Marwan M. Alias’ Post

A common myth about Islamic finance is that it is simply a "rebranding" of conventional finance with Arabic terminology, without any substantial differences. This misconception overlooks the fundamental principles and unique characteristics that distinguish Islamic finance from conventional financial systems. Here are some key aspects to highlight the differences: 1: Prohibition of Riba (Interest) Islamic finance strictly prohibits riba, which is the charging or paying of interest on loans. This prohibition is based on the belief that money should be a medium of exchange and not a commodity to generate profit. In contrast, conventional finance relies heavily on interest-based transactions. 2: Risk-Sharing Islamic finance emphasizes risk-sharing between the both parties. In Islamic contracts, both parties share the risks and rewards of the investment. This contrasts with conventional finance, where the lender typically transfers all the risk to the borrower. 3: Asset-Backed Financing Transactions in Islamic finance must be backed by tangible assets or services. This requirement ensures that financial activities are linked to real economic activities, promoting stability and sustainability. Conventional finance, on the other hand, often involves speculative trading and derivative instruments that may not be directly tied to physical assets. 4: Ethical and Social Responsibility Islamic finance operates within the framework of Shariah law, which includes ethical and social guidelines. Investments must comply with Islamic ethical standards, which prohibit involvement in businesses related to alcohol, gambling, pork, and other activities considered harmful or immoral. This ethical consideration is not a central concern in conventional finance. 5: Profit and Loss Sharing Mechanisms Islamic finance utilizes profit and loss sharing models such as Mudarabah (profit-sharing) and Musharakah (joint venture). These models ensure that financiers share in the profits or losses of a business venture, fostering a partnership approach. Conventional finance typically involves fixed returns for lenders regardless of the outcome of the business venture.   Contact Us for Comprehensive Shariah Advisory Services We invite you to reach out to us for end-to-end Shariah advisory services tailored to ensure your business and company achieve full Shariah compliance. Our goal is to help you attain the barakah and blessings of Allah in this world and the hereafter. https://lnkd.in/dNzv_4ZQ fb.com/ameenadvisors wa.me/923193991839 #AmeenِِAdvisors #Shariah-insight-business-bright #ShariahCompliance#ShariahAdvisory#ShariahConsultancy#IslamicFinance#HalalInvestments#EthicalBanking#IslamicConsulting#IslamicBanking#ShariahGovernance#EthicalInvesting#ShariahInsights#FaithBasedFinance#IslamicLaw#ShariahComplianceAudit#HalalBusiness#IslamicInvestments#IslamicFinancialServices#ShariahStandards#IslamicEconomics#EthicalAdvisory

How Can Islamic Finance Products Be Improved? Spread the Word: To get more people to know about Islamic finance goods, financial institutions and regulators should spend money on educational campaigns. This includes pointing out the moral and social advantages, which might bring in more customers. It can also help to increase knowledge in this area to work with universities and business groups to provide training and certifications. Support and incentives from regulators: Lawmakers and regulatory bodies can play a big part by making guidelines that make it easier for Islamic financial goods to be made and sold. Giving Islamic financial institutions incentives, like tax breaks or fewer rules and regulations, can help them grow and offer more goods. Product Innovation: To make more Sharia-compliant products, Islamic banking institutions need to focus on coming up with new ideas. This could mean making products that meet the wants of different groups of people in the market, like small and medium-sized businesses, new businesses, and the growing group of ethical investors. Utilising technology (FinTech) could also make these items easier to get and less expensive. Different interpretations of Islamic law are a problem that needs to be fixed. To do this, global standardisation efforts should be stepped up. These efforts should be led by groups like the Islamic Financial Services Board (IFSB) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). A more standardised method would speed up the development of products and make them easier to sell across borders. Growth of Islamic Finance Institutions: More people will be able to use Islamic finance products if the network of Islamic banks and other financial institutions grows, especially in places where the number of Muslims is rising. To help close the gap, Islamic banks could work with regular banks or add Islamic windows to banks that are already open. To sum up, Islamic finance goods aren't widely available because of problems with demand, regulations, and the way the market is set up. However, these problems can be fixed by raising awareness, coming up with new ideas, regulating more, and making the market more uniform.

