It is a banking system, which provides banking services and products in line with the rules and principles of Sharia and is conducted under direct supervision and audit of Sharia scholars.
Sharia is an umbrella term which stands for the principles and rules related to practical aspects of life which cover acts of worship, financial transactions, family law and laws of inheritance, rules of war and peace etc. whether they are mentioned explicitly in the Holy Quran and Sunnah or derived from other Sharia sources by Mujtahedeen through application of the rules of Ijatihad.
Name of the members of Ahli Islamic Banking Services Sharia Supervisory Board is mentioned below:
- Ahmed Mohiyeldin Ahmed (Chairman of SSB)
- Mohammed bin Tahir al-Ibrahim
- Dr. Mustaien Ali Abdulhameed
- Abdul Raouf Abdullah Al-Tobi
No, Islamic banking is for all. Anybody who fulfills business requirements of Islamic bank can avail Islamic banking services. However, Islamic bank does not enter into activities which are harmful for a society or any businesses which are not allowed by Islamic Sharia such as business of alcohol, pork, pornography and etc.
Following are the most commonly used modes of Islamic banking and finance:
- Mudaraba: It is a form of partnership where one party provides the funds while the other provides management services against a pre-agreed share in the profit of the investment. However, if there is any loss, it is borne solely by the capital provider.
- Musharaka: It is a partnership with all the parties contributing to the capital of the Musharaka on the basis of profit and loss sharing. The profit shall be shared as per the agreement but the loss will be borne pro rata.
- Murabaha: It is a sale contract in which an individual/entity sells an asset at cost plus an agreed profit. The sale price could be paid on spot or deferred.
- Musawama: It is a general kind of sale in which price of the commodity to be traded is bargained between seller and buyer without any reference to the price paid or cost incurred by the former.
- Ijara: It is a leasing contract in which the owner of an asset or its usufruct sells the usufruct of the underlying asset to the lessee for an agreed rental.
- Salam: It is a kind of sale in which payment is made on the spot while the delivery of the goods is deferred.
- Istisna’: It refers to a sale in which the buyer orders to a manufacturer to produce and deliver fully described commodity from raw materials of its own. It is basically an order to manufacture.
The Islamic banks invest/utilize the funds received from the Account Holders/customers under Islamic modes of financing such as Ijara, Murabaha, Salam, Istisna and investment contracts such as Mudaraba, Musharaka, Wakala etc. to generate profit.
If Islamic banks do not impose any penalties on late payment the customers shall not pay in time and thus the Islamic banks will not be able to run their business efficiently and give a good return to the investors. Therefore, the Islamic banks have decided to take from each client an irrevocable undertaking that in case of late payment he shall be charged a penalty which shall be donated to a charity supervised by the Sharia Supervisory Board of the bank independently from the bank. The Islamic banks do not use these donations for their own benefit, but incorporate such provisions in their contracts to check potential default.
Yes, Islamic banks offer interest free credit card facility for which the client pays a monthly fee irrespective of the way he uses the card during the period. The fee is in lieu of some real services that a credit card holder becomes entitled to. The fee neither increases nor decreases on the basis of the use, frequency of usage or non-use of the card by the customer.
No, both have the same meaning. Qur’an, Sunnah and Fiqh do not differentiate between the two. Islam terms what is known as interest or usury as Riba and therefore prohibits it.
Islamic banking offers Riba free banking in line with Islamic Sharia rules. It neither gives nor takes loans on interest. It operates as a trading company, which buys, sells and enters into different modes and contracts of investment such as Mudaraba, Musharaka etc.
No, it has simple Sharia based contracts like Mudaraba, Musharaka, Murabaha, etc.
No one can certain or assure profit rates in Islamic banking. Islamic banks declare the profit of their investment pools periodically, and the declared rates can be referred to show their past performance with a clear disclaimer that the bank may or may not perform similarly in future.
Ahli Islamic Bank owns a unique distinction and exposure of Islamic banking which it obtains with its presence in several countries such as Bahrain, Kuwait, UK, and in Oman with the brand name Ahli Islamic banking. As for as comparison with the services provided by conventional banks are concerned, the main difference is that Ahli Islamic banking provides Sharia compliant products and services and in no way enters into any Sharia repugnant and interest based transaction.
Compared with other Islamic banks or windows, Ahli Islamic Bank is proud of its pioneering role in the world of Islamic Banking. Ahli Islamic has a full-fledged Fatwa and Sharia Supervisory Board and a Sharia Compliance Department, which are involved in structuring, documentation, vetting approval and post transaction audit of all transactions and products.
The Bank is supervised by a Fatwa and Sharia Supervisory Board, whose decisions are binding on the Bank. The Sharia Board is comprised of four members of internationally renowned Sharia scholars.
No, Islam does not allow business in prohibited items. This is one of the major differences between an Islamic bank and a conventional one.
Ahli Islamic Banking uses Mudaraba mode of investment for savings and deposit accounts.
Current account product of Ahli Islamic Banking is based on the principle of Qard. According to the principle, the Bank guarantees safe custody of the deposited amounts and there are no profits shared with the depositor.
All persons (individuals, corporate entities, firms, societies, clubs, government organizations, statutory bodies/corporations, public and private institutions, etc) are eligible to open account in Islamic banks provided they fulfill the banks’ and the regulatory authorities’ requirements.
All transaction documents are approved before signing the contracts by the Bank’s Sharia Board. The Bank has Sharia compliance department, which monitors the operations of the Bank and ensures the implementation of Fatwa and Sharia Supervisory Board’s directives. If any transaction is found as Sharia repugnant, its returns are not considered in the income of the Bank rather it is credited into charity account as per the Sharia Board’s decisions.
No, Islam does not prohibit from selling or buying or entering into partnership with non-Muslims provided the underlying transactions are Shari’a compliant.
Yes, the Account Holder bears the loss in proportion to his/her investment.
The form of Islamic insurance is TAKAFUL which is based on Sharia rules. In case of absence of a Takaful based company, Islamic banks are allowed to get insurance cover through conventional insurance to avoid exposing the investors’ deposits to high risk till the availability of Takaful services.
Takaful is the Islamic way of Insurance. Takaful means mutual protection through contribution by each member.
No, overdraft facility is not allowed in Islamic banking. Islamic banks may offer Sharia compliant alternatives for such a facility.
Islamic banks do not offer loans; they offer financing through Sharia compliant modes of investment and transactions.
It’s called Ribh in Arabic and is translated as profit in English.
Sukuk are Islamic Investments certificates issued against shares in the underlying assets, whether existing or described assets promised to be delivered in future, or shares in the usufruct of such assets or shares in services.
The owner of Sukuk becomes the owner of the underlying assets in proportion to the investment, and therefore bears the loss and is entitled to the profit proportionately.