Islamic Funding Structures And Financing Alternative | SHARIA | Muslim Compliant Businesses Best Practice

The financial jurisprudence adhered to by this site is after the manner of Mufti Taqi Usmani
Mufti Muhammad Taqi Usmani, Sheik-Ul-Islam, is one of the leading Islamic scholars living today. He graduated par excellence form Dars e Nizami at Darul Uloom, Karachi, Pakistan. He served as a judge on the Federal Shariat Court of Pakistan from 1981 to 1982 and theShariat Appellate Bench of the Supreme Court of Pakistan between 1982 and 2002. He is an expert in the fields of Islamic Jurisprudence (fiqh), economics, and hadith. Then he specialized in Islamic Jurisprudence under the guidance of his eminent father, Mufti Muhammad Shafi, the late Grand Mufti of Pakistan. Since then, he has been teaching hadith and Fiqh at the Darul-Uloom, Karachi.

MUSLIM FINANCIAL BEST PRACTICES

Sharia Compliance - The Duty After The Duty

Islamic banks around the world have devised many creative financial products based on the risk-sharing, profit-sharing principles of Islamic banking. For day to day banking activities, a number of financial instruments have been developed that satisfy the Islamic doctrine and provide acceptable financial returns for investors. Broadly speaking, the areas in which Islamic banks are most active are in trade and commodity finance property and leasing. Some of the basic financial techniques of Islamic banking are the following

The concepts of equity and morality are at the root of Islamic banking and absence from interest. In Islam moral and equitable values form an integral part of the rules of law governing contractual and financial relations to such an extent that the relationship which exists between equity, law and religion is an organic rather than supplementary relationship. The importance of Islamic banking has increased dramatically over the past 10 years. The main difference between Western and Islamic-style banking is the concentration on people and their businesses rather than on accounts- it is a much more 'grass roots' banking according to one expert.

IJARAH

Definition

Ijara Wa Iktina: Equivalent to the leasing and installment-loan, hire-purchase, practices that put millions of drivers on the road each year. These techniques as applied by Islamic banks include the requirement that the leased items be used productively and in ways permitted by Islamic law..

IJARAH

Application

Equivalent to the leasing and installment-loan, hire-purchase, practices that put millions of drivers on the road each year. These techniques as applied by Islamic banks include the requirement that the leased items be used productively and in ways permitted by Islamic law.

The operation lease transactions are suitable for high cost expensive assets, that demand large amounts of money in order to possess, in addition to the long time necessary for its production.

To mention but a few of these assets, aircrafts and ships for which the demand on operation lease is increasing because of high cost and long period of construction.

The Islamic banks can carry business in the line of operation lease in many assets such as industrial equipment and agricultural machinery as well as the means of transportation. All these can satisfy the immediate needs of different parties.

The bank benefits from this mode by retaining the assets in its possession and at the same time receives returns from leasing. The lessee also benefits by covering its immediate demand and achieving its objectives at the appropriate time without bearing large capital cost.

IJARAH

Rules

Ijara Wa Iktina: Equivalent to the leasing and installment-loan, hire-purchase, practices that put millions of drivers on the road each year. These techniques as applied by Islamic banks include the requirement that the leased items be used productively and in ways permitted by Islamic law.

1.It is a condition that the subject of the contract 'benefit' is known comprehensively to avoid conflict. If the subject of the contract is unknown or unspecific the lease contract is invalid, to avoid dispute.

2.It is a condition that the object leased must not be perishable or consumable. The asset must remain because the lease is for the utilization not the consumption of the asset. .

3.It is a condition that the subject of the contract must actually and legally be attainable. It is impermissible to lease something impossible to deliver. If the asset subject to lease is a pro rata property, it is permissible for a partner to lease its share to the other partner via an agreement. However, the majority of jurists permit the partner to let his share to others. .

4.It is a condition that the lessee shall ensure that the asset is used for the purpose it is made for and shall comply with the provisions of the contract or the norms if there is no provision. The lessee also shall not benefit from the asset in a way more than what has been agreed upon. .

