Islamic banking and finance

text: Sources disagree over the definition of these two contracts. "Often the same words are used by different banks and have different meanings."


title: Islamic banking and finance

text: Sources differ over whether "Wadiah" deposits are simply guaranteed by the bank or must be kept unused with 100% reserve, with another contract – called "Wadia yadd ad daman" – allowing "rights of disposal" to invest but guaranteeing "repayment of the whole or part" of "current account deposit".


title: Islamic banking and finance

text: Sources also differ over whether banks can use "Amanah" accounts for its operations – if it "obtains" the "authority" of depositor – or not. Sources do agree that the trustee of "amanah" is not liable for "unforeseen mishap" (Abdullah and Chee), "resulting from circumstances beyond its control",(financialislam.com), or if there has not been a "breach of duty" (Reuters).


title: Islamic banking and finance

text: According to at least one report, in practice no examples of 100 percent reserve banking are known to exist.


title: Islamic banking and finance

text: "Sukuk", (plural of صك Sakk) – often called "Islamic" or "sharia compliant" bonds – are financial certificates developed as an alternative to conventional bonds. Different types of sukuk are based on different structures of Islamic contracts mentioned above ("murabaha", "ijara", "wakala", "istisna", "musharaka", "istithmar", etc.), depending on the project the "sukuk" are financing.


title: Islamic banking and finance

text: Like conventional bonds, "sukuk" have expiration dates. But instead of receiving interest payments on money lent as bonds do, "sukuk" holders are given "(nominal) part-ownership of an asset" from which they receive income "either from profits generated by that asset or from rental payments made by the issuer".


title: Islamic banking and finance

text: The part ownership element and (at least in theory) the lack of a guaranteed repayment of initial investment resembles equity instruments. However, in practice, most "sukuk" are "asset-based" rather than "asset-backed"—their assets are not truly owned by their Special Purpose Vehicle, and (like conventional bonds), their holders have recourse to the originator if there is a shortfall in payments.


title: Islamic banking and finance

text: The "sukuk" market began to take off around 2000 and as of 2013, "sukuk" represent 0.25 percent of global bond markets. The value of the total outstanding "sukuk" as of the end of 2014 was $294 billion, with $188 billion from Asia, and $95.5 billion from the countries of the Gulf Cooperation Council. Demand for "sukuk" should able to support further growth.


title: Islamic banking and finance

text: "Takaful", sometimes called "Islamic insurance", differs from conventional insurance in that it is based on mutuality so that the risk is borne by all the insured rather than by the insurance company. Rather than paying premiums to a company, the insured contribute to a pooled fund overseen by a manager, and they receive any profits from the fund's investments.


title: Islamic banking and finance

text: Any surplus in the common pool of accumulated premiums should be redistributed to the insured. (As with all Islamic finance, funds must not be invested in "haram" activities like interest-bearing instruments, enterprises involved in alcohol or pork.)


title: Islamic banking and finance

text: Like other Islamic finance operations, the "takaful" industry has been praised by some for providing "superior alternatives" to conventional equivalents; and criticized by others for not being significantly different from them in its use of the "law of large numbers" to spread risk, or its use of conventional corporate (not mutual) management practices.


title: Islamic banking and finance

text: While a number of scholars (Manzur Ahmad, Hossein Askari, Zamir Iqbal and Abbas Mirakhor) have cast doubt on the shariah compliance of any kind of credit card – or at least cards that "can offer the same service as the conventional credit card" – there are credit cards claiming to be shariah-compliant (particularly in Malaysia, where as of about 2012 they were offered by Bank Islam Malaysia Berhad, CIMB Islamic Bank Berhad, HSBC Amanah Malaysia Berhad, Maybank Islamic Berhad, RHB Islamic Bank Berhad, Standard Chartered Berhad, Am Islamic Bank Berhad.),


title: Islamic banking and finance

text: Islamic funds are professionally managed investment funds that pool money from many investors to purchase securities that have been screened for sharia compliance. They include mutual funds holding equity and/or sukuk securities, but also Islamic "alternative" funds deal in "anything from private equity and real estate to infrastructure and commodity asset classes." They began growing fairly rapidly in about 2004, and as of 2014 there were 943 Islamic mutual funds worldwide and as of May 2015, they held $53.2 billion of assets under management, with "latent demand" for considerable growth.


title: Islamic banking and finance

text: Creators of benchmarks to gauge the (equity) funds' performance include the Dow Jones Islamic market index series and the FTSE Global Islamic Index Series.


title: Islamic banking and finance

text: At least from 2000 to 2009, Islamic equity funds under-performed both Islamic and conventional equity benchmarks, particularly as the 2007–08 financial crisis set in (according to a study by Raphie Hayat and Roman Kraeuss).


title: Islamic banking and finance

text: As mentioned above (see Islamic laws on trading), "almost all conservative Sharia scholars" believe derivatives (i.e. securities whose price is dependent upon one or more underlying assets) are in violation of Islamic prohibitions on "gharar". This, however, has not stopped the Islamic finance industry from using some of these instruments, and derivative permissibility in Islam is a subject of "heated debate".


