Islam does not deny the market forces and market economy. Even the profit motive is acceptable to a reasonable extent. Private ownership is not totally negated. Yet, the basic difference between capitalist and islamic economi is that in secular capitalism, the profit motive or private ownership are given unbridled power to make economic decisions. Their liberty is not controlled by any divine injunctions. If there are some restrictions, they are imposed by human beings and are always subject to change through democratic legislation, which accepts no authority of any super-human power. This attitude has allowed a number of practices which cause imbalances in the socity.



Table of Contents:

Some Preliminary Points

1. Belief in Divine Guidance

2. The Basic Difference Between Capitalist and Islamic Economy

3. Asset-backed Financing

4. Capital and Entrepreneur

5. Present Practices of Islamic Banks

Chapter 1. Musharakah

1. Introduction

2. The Concept of Musharakah

3. The Basic Rules of Musharakah

3.1 Distribution of Profit

3.2 Ratio of Profit

3.3 Sharing of Loss

3.4 The Nature of the Capital

3.5. Management of Musharakah

3.6. Termination of Musharakah

3.7. Termination of Musharakah without Closing the Business

4. The Concept of Mudarabah

4.1. Business of the Mudarabah

4.2. Distribution of the Profit

4.3. Termination of Mudarabah

5. Combination of Musharakah and Mudarabah

6. Musharakah and Mudarabah as Modes of Financing

6.1. Project Financing

6.2. Securitization of Musharakah

6.3. Financing of a Single Transaction

6.4. Financing of the Working Capital

6.5. Sharing in the Gross Profit Only

6.6. Running Musharakah Account on the Basis of Daily Products

7. Some Objections to Musharakah Financing

7.1. Risk of Loss

7.2. Dishonesty

7.3. Secrecy of the Business

7.4. Clients' Unwillingness to Share Profits

8. Diminishing Musharakah

8.1. Diminishing Musharakah for Carrying Business of Services:

8.2. Diminishing Musharakah in Trade:







Chapter 2. Murabahah

1. Introduction

2. Some Basic Rules of Sale

2.1. Bai' Mu'ajjal (Sale on Deferred Payment Basis)

3. Murabahah

3.1. Murabahah as a Mode of Financing

4. Basic Features of Murabahah Financing

5. Some Issues Involved In Murabahah

5.1. Different Pricing for Cash and Credit Sales

5.2. The Use of The Interest-Rate as a Benchmark

5.3. Promise to Purchase

5.4. Securities Against Murabahah Price

5.5. Guaranteeing the Murabahah

5.6. Penalty of Default

5.7. An Alternative Suggestion

5.8. No Roll-Over in Murabahah

5.9. Rebate on Earlier Payment

5.10. Calculation of Cost in Murabahah

5.11. Subject-Matter of Murabahah

5.12. Rescheduling of Payments in Murabahah

5.13. Securitization of Murabahah

5.14. Some Basic Mistakes in Murabahah Financing

6. Conclusions

Chapter 3. Ijarah

1. Introduction

2. Basic Rules of Leasing

3. Determination of Rental

4. Lease as a Mode of Financing

4.1. The Commencement of Lease

4.2. Different Relationships of the Parties

4.3. Expenses Consequent to Ownership

4.4. Liability of the Parties in Cases of Loss to the Asset

4.5. Variable Rentals in Long-Term Leases

4.6. Penalty for Late Payment of Rent

4.7. Termination of Lease

4.8. Insuranceof the Assets

4.9. The Residual Value of the Leased Asset

5. Sub-Lease

6. Assigning of the Lease

7. Securitization of Ijarah

8. Head-Lease





Chapter 4. Salam and Istina'

1. Introduction

1.1. Meaning of Salam

1.2. Conditions of Salam

2. Salam as a Mode of Financing

2.1. Some Rules of Parallel Salam

3. Istisna'

3.1. Difference Between Istisna' and Salam

3.2. Difference Between Istisna' and Ijarah

3.3. Time of Delivery

4. Istisna' as a mode of financing

Chapter 5. Islamic Investment Funds

1. Introduction

2. Equity Fund

2.1. Conditions for Investment in Shares

3. Ijarah Fund

4. Commodity Fund

5. Murabahah Fund

6. Bai'-al-dain

7. Mixed Fund

Chapter 6. The Principles of Limited Liability

1. Introduction

1.1. Waqf

1.2. Baitul-Mal

1.3. Joint Stock

1.4. Inheritance under Debt

1.5. The Limited Liability of the Master of a Slave

Chapter 7. The Performance of Islamic Banks

Selected Bibliography

Index