In Islamic finance, the SWIFT MT700 message can still be used as a communication tool for issuing documentary credits, but there are specific considerations to adhere to Sharia principles. Here are some key points regarding SWIFT MT700 in the context of Islamic finance: 1. Sharia Compliance: Islamic finance operates based on Sharia principles, which prohibit the payment or receipt of interest (riba) and promote risk-sharing and ethical investment. Therefore, any financial instrument or transaction, including letters of credit, must comply with Sharia guidelines. 2. Structure of Islamic Letter of Credit: In Islamic finance, a letter of credit can be structured in a way that adheres to Sharia principles. For example, instead of charging interest on a deferred payment, Islamic finance may use structures such as Murabaha (cost-plus financing) or Wakala (agency agreement) to facilitate trade transactions. 3. Documentation and Terms: The content of the SWIFT MT700 message in Islamic finance will include specific terms and conditions that comply with Sharia principles. This may involve mentioning the underlying Sharia-compliant structure, specifying permissible goods and services, and ensuring transparency in the transaction. 4. Role of Islamic Banks: Islamic banks play a crucial role in facilitating Sharia-compliant trade finance transactions. When issuing or advising a letter of credit (LC), an Islamic bank will ensure that the transaction structure, terms, and documentation align with Sharia guidelines. 5. Risk Sharing and Fairness: Islamic finance emphasizes risk-sharing and fairness in transactions. Therefore, the MT700 message in Islamic finance may reflect provisions that promote equitable treatment of parties, clarity in responsibilities, and mechanisms for dispute resolution in accordance with Sharia principles. 6. Regulatory Compliance: In addition to Sharia compliance, transactions involving SWIFT MT700 in Islamic finance must also adhere to relevant regulatory requirements and guidelines set by Islamic finance regulatory bodies and standard-setting organizations. Overall, while the SWIFT MT700 message remains a standard tool for issuing documentary credits in international trade, its application in Islamic finance requires careful consideration of Sharia principles, transaction structures, and regulatory frameworks to ensure compliance and ethical conduct in financial transactions.

Assalam Alaikum Not criticising but Few relevant concerns that must be addressed before CONVERSION of Conventional banking into Islamic: Is not Islamic banking approach in Pakistan more CAPITALISTIC than conventional due to following reasons: 1: Are IBIs following Maqasid Shariah in letter & spirit 2: Is there equitable & fair treatment between safeguarding Shareholders interest & Mudarabah based saving retail depositors. 3: Are BoDs, Shariah Boards & other organs of Shariah Governance fulfilling their fiduciary responsibilities other than shareholders. 4: Is there any IBI has 100% IT BASED POOL MANAGEMENT, PROFIT CALCULATION & DISTRIBUTION SYSTEM WITHOUT ANY HUMAN INTERVENTION. 5: Which IBI is rationally quantifying Profit Sharing Ratio & has any justification, can anyone provide detailed breakup that why it is 50%, not 40/35/else %. 6: How much IBIs are earning from Treasury activities. 7: Did IBIs not make money from Appreciated Dollar Regime & get undue benefits, against the advise of Hazrat Moulana Taqi Usmani Sb opinion about Dollars regime. 8: Is there any SOCIAL FINANCE ACTIVITIES being practiced by IBIs. 9: Is there any Monitoring mechanism to evaluate the performance of Shariah Board as a whole & individual Shariah Board member. Same requirements are also incorporated in SGF Standard, drafted by IFSB & AAOIFI together but not issued due to some unknown reasons, however, may be searched on web. 10: Why IBIs are still using KIBOR while they are exempted to use it by regulations. 11: Is there any Head of IBI whose funds are taken by Head Office/ Treasury has the authority to negotiate expected rate of return. 12: Why few IBIs are providing liquidity funds to small size weak conventional banks on high rates against keeping Interest Based Government Securities as Collateral. 13: Why major portion of Diminishing Musharakah Financing based on old existing assets on buy back structure where purpose is capital working financing not buy & sale transaction in actual. It's required serious research on various related issues. 14: Why three times difference between minimum & maximum weightages is being applied only on General pool while it is applicable across the pools (Both General & Special) of an IBI. SBP is neither giving any clarification nor revising it to control the issue of MDR. 15: As per AAOIFI SS-Profit calculation & distribution, in case of monopoly or exploitation, Government /Regulator can fix the rate of return for unrestricted investment account holders/ Mudarabah based Saving depositors. 16: In order to mitigate FIDUCIARY RISK/ RESPONSIBILITY, SBP did not introduce any Governance framework at BOD/ It's Committee level to safeguard the interests of Mudarabah based Saving depositors YET. One important point needs to be clarified: The working on adaptation of AAOIFI ACCOUNTING STANDARDS against IFRS has been stopped by ICAP, can be clarified from ICAP, SBP OR SECP. MANY MORE CONCERNS TO BE ADDRESSED.