title: Islamic banking and finance

text: The Islamic finance equivalent of a conventional call option is known as an "urbun" (lit. "down payment"), the equivalent of a put option is known as a "reverse "urbun"". In each the seller has the right but not the obligation to either buy (in the case of a call or "urbun") or sell (in the case of a put or "reverse "urbun"") at a pre-determined price by some point in the future. These two Islamic options also have a different name for a "premium", (called a "down-payment") and for the "strike price" ("preset price"). The options' Islamic distinctiveness has been questioned by analysts, and its use has been criticized by conservative scholars.


title: Islamic banking and finance

text: Microfinance seeks to help the poor and spur economic development by providing small loans to entrepreneurs too small and poor to interest non-microfinance banks. Its strategy meshes with the "guiding principles" or objectives of Islamic finance, and with the needs of Muslim-majority countries where a large fraction of the world's poor live, many of them small entrepreneurs in need of capital, and most unwilling or unable to use formal financial services.


title: Islamic banking and finance

text: According to the Islamic Microfinance Network website (as of circa 2013), there are more than 300 Islamic microfinance institutions in 32 countries, The products used in Islamic microfinance may include some of those mentioned above – "qard al hassan", "musharaka", "mudaraba", "salam", and others.


title: Islamic banking and finance

text: Unfortunately, a number of studies have found "very few examples" of Microfinance institutions "operating in the field of Islamic finance" and few Islamic banks "involved in microfinance".


title: Islamic banking and finance

text: One 2012 report found that Islamic microfinance made up less than 1 per cent of the global microfinance outreach, "despite the fact that almost half of the clients of microfinance live in Muslim countries and the demand for Islamic microfinance is very strong."


title: Islamic banking and finance

text: These are the emic (from within) issues discussed within the Islamic community for the compliance of Islamic banking and finance with sharia and the desired Islamic objectives.


title: Islamic banking and finance

text: On the other hand, the industry also has challenges —"key" among them, as of 2016 (according to the "State of the Global Islamic Economy Report", 2015/16 and the IMF), include:


title: Islamic banking and finance

text: Another challenge in Islamic banking has been exploitation of poor gullible people in the name of religion.


title: Islamic banking and finance

text: Critics have complained of Islamic banking and finance closely resembling the conventional sort but having "higher costs, bigger risks", – a situation that has not been remedied by "learning" over the decades.


title: Islamic banking and finance

text: Other issues/complaints include a lack of policies to uplift small traders and the poor; the challenge of inflation, late payments, the lack of hedging of currencies and rates, or of sharia-compliant places to park short term funds for liquidity; the non-Muslim ownership of much of Islamic banking, and the concentration of what ownership is in Muslim hands.


title: Islamic banking and finance

text: Some Islamic Banking observers believe the industry suffers from handpicked, highly paid Shariah experts who have been approving financial products using "ḥiyal" (legal stratagem) to follow sharia law, "shunning controversial issues", and/or "rubber stamping" bank management decisions after perfunctory reviews, and that the banking practices approved by this small number of Islamic jurists have moved closer and closer to the practices of conventional non-Islamic banking.


title: Islamic banking and finance

text: "We create the same type of products that we do for the conventional markets. We then phone up a Sharia scholar for a Fatwa ... If he doesn't give it to us, we phone up another scholar, offer him a sum of money for his services and ask him for a Fatwa. We do this until we get Sharia compliance. Then we are free to distribute the product as Islamic."


title: Islamic banking and finance

text: According to Foster, this practice of "shopping" for an Islamic scholar who will issue a fatwa testifying that a banking product obeys Shari'ah law has led to "top scholars" earning "six-figure sums" for each "fatwa", and to Islamic financing mechanisms that appear to outsiders to be mortgages "dressed up in Arabic terminology"—such as "Mudarabah", or "Ijarah" (lease agreements).


title: Islamic banking and finance

text: Mahmoud El-Gamal believes that from the 1970s to the 2000s there has been an evolution of the industry towards "progressively closer approximations" of the practices of conventional banking, approved by "progressively smaller" numbers of jurists (with only a small group for example approving "unsecured lending" to retail and corporate customers through the "tawarruq" mode in the early 2000s). The scarcity of qualified shariah supervisors – who need to be trained in both Islamic commercial law and contemporary financial practices – has been noted. One study found the 20 most popular shariah scholars holding 621 sharia board positions, – creating potential conflicts of interest.


title: Islamic banking and finance

text: This scarcity also increases fees. Two researchers noted the small group of Shariah experts "earn as much as US$88,5000 per year per bank" and can "charge up to US$500,000 for advice on large capital market transactions."


title: Islamic banking and finance

text: Income far in excess of what has been customary for Islamic scholars – luxury air travel and five star hotel – as well as being eagerly asked for their legal opinion by wealthy, high status people, may lead to what one writer (Muhammad O. Farooq) calls a "certain changes in viewpoint" resulting in "over-stretching the rules of Shariah".