najash The prohibited practice of deceiving and inciting a potential buyer during the course of pre-sale negotiations or bidding by egging him on, either through insincere bidding on the part of a spectator (such as bidding with no intention of buying and merely in order to have the would-be buyer raise his bid), or false statements on the part of the seller himself (such as the seller claiming that the commodity is of greater value than its true worth). nisab The exemption limit for the payment of zakah. A Muslim who possesses wealth below the nisab is exempted from paying zakah, while a Muslim who possesses wealth at or above this exemption limit is obliged to pay zakah. The nisab differs depending on the type of wealth in question.
PLS Profit and Loss Sharing. The term is used to describe any one of several financial schemes (but particularly the banking system of Pakistan) based on the principle of interest-free lending and featuring the use of mudarabah and musharakah (see entries) as financing instruments.
qabd(lit. seizing) taking possession of the exchange commodity in an exchange transaction, such as the exchanger taking possession of the silver which he traded for his own gold. Its being immediate is a necessary condition for the validity of currency exchange. qard hassana loan per amore in which there is no interest. In Islamic law, all loans are gratuitous contracts qimarA type of prohibited arrangement in which the acquisition of property is contingent upon the occurrence of an uncertain event, as is the case in gambling. qirad Qirad is a synonym for mudarabah. Qur'anthe Book of Divine Revelation that was delivered to humankind by the Prophet Mohammed, peace be upon him.
ra's al-malCapital. The money or property which an investor (rabb al-mal) invests in a profit-seeking venture, often in a partnership (musharakah) such as a mudarabah or shirkah arrangement. rabb al-mal In the mudarabah, the investor. rahn Collateral; a pledge or the transaction which governs such a pledge. riba (lit. increase) any increase in a loan or sale transaction which accrues to the lender, seller or buyer, without the provision of an equivalent counter-value to the other party. In Islam, riba is one of the most abhorrent of all sins and is absolutely prohibited. Riba encompasses various types of illict gain, of which banking interest is one example. riba al-fadl The riba of exchange surplus. Any commodity-for-commodity exchange transaction (i. e. barter) in which the exchanged commodities are of the same type but of unequal measure, or the delivery of one commodity is postponed. riba al-nasi'ah Postponement riba. Riba al-nasi`ah is one of the two categories into which riba (see entry) is often divided by the fuqaha', the other being riba al-fadl (see entry). Riba al-nasi'ah takes place when two ribawi substances (see al-amwal al-ribawiyyah) are exchanged, one immediately and the other with a delay. An example of riba al-nasi'ah: two parties agree to exchange 10 kilos of gold for 2 kilos of silver such that the former is handed over immediately and the latter is to be delivered 2 weeks from the date the contract is signed. Another example: two traders exchange 1 metric ton of wheat for 2 metric tons of barley such that the latter is delivered after one year. rishwah Bribery. rukn (lit. pillar, pl. arkan) In fiqh, an integral part of an act, such as a transaction, without which the act can not be said to have been performed.
sadaqah (pl. sadaqat) Charitable giving. sahih (lit. sound, healthy, correct) said of a valid contract, opp. of b�til. A hadith of the highest level of authentication. salah Ritual prayer; the second pillar of Islam after the shahadah. salamA type of sale in which the full price of the goods is paid in advance and the goods are delivered at a specified date in the future. salamA contract for the purchase of a commodity for deferred delivery in exchange for immediate payment according to specified conditions sarf Currency exchange. shahadahTestimony to the fact that Allah has the unique right to be worshipped to the exclusion of anything or anyone else and that the ProphetMuhammad is the Messenger of Allah by declaring, "Ashhadu an la ilaha illallah wa ashhadu anna Muhammadan rasulullah" (i.e. "I testify that there is no one or thing rightfully worshipped except Allah and that Muhammad is the Messenger of Allah). Shariah: Islamic law as revealed in the Quran and through the example of ProphetMuhammad (PBUH). A Shariah compliant product meets the requirements of Islamic law. A Shariah board is the committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of Shariah compliant products. Shariah advisor An independent professional, usually a classically trained Islamic legal scholar, that advises an Islamic bank on the compliance of its products and services with the Shariah, or Islamic law. While some Islamic banks consult individual Shariah advisors, most establish a committee of Shariah advisors (often know as a Shariah board or Shariah committee).