🌟 Exploring the Different Types of Islamic Finance Contracts 🌟 Islamic finance, rooted in principles of fairness, risk-sharing, and ethical conduct, offers a compelling alternative to conventional financial systems. At its core are various contracts designed to facilitate transactions while adhering to Shariah law. Let's learn about some key types of Islamic finance contracts: 1️⃣ Mudarabah: In this profit-sharing contract, one party provides capital while the other offers expertise and management. Profits are shared according to pre-agreed ratios, while losses are borne solely by the investor. 2️⃣ Musharakah: A partnership contract where all parties contribute capital and share profits and losses proportionally. It encourages collaboration and risk-sharing among stakeholders. 3️⃣ Murabaha: A cost-plus sale contract commonly used in trade finance. The financier purchases an asset at the request of the client and sells it to them at a marked-up price, allowing for deferred payments. 4️⃣ Ijarah: A leasing contract where the lessor owns the asset and leases it to the lessee for an agreed-upon period and rental amount. It's widely used for financing assets like real estate and vehicles. 5️⃣ Sukuk: Islamic bonds structured to generate returns without violating Shariah principles. They represent ownership in an underlying asset, project, or investment activity, providing investors with a share of profits. 6️⃣ Takaful: An Islamic insurance contract based on mutual cooperation and solidarity. Participants contribute funds to a common pool to cover potential losses, with payouts made according to Islamic principles. These contracts illustrate the diversity and adaptability of Islamic finance, catering to various needs while upholding ethical and Shariah-compliant practices. Embracing these principles fosters financial inclusion and stability, promoting economic growth with integrity. #IslamicFinance #EthicalFinance #FinanceInclusion 📈🕌

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Revision : Tawarruq Munazzam . 1)The classical tawarruq arrangement consists of two unrelated contracts. A person in need of liquidity purchases a commodity on credit and then looks for someone else to buy it from him on spot. He ends up with cash and a debt that is normally larger than the cash amount. 2)The tawarruq contract was recognised by the majority of classical Shariah scholars as permissible on the basis of the general permissibility of sale and purchase transactions except for what has been excluded by specific evidence.The majority did not consider the goal of the seeker of liquidity to affect the legality of either of the constituent transactions. 3) Al-Tawarruq al-Munazzam (Organized Tawarruq) is when the seller handles the process by which cash is acquired for the mutawarriq (the seeker of cash). He does so by selling a commodity to him for a delayed payment; then selling it on his behalf for cash, taking the payment from the buyer and delivering it to the mutawarriq. 4)Contemporary Shariah authorities differ over the permissibility of tawarruq munazzam. 5)The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), in its Shariah Standard No. 30 on Monetization (Tawarruq) allows restricted use of tawarruq munazzam in Islamic financial institutions that is, only when faced with the risk of liquidity shortages that might interrupt operations and result in customer losses. (AAOIFI ,2017). 6)Bank Negara Malaysia (BNM) in its tawarruq document policy permits the use of tawarruq contracts in Malaysian Islamic banking operations without imposing usage restrictions on deposit and financing products (BNM, 2018). Video credits : Amanie TV https://lnkd.in/gt374Fai

