All spiritual and practical aspects of life are aptly covered by injunctions of Islam.
The primary source of Islamic laws and commands are words of Holy Quran and traditions of Holy Prophet (Peace Be Upon Him). Whereas Islam talks about other fields of life and human dealings and their public relationships, same place it speaks about financial matters of Muslims.
Islam has covered all possible features of finance like provisions, practices, sale, contract, Tarde, commerce, and other financial dealing according to teachings of Holy Quran and the practices of Holy Prophet (Peace Be Upon Him).
Not only banking but also other section like capital, markets regarding capital and other types of financial issues are also covered by Islamic Finance.
Some features of Islamic finance are resembling to western system of finance but some characteristics of Islamic finance are only attached with Islamic finance system. According to Islam, some activities of western finance system are in valid and recognized void.
Thus, it proves that Islamic laws are compatible for commercial fields also. Some important features of Islamic finance are given here.
Riba, the most significant aspect of Islamic economics, denotes excess or further, is Severely forbidden. Usury and interest also belong to that category.
Riba is the most hatred exercise which activate other evil events and social unfairness in the culture. Gharar is additional significant part of Finance. It means uncertainty, reservation or lack of specificity in the monetary dealings. It is also disheartened aspect.
As riba is disqualified, traders of money become savers instead of creditors. Savings in Islamic economics is permissible but in some allowable and legitimate belongings and actions. If someone is going to devote in the corporate of liquor, it will be avowed null and invalid.
Similarly, one cannot capitalize in the dealings of casino. Islam indorses the idea of free market. Thus, market values must be controlled affording to nature of mandate and source. All savers must be specified any sort of material on basis of fairness.
Consequently, some financial dealings and instruments are shaped on the foundation of above-mentioned features of Islamic economics.
Musharaka, is a scheme in which saver produce monetary compensation to the creativity but also participate his vigorous role in its organization. Earnings will be alienated according to pre-decided proportion and sufferers are also shared between both groups. This scheme approves an equity-based business.
In Mudaraba, one group will capitalize and other party will have assured to provide administration. Revenues will be divided in both parties but monetary sufferers are endured by the depositor. In Murabaha, one party purchases some substances and trades the other party.
In Tawarruq, the finance dealer buys a plus and promptly sells it to the customer on an unpaid recompense basis. The customer then sells the same to a third party for prompt conveyance and amount. Ijarah, it is the leasing or signing of a bodily asset, and it is one of the wildest increasing actions of Islamic monetary governments.
Takaful, it is a technique of protection. It is a decision by an assembly of people to defend each other from injury or harm through the formation of a discrete pool of possessions. Sukuk is named "Islamic bond", it designates, speaking more exactly, an Islamic asset certification.