GLOSSARY OF ISLAMIC BANKING TERMS

  • Aqad : Contract, consisting of all tenets of a contract

  • Arbun : Down payment deposit to retain a right to transact

  • Bai Ad-Dayn : Sale of Debt

  • Bai Bithaman Ajil / Bai Muajjal : Deferred Payment Sale, over a period of time

  • Bai Inah : 2-party Sale (for Cash)

  • Bai Salam : Trust Sale

  • Fatwa : Edict, opinion or judgement based on religious sources scholarly discussion

  • Gharar : Uncertainty, unmitigated risk

  • Hadith : Sayings of the Prophet as recorded

  • Halal : Permissable, Clean & Pure

  • Haram : Prohibited

  • Hibah : Gift

  • Hilah : Trick (contractum trinius)

  • Hiwalah : Remittance

  • Ibadah : Worship

  • Ibra’ : Rebate

  • Ijab : Offer (tenets of a contract)

  • Ijarah : Rent

  • Ijarah Mausufah Fi Zimmah : Forward Lease

  • Ijarah Muntahiyah Bi Tamleek / Wa Iqtina : Rental with intention to own / gift at end of period

  • Ijarah Thumma Al Bai : Rent with eventual sale (Hire-purchase)

  • Istijrar : Staggered sale (time-to-time sale)

  • Istina’a : Order to Construct

  • Jualah : Service Charge

  • Kafalah : Guarantee

  • Maisir : Unearned income, unfair income (part of gambling)

  • Muamalat : Man-to-Man transaction

  • Mudharabah : Profit Sharing. Commonly for investments.

  • Mudharib : Entrepreneur, in a Mudharabah transaction

  • Murabahah : Cost-plus sale (financing)

  • Musawamah : Simple Sale

  • Musyarakah : Partnership, Joint-venture

  • Musyarakah Mutanaqisah : Diminishing partnership

  • Nasi’ah : Delay (used in relationship in delay of payment of money)

  • Qabul : Acceptance (tenets of a contract)

  • Qardh : Loan

  • Qardhul Hassan : Benevolent Loan

  • Qimar : Gambling

  • Rab Ul Maal : Capital providers, Fund owner

  • Rahnu : Collateralised debt or pledge (pawn broking)

  • Riba’ : Usury (interest)

  • Salam : Order Sale

  • Sarf : Exchange of foreign currency

  • Shariah : Law (Islamic) literal definition – way, path

  • Shirkah : Partner

  • Sukuk : Certificates (Securitised Assets)

  • Sunnah : Actions of the Prophet as recorded

  • Takaful : Mutual assistance

  • Takharuj : Relinquishing the Share of Profit or Inheritance

  • Tawarruq Murabahah : Tripartite Cost-plus Sale

  • Ujrah / Ujr’ : Compensation or Service Charge

  • Yad Amanah : With Trust (used with Wadiah)

  • Yad Dhamanah : With guarantee (used with Wadiah)

  • Waad : Promise

  • Wadiah : Safe Custody

  • Wakalah : Agency

  • Waqaf : Benevolent Endowment (no human ownership)

 

Check out also the other comprehensive list of Islamic Banking terms from the following websites:

  1. Five Pillars (click Here)
  2. Learn Islamic Finance (click Here)

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