1. An Overview & Fundamentals of Islamic Finance & Sharia Laws
August 12, 2015
‘International Workshop on ‘Islamic Finance and Takaful’
An Overview & Fundamentals of Islamic Finance & Sharia Laws
Dear Participants,
Assalam Alaikum,
I am Irfan Shahid completed my Islamic Education Almiyah from Jamiatul Falah, Azamgarh and after that I moved to AMU Aligarh to complete my graduation in Economics. After that I moved to Bombay, the financial capital of India to learn more about busines and economics but finally I landed up in the UK to complete my M.Sc in Islamic Banking from Loughborough University. During my stay
Dept of Management
MANUU
Hyderabad

2. Table of Contents PARTICULAR SLIDE NUMBER Islamic Vision of Life 3
Key Concepts 4
Fundamental Principles of Islamic Finance 5
Islamic Finance 6
Islamic Banking 7
Islamic Insurance 8
Islamic Investments 9
Islamic Finance: Current Statistics
10-17

3. The Prelude Islamic Vision of Life: Importance of Halal
The Purpose of Creation
The Status
Final Destination
Importance of Halal
The Body which is nourished from Haram source is bound for hellfire.
On the day of judgment a person will not be able to move his feet until he has answered how he earned the money and where did he spent it.
Purifying the sources of income is important requirement for acceptance of supplication.

4. Key Concepts Shariah Path that guides towards the original source.
The understanding of Islam
is an abstract form of law capable of adaptation, development and further interpretation.
Source of Shariah
Primary
Quran & Sunnah
Secondary
Ijtehad, Ijma, Qiyas etc.
Objectives of Shariah
Protection from Harm
Promotion of Public welfare
Principles of Shariah
Ibadaat
Muamlaat

5. Fundamental Principles
Prohibitions:
Interest (Riba )
Excessive Uncertainty (Gharar)
Gambling (Maysir)
Harmful Businesses (Prohibited sectors)
Promotions:
Encouragement of profit and loss sharing
Public need or necessity
Charity
Compulsory:
Zakah

6. Islamic Finance
Islamic finance is known by different names such as Ethical Finance, Interest-free Finance, Special Finance, Shariah Finance, PLS Finance etc.
What is Islamic Finance?
A Shariah based financial system which seeks to achieve economic and social justice in all financial transactions.
Features of Islamic Finance
It takes into account the moral consequences of financial transactions;
It ensures that financial contracts are fair and equitable to all parties involved; and
It guarantees that financial rewards are correlated with the level of risk and responsibility borne by all parties

7. Islamic Banking What is Conventional Banking? Accepting Deposit
Lending
It deals in interest and does not mind funding activities which are harmful for society such as alcohol, gambling, tobacco, pornography, armaments etc.
What is Islamic Banking?
Trading and Investing
It doesn’t deal through interest and do not provide funds for activities which are harmful for society such as those mentioned above.

8. Islamic Insurance (Takaful)
Conventional Insurance is the business of purchasing the risk by the insurance company in lieu of the premium paid by policyholders.
Features of Conventional Insurance
It deals in interest;
It trades in risks instead of sharing it; and
Its business mechanism falls within the ambit of Islamic prohibition of gharar and maysir
Islamic Insurance
Islamic insurance is close to conventional concept of mutual insurance where the participants instead of selling their risk to a third party jointly share the burden of risk among themselves.

9. Shariah Compliant Investment
Investing activities that adheres to Islamic restrictions is known as Shariah Compliant investments.
Basic Norms of Investments
Business activities must be beneficial to the society, economy and environment;
Non-serious traders must stay away from the market;
Traders/investors should not participate in Short-selling, gambling, risk trading and any kind of interest-based activities;
Check on debt and earnings from impure sources; and
Increased Charity and public welfare activities;

10. Islamic Finance: Across Globe
CURRENT PRACTICES AND TRENDS
Islamic finance practices have spread to about 75 countries.
By 2020, a major part of the Middle East economy will become Shariah-compliant.
Conventional banks are converting their operations into the shariah-compliant. Even foreign financial institutions in the region are following this trend.
Many western economies are trying to tap the niche opportunities.
Region
Banking Assets
Sukuk
Islamic Funds
Takaful Premium
Asia
203.8
188.4
23.2
3.9
GCC
564.2
95.5
33.5
9.0
MENA
633.7
0.1
0.3
7.7
Sub-Saharan Africa
20.1
1.3
1.8
0.6
Others
54.4
9.4 17
Total
1476.2
294.7
75.8
21.5

11. Islamic Finance: Across The Globe

12. Islamic Finance Assets
S. No.
Country
Islamic Finance Assets ($ Billion)
Islamic Finance Institutions 1
Malaysia
411 92 2
Saudi Arabia
269
113 3
Iran
185 44 4
United Arab Emirates
118 77 5
Kuwait 81
101 6
Qatar 71 37 7
Bahrain 47 55 8
Turkey 9
Indonesia 33 73 10
Bangladesh 17 23 11
Pakistan 13 62 12
Egypt 30
Sudan 45 14
Switzerland 15
Jordan
Thomson Reuters- Islamic Finance Development Report 2012

13. Islamic Banking Assets
S. No.
Country
Islamic Banking Assets ($ Billion) 1
Saudi Arabia
216 2
Malaysia
194 3
Iran
185 4
United Arab Emirates 94 5
Kuwait 72 6
Qatar 52 7
Bahrain 43 8
Turkey 34 9
Indonesia 19 10
Bangladesh 17
Thomson Reuters- Islamic Finance Development Report 2012

14. Islamic Bonds (Sukuk)
$ Billion

15. Global Takaful Premium (USD Billion)

16. Islamic Funds

17. Islamic Finance: Western Countries

18. Thanks! iiefs@yahoo.com