5.It is permissible to draw a contract on lawful (licit) benefits but as for prohibited benefits, Ijarah (lease) is impermissible. It is impermissible to lease real estate to be used as an interest based bank or a bar. However it is permissible to lease property to whose major activities are allowed even if they include some secondary prohibited practices. .

6.The lessor is under obligation to enable the lessee to benefit form the asset, by delivering the asset at the commencement of the lease period, this includes the accessories of the asset necessary to benefit from the asset according to the norms. .

7.It is a condition in the benefit lease contract to state the lease period clearly, if otherwise dispute will arise. .

8It is a condition that the rental must be money and the letting begins at the time of receipt of the asset because lease contract is a temporal contract the rental falls due from the receipt of the asset not the contract. .

9.It is permissible to advance, defer or install the rental in both the asset lease and the lease described on liability in accordance with the agreement. .

10.It is permissible for the rental to be a benefit similar or different from the one contracted on such a letting a house for living in another, it is also permissible for the rental to be a certain amount of money which increases gradually in ratio with the increase in the output provided that the ratio of increase in the rental and the increase in profit are unambiguously stated. .

11.It is permissible for the two parties to agree during the lease period to review the lease period or the rental or both. That is because the lease contract occurs periodically unlike the sale contract where the transfer of ownership is immediate

12.The leased asset is a trust in the hands of the lessee, so if the asset is damaged or destroyed without transgression, default or negligence from the lessee, it does not guarantee the asset because the lease hold is a permissible hold so it is not guaranteed.

12.The leased asset is a trust in the hands of the lessee, so if the asset is damaged or destroyed without transgression, default or negligence from the lessee, it does not guarantee the asset because the lease hold is a permissible hold so it is not guaranteed.

13.It is a condition that the lessor bears the liabilities of the owner when leasing the asset such as damage liabilities, payment of premium cost and basic maintenance. There is no objection to authorizing the lessee to undertake all the above but must be at the expense of the lessor/owner. .

14.The lessor/owner bears all the costs of the legally binding basic maintenance and these are operations on which the permanence and suitability of the leased object depend. The lessor also bears the cost of the replacement of durable parts. It is permissible to make the lessee bear the cost of ordinary routine maintenance, because this cost is normally known and can be considered as part of the rental. .

15.It is permissible for one who purchases an asset and owns that asset legally and entirely to give it on lease to the seller according to the legal rules of Ijarah. .

16.It is permissible for the lessee to let to the third party during the lease period whether for the same rental or more as long as the asset is not affected by the change of user. .

17.It is permissible to purchase an asset bearing a lease contract. The lease contract may continue since the purchaser agrees to its continuity up to the end of the lease term. All rights and liabilities emanating from the lease contract will transfer to the new owner. But if the sale-contract is drawn and the purchaser is oblivious of the lease contract, he has the right to rescind the contract and the lease continues. .

18.It is a condition that the asset is in good working condition and in case of defect the lessee has the option to retract or to continue the lease and pay the rental. .

19.As soon as the lease period terminates the lessee is under obligation to return the asset to the owner. .

20.The lease contract is binding, and no one party shall unilaterally rescind except for compelling reasons that abrogate binding contracts such as appearance of defects, damage or destruction. .

21.If the asset to be leased in the lease described on liability contract is damaged, the contract does not terminate if the lessor offers a substitute with the same specifications agreed upon in the lease contract. .

22.The lessee in the method of lease described on liability (the leased object is not particular but described and agreed on) is permitted to lease to others in the same manner in a way that coincides with the specifications of the first lease. Then when it delivers the asset to the new lessee it is parallel leasing. According to the Hanbali, it is permissible to pay immediately or to defer the payment of rental, the Shafites have the same view. .

IJARAH

Evidence

Allah says: .and if they suckle your (offspring) give them their recompense. Al-Talaq 6

Said one of the (damsels)"O my (dear) father! Engage Him on wages:ntruly the best of men for thee to employ is The (man) who is strong and trusty Al-Gasas 26

Abu Said Al-Khudari related that, the Messenger of Allah (PBUH) said, "He who hires a worker must inform him of his wage."

Abu Said Al-Khudari related that, the Messenger of Allah (PBUH) said, "He who hires a worker must inform him of his wage."

Related by Albyhaghi through Abu Huraira and His saying (PBUH) "Give the worker his wage before his sweat dries." Ibn Maja

There is consensus among the Ummah from the time of Sahaba "Companions" up to this day because people need benefits as their need to assets.

Islamic banks around the world have devised many creative financial products based on the risk-sharing, profit-sharing principles of Islamic banking.

For day to day banking activities, a number of financial instruments have been developed that satisfy the Islamic doctrine and provide acceptable financial returns for investors.
Broadly speaking, the areas in which Islamic banks are most active are in trade and commodity finance property and leasing. Some of the basic financial techniques of Islamic banking are the following

IJARAH

Methods

A form of credit that enables customers to make a purchase without having to take out an interest-bearing loan. The bank buys an item and sells it to the customer on a deferred basis. The price includes a profit margin agreed by both parties. Repayment, usually in installments, is specified in the contract. The modern Murabahah has become the most popular financing technique among Islamic banks, used widely for consumer finance, real estate, the purchase of machinery and for financing short-term trade.

IJARAH

Products

The banks use the two modes of Ijara, (a) Operation Lease and (b) Purchase Lease

IJARAH

Feature

Th The distinguishing feature of this mode is that the assets remain the property of the Islamic bank to put them up for rent every time the lease period terminates so as not to remain unutilized for long periods of time. Under this mode the bank bears the risk of recession or diminishing demand for these assets

COMMENT

DEEN OF SUBMISSION

The challenge of Islam is for societies to create institutions, infrastructure and systems that will preserve the values of Islam together with the individual freedom of all of creation. The Share'eah contains prescriptions, recommendations, suggestions, general principles, and guidelines that may be considered the basis for an overall economic and commercial theory. Such a theory must be part of the complete vision of Islam and the integration of all aspects of human life. Critics unaware of Islam's Share'eah Laws, and much of the response that surrounds any discussion of it is based on this unawareness.

Islam is a way of life, a form of government, a social structure, as well as a regulatory norm for interpersonal relationships. The conduct of business is not different, and apart from all these other aspects of social life. It is a part of human life and normal like any other.

WAKAALAH

Definition

Literally Wakalah means protection or remedying on behalf of others. Legally Wakalah refers to a contract where a person authorizes another to do a certain well-defined legal action on his behalf. It is a contract of agency which means doing any work or providing any service on behalf of any other.
The majority of the jurists consider WAKALA'a as one of the divisions of Salam, therefore it is subsumed under the definition of Salam. But the Hanafite school of jurisprudence makes WAKALA'a an independent and distinct contract. The jurists of the Hanafite school have given various definitions to WAKALA'a, some of which are: "That it is a contract with a manufacturer to make something" and "It is a contract on a commodity on liability with the proviso of work".

KAFAALAH

Definition

Kafaalah is an Arabic word from the scale of Nasara, Yansuru. It means to join. Allah Ta'ala has 99 qualities. One is al-Kafeel as he joins (assists) in the affairs of every creation.

1) Sharee Definition

'To attach a responsibility to another in a claim.' (Hidaaya). Kafaalat is permissible. This is proven from two prime sources of Shari'ah.

SUKUK

Definition

So Called Islamic Bonds

Modern "SUKUK" emerged to fill a gap in the global capital market. Islamic investors want to balance their equity portfolios with bond-like products. Because "SUKUK" are asset-based securities — not debt instruments — they fit the bill. In other words, "SUKUK" represent ownership in a tangible asset, usufruct of an asset, service, project, business, or joint venture

Each "SUKUK" has a face value (based on the value of the underlying asset), and the investor may pay that amount or (as with a conventional bond) buy it at a premium or discount.

EditorsNote

Please note that our representation here is neither to seen or accepted as guidance, acceptance, or recommendation. Rather it is EXISTENCE.

We share this information here, with the intention that the community is informed of the existence of this product, which some muslims (and others do not) accept as compliant. For our part, we do not participate in this product.

July 15, 2010 | By John Foster, former editor, Islamic Business & Finance magazine

The Islamic finance industry has often battled with the question: How Islamic is Islamic banking?

The question's pertinence was raised in March last year, when Sheikh Muhammad Taqi Usmani, of the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI), a Bahrain-based regulatory institution that sets standards for the global industry, said that 85% of "SUKUK" , or Islamic bonds, were un-Islamic.

Usmani is the expert of modern-day Islamic finance, so having him make this statement is synonymous with Adam Smith saying that free-markets are inefficient. Because "SUKUK" underpin the modern-day Islamic financial system, one of its pre-eminent proponents arguing that the epicentre of the system was flawed sent shockwaves through the industry. It also gave ammunition to the many critics who see Islamic finance as an industry more driven by cultural identity than practical problem solving: as a hodgepodge of incoherent, incomplete, impractical and irrelevant ideas.

We know business needs!

We (a) Seek to establish approved income activities and an enhanced ROI for our prospects while applying the principles of Islam; (b) invite all to right conduct, and to proceed on common terms; (c) to be available to our community for compliance in their operations; (d) Be exemplars of what we call others to.

You may use our services for brainstorming, planning and/or implementation, to resolve issues and challenges.

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Understand technology

We provide custom configurations to ensure relevance to internal/external culture, procedures, needs etc.

We convene and discuss the range of possibilities suitable to satisfy the need requirement.

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Do the duty after the duty

."If one of ten Dirhams used to select a cloth is tainted the Salah is unacceptable as long as the cloth is worn."(Musnad Ahmad).. .

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Gap Mgnt Intervention

Critical Culture Shifting and Profit Enhancement Change has occurred (perhaps someone has just left suddenly) or it is about to (A strategic change is to be implemented) Extremely cost efficient:

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Just-in-Time Support

Non-executive directors are usually found in big, multi-national companies.

In reality there is often a genuine requirement for a good Director in smaller and owner-managed companies.

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Profit Oriented Trade-Offs

Our PM practice method lets you know if you are doing the first things first. How to know what to do before the first thing.

How do know what is involved and what will pull it together.

We can help you with your decision-making strategies, tradeoffs, and shortcuts in high ambiguity settings, and ease some of your anxieties over uncertainties.

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Prod/Svc Evaluation

Many Business Plans are rejected simply for being too complicated, too simplistic, or because the wording of the plan and the actual financial forecasts that accompany it do not agree with each other.

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Owner/Mgr Evaluation

Stress Test owner, management and team. owner .

How well are you equipped to manage your dream operations in meeting the deliverables of customers that have entrusted their business to you.

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Biz/Project Evaluation

Stress Proof Business. If your business/project received a report card, what do you think it would say.

At critical periods, companies are required as a better practice principle to conduct internal business and personal process evaluation operations commonly called STRESS TESTS

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Foreign (local) Office

Different cultures and values add to the hurdles to be overcome before the first staff is employed, or the first product/service is rolled out.

Dispatching your own staff to the new country immediately, may require costly and time-consuming training and orientation and dislocation.

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PlcCounsel ToGo

Need An Expert Stand-In or have a meeting that you dread attending, or will need expensive local home talent in a foreign country to navigate through.

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Scale-Up Teams

Need expertise short term, augment your current management to chart a new thrust, get secure the favours and services of a new resource or venture partner, an new banking institution as a requirement to access emerging opportunities or enter into new markets.

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PlcCompliant Document

Compliant Business and Technology Counsel & Practice Solutions to Transition from Conventional Business to Compliant Business, Training Technical Advice, Coaching and Business Plans and Proposals geared to initiate and transform Individual Operations to Islