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Shariah -Compliant

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Make Yourself. Shariah -Compliant. Why is Shariah-Compliance Important?    . Our lifelong objective is to seek the pleasure of Creator ‘Islam’ is a complete ‘way of life’ – What does this Mean? The Muslim Code of Life – stipulated from Quran and Sunnah More than just Ibadah!

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Presentation Transcript
slide1
Make Yourself

Shariah-Compliant

slide2
Why is Shariah-Compliance

Important?    

  • Our lifelong objective is to seek the pleasure of Creator
  • ‘Islam’ is a complete ‘way of life’ – What does this Mean?
  • The Muslim Code of Life – stipulated from Quran and Sunnah
  • More than just Ibadah!
  • Widespread ignorance of Mu’amalat matters 
slide3
Three Basic principles of Shariah-Compliance    
  • The subject matter of any transaction must be Shariah-compliant
  • The transaction must not involve any interest based lending or borrowing
  • Contemporary contracts fall foul of Shariah Principles in FOUR key areas
slide4
Basic principles of Shariah-Compliance

Contracts - Four Key Issues

Penalty clauses which require the householder to pay interest charges if they default on payment

Seller not having possession/ ownership of goods or selling something that is not in existence yet – e.g. financial markets such as derivatives and options and short selling

Contracts must be devoid of excessive uncertainty (gharar)

Contracts must not be interlinked so as to form a contract

within a contract

slide5
Mortgage Alternatives

(Islamic Home Purchase Plans)

  • Why are conventional mortgages not permitted?
  • How do Islamic Home Purchase Plans differ?
  • Who provides Islamic Home Purchase Plans?
  • SOME KEY CHALLENGES:
    • Type of Shirkah (aqd / amwal etc.)
    • Contract within a contract
    • Rental rate being similar to interest rate
    • Spirit vs Letter of Shariah
slide6
 Islamic Bank Accounts
  • Why are conventional bank accounts not permitted?
  • How do Islamic bank accounts differ?
    • Diminishing Musharaka ?
  • So who provides Islamic bank accounts?
  • SOME KEY CHALLENGES:
  • Centrality of constructive possession
  • Spirit vs Letter of Shariah
slide7
Investments, Pensions &

Child Trust Funds (CTF)  

  •  What’s WRONG with conventional investments?
  • So how do Shariah-Compliant investments work?
  • Who provides Islamic Investments?
  • KEY CHALLENGE:
  • Rationale behind 5% and 33%
slide8
Personal Loans
  • What is WRONG with a conventional personal loan?
  • How does an Islamic loan work?
    • What is Tawaruk and how does it work?
    • SOME KEY CHALLENGES:
    • Why is it controversial? Is there an alternative?
    • Also need to consider if the underlying need for the loan is valid
slide9
Car & Equipment Leases
  • Are normal leases haraam?
  • Responsibilities of lessor & lessee
  • Penalties on default
  • Interlinked contracts    
  • KEY CHALLENGE:
  • Differentiating behind a Faasid condition and a void contract
  • Where does bending the rules differ from breaking the
  • rules?
slide10
Insurance & Takaful
  • So what’s WRONG with conventional insurance?
  • So how does Islamic insurance work?
    • Takaful ?
  • What about those scholars who view conventional insurance as permitted?
  • SOME KEY CHALLENGES:
  • How to resolve key issue of Gharar?
  • Aqd Tabarru and debate around this
slide11
Guarantees, Warranties &

Credit Cards

  • Are warranties considered to be insurance? 
  • Are conventional credit cards acceptable?
  • Some key challenges:
  • What is the difference between a guarantee, a warranty
  • and insurance?
  • Is breakdown cover insurance, a guarantee or a warranty?
  • Is there a difference between pre-paid cards / debit cards and credit cards?
slide12
Summary
  • Zakah and Islamic Wills to be covered via dedicated session
  • Each of the areas could easily have it's own dedicated session
  • Each of above areas is a challenge British Muslims have to overcome if we want to submit to Shariah with regards to financial and legal matters
  • Widespread ignorance is prevalent not only amongst Muslim community but also amongst Scholars on these matters
slide13
Key outcomes of this session are to:
  • Raise awareness of some of the key legal / financial areas where Muslims need to be aware of Shariah principles to either avoid a clear haram or to fulfill a Fardh Ain obligation
  • To suggest ways for further study as this session is simply to raise awareness and each area needs more research
  • Most importantly for you, the audience to recognise that disseminating and implementing this knowledge amongst the community is a personal challenge!
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