Introduction to Islamic Banking and Finance

A financial system based on Islamic law (Shari'ah).

Islamic law, the foundation of Islamic banking.

The central body for interpreting Islamic law in finance.

A core principle in Islamic finance, forbidding interest-based transactions.

Legitimate transactions in Islamic banking, avoiding prohibited practices.

The promotion of business practices aligned with Islamic principles.

Islamic law, encompassing divinely prescribed rules for faith, beliefs, laws, and moral norms.

Worship and devotional practices in Islam.

Civil transactions and dealings in Islam.

The primary source of Islamic law and guidance.

The teachings and practices of Prophet Muhammad.

Excessive risk or uncertainty in transactions, prohibited in Islam.

Charging interest, forbidden in Islamic finance.

Banking system based on Islamic principles.

Interest-free, ethical, asset-based, and partnership investment based on profit/loss sharing (PLS) between financer and entrepreneur.

Emergence in the 1960s, Asian expansion in 80s/90s, takaful (insurance), project financing, sukuk/equity markets (1990s), and internationalization from early 2000s.

Retail banking, corporate banking, real estate, investment banking, and proprietary trading investments.

A key principle in Islamic finance where returns are distributed based on profits and losses.

The sayings, practices, and tacit approvals of Prophet Muhammad (PBUH). It's the second primary source of Islamic law (Shari'ah).

Islamic law, encompassing principles and rules based on the Quran and Sunnah.

The final prophet in Islam. His actions and teachings are vital to understanding and adhering to Islamic principles.

Interest-based transactions, prohibited by Islamic law (Shari'ah).

Profit-and-loss sharing (PLS) based partnership in Islamic finance.

Benevolent loan, a gift-based form of lending without interest.

Deferred payment contract for goods, where payment is made upfront.

Currency exchange in Islamic finance, following specific rules.

A financial system following Islamic principles, avoiding interest and various other prohibited practices.

The modes and types of transactions in early Islamic society— before modern Islamic banking-related activities

The time during Prophet Muhammad's (PBUH) lifetime, with its associated financial transactions.

The period after the Prophet Muhammad (PBUH), covering the era of the first four caliphs

The economic policies of the early Islamic state, including the introduction of a centralized treasury (Bait al-mal) and reforms impacting the zakat (compulsory alms).

The treasury house of the Islamic state, a centralized institution managing finances and resources.

Compulsory alms in Islam, impacting economic policies in the early Islamic state.

The introduction of the first Muslim coins, marking a significant advancement in the economy.

Islamic legal studies, expanding economic reforms during the era of the Noble Companions.

A legal process of leasing in Islamic finance; an example of trade involving gold-gold, silver, and silver.

Trade networks connecting Mecca and Syria; an example of early commercial interactions within the Islamic state.

Periods of Islamic history marked by advancements in coinage (first Islamic dirham), treasury house shifting, and continued use of dirham and dinar.

Attempts to establish Islamic financial systems in countries like Egypt, Malaysia, and Pakistan, crucial in the founding of modern Islamic banking.

Established in 1975, the IDB is a global financial institution supporting economic development among member Muslim countries. It uses Islamic principles/practices within its operations.

Founded in 1975; the first full-fledged Islamic commercial bank in the world.