Shariah compliant An act or activity that complies with the requirements of the Shariah, or Islamic law. The term is often used in the Islamic banking industry as a synonym for "Islamic"�for example, Shariah compliant financing or Shariah compliant investment. shart (pl. shurut) A necessary condition, something which needs to exist or be present in order for something (like a transaction) to be valid. Also a condition or stipulation in a contract. shirkah Any contract between two or more persons in which they agree to jointly enter into a financial enterprise whose profits will be divided between them. syn. musharakah. shuf`ahThe right of pre-emption in sale transactions, for example, a real estate sale in which some party possesses the right to force the seller to sell him all or part of the real estate in the event of a sale. sighah (sighat al-`aqd) Sighah is a term used by the fuqaha' to refer to the formal exchange which takes place between the contractual parties indicating their willingness to enter into the contractual agreement and therefore constitutes the contract itself. The sighah is a rukn (integral element) of the Islamic contract and essentially consists of a proposal (ijab) on the part of one contractual party and an acceptance (qabul) on the part of the other, either of which may be verbal, written or even gestural, depending on the circumstances under which the contract is closed. An accepatable sighah in a sale contract, for example, may consist of a purchaser saying to a seller, "do you agree to sell me this merchandise for this price?" followed by the seller replying "Yes." The ijab and qabul may be reversed so that the seller proposes and the purchaser accepts. Signing a written contract which details the conditions of the transaction which it governs, constitutes acceptance on the part of the signer. suftajah(Orig. Persian) A debt transfer transaction, practiced in Islamic societies since the `Abbasi period in which A, a debtor authorizes his agent (wakil) or someone who owes him a debt, to pay a given amount to C to whom A owes a debt. Suftajah is related to and may be considered a special case of the standard Islamic debt transfer transaction known as hawalah (see entry). sukukSimilar characteristics to that of a conventional bond with the difference being that they are asset backed, a sukuk represents proportionate beneficial ownership in the underlying asset. The asset will be leased to the client to yield the return on the sukuk. Sunnah The actions, deeds, affirmations and characteristics of the ProphetMuhammad. The customary practice of the Prophet which informs the life of a Muslim.
takaful Islamic insurance. Structured as charitable collective pool of funds based on the idea of mutual assistance, takaful schemes are designed to avoid the elements of conventional insurance (i.e., interest and gambling) that are prohibited by Islamic law. tawarruqReverse murabahah. As used in personal financing, a customer with a genuine need buys something on credit from the bank on a deferred payment basis and then immediately resells it for cash to a third party. In this way, the customer can obtain cash without taking an interest-based loan
Ulema pl. of 'alim, Shariah a scholars or jurists. Ummah The Muslim Community. urboun Earnest money. It is the amount paid by the client (orderer) to the seller after concluding a contract of sale, with the provision that the contract is completed during the prescribed period. The urboun amount will be counted as part of the price; otherwise the urboun will be kept by the seller if the buyer fails to execute the contract. usul al-fiqhIslamic legal theory.
wadiaSafe-keeping/resale of goods with a discount on the original stated cost wadi`ah (lit.) Safe-keeping deposit. The standard Islamic financial transaction in which X entrusts property to Y for safe-keeping. Wadi`ah refers to the deposited property. wakalah Agency; a standard Islamic practice wherein X (the wakil) acts as the agent of Y. In this capacity X may execute the affairs of Y. Wakalah is a widely applicable phenomena in Islamic practice which is often used in financial transactions: whenever a party cannot personally supervise a given affair, it deputizes another party to execute it on its behalf. waqf pl. (awqaf) lit. cessation; A standard Islamic transaction in which one 'freezes' his property such that it is considered to have been arrested in perpetuity and can neither be sold, inherited or donated. The term waqf frequently refers to the property itself. The use of a waqf (e.g. a park) is often dedicated to the relief of the poor, the public at large or other charitable ends. wasiyyah Will, testament, bequest. The statement of a Muslim in which he details the manner in which his wealth is disposed of after his death.
zakahliterally, it means blessing, purification, increase, or cultivation of good deeds. In Shariah, it is an obligation in respect of funds paid for a specified type of purpose and for specified categories. It is a specified amount prescribed by Allah the Almighty for those who are entitled to Zakah as specified in the Qur'an. The word Zakah is also used to indicate the amount paid from the funds that are subject to Zakah.