🌟 **Exploring Risk Sharing in Islamic Finance** 🌟 Risk sharing is a cornerstone principle in Islamic finance, promoting fairness and ethical conduct in financial transactions. This concept sets Islamic finance apart from conventional systems and contributes to a more equitable and resilient economic environment. 🔹 **What is Risk Sharing?** In Islamic finance, risk sharing involves distributing risks and rewards among all parties involved in a financial transaction. Unlike conventional finance, where risk is often transferred to one party (usually the borrower), Islamic finance ensures that risks are shared, fostering a sense of partnership and mutual responsibility. 🔹 **Key Risk Sharing Instruments:** 1. **Mudarabah (Profit-Sharing Partnership):** A partnership where one party provides the capital (rabb al-mal) and the other provides expertise and management (mudarib). Profits are shared according to a pre-agreed ratio, while losses are borne by the capital provider unless caused by negligence or misconduct by the manager. 2. **Musharakah (Joint Venture):** Both parties contribute capital and share profits and losses based on their equity participation.This arrangement ensures that all partners are equally committed and benefit from the venture’s success or share in its failure. 3. **Ijarah (Leasing):** The financier buys and leases out an asset to the client for a fixed period and price. Ownership and associated risks remain with the lessor until the end of the lease term, promoting shared risk and responsibility. 🔹 **Benefits of Risk Sharing:** 1. **Economic Stability:** Risk sharing reduces the likelihood of financial crises caused by excessive leverage and unsustainable debt levels. 2. **Promotes Equity:** It ensures a fair distribution of wealth and income, preventing the exploitation of any party. 3. **Encourages Entrepreneurship:** By providing capital and sharing risks, Islamic finance fosters innovation and business growth. 🔹 **Impact on the Economy:** **Resilient Financial System:** The shared risk approach leads to a more stable and resilient financial system, capable of withstanding economic shocks. **Social Welfare:** Risk sharing aligns with the ethical and social objectives of Islamic finance, promoting overall societal well-being and reducing income inequality. **Sustainable Development:** Investments are made in real economic activities, driving sustainable growth and development. 🌐 **Embrace Risk Sharing for a Fairer Economy!** 🌐 By integrating risk-sharing principles, Islamic finance not only adheres to Shariah law but also promotes a fair, transparent, and stable financial system. Let’s champion these values and work towards a more inclusive and ethical financial future. #IslamicFinance #RiskSharing #EthicalFinance #EconomicStability #InclusiveGrowth #SustainableFinance #FinancialEquity

ahli Islamic signs landmark MoU with AAOIFI ahli islamic Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) #oman

The Islamic Financial Services Act 2013 (IFSA) is a comprehensive legislation introduced in Malaysia to govern and regulate Islamic financial services in the country. The law aims to provide a strong legal framework for the development, supervision, and stability of the Islamic finance industry. The IFSA covers a wide range of areas within the Islamic financial sector, including Islamic banks, takaful operators, Islamic capital market activities, and other intermediaries. It establishes the Central Bank of Malaysia (Bank Negara Malaysia) as the regulatory authority responsible for overseeing and supervising these entities, ensuring compliance with the law and promoting sound practices. One of the important aspects of the IFSA is the licensing requirements for Islamic financial institutions. It sets out the criteria and conditions that entities must meet in order to obtain and maintain a license. These requirements include capital adequacy, corporate governance, Shariah compliance, and risk management. The law also focuses on enhancing the governance and accountability of Islamic financial institutions. It mandates the establishment of an effective board of directors, with specific qualifications and responsibilities, to ensure proper oversight and decision-making. Additionally, the IFSA requires institutions to establish risk management frameworks and systems to identify, measure, and mitigate various risks they may face. To safeguard the interests of consumers, the IFSA incorporates consumer protection provisions. It sets out guidelines for fair and transparent practices, disclosure of information, and dispute resolution mechanisms. This promotes trust and confidence among customers engaging in Islamic financial transactions. IFSA also addresses the resolution and recovery of Islamic financial institutions in the event of distress or failure. It establishes a comprehensive framework for the resolution process, empowering the regulatory authority to take necessary actions to protect the stability and integrity of the financial system. Furthermore, the law gives importance to Shariah compliance and establishes a Shariah Advisory Council to provide guidance and ensure that Islamic financial transactions and products are Shariah-compliant. This reinforces the Islamic nature of the industry and promotes confidence among customers seeking Shariah-compliant services. Overall, the IFSA 2013 serves as a fundamental legislation that sets out the regulatory framework for the Islamic finance industry in Malaysia. It aims to promote stability, integrity, and growth while safeguarding the interests of consumers and maintaining Shariah compliance. The law plays a crucial role in the development and expansion of Islamic finance in the country, contributing to Malaysia's status as a global hub for Islamic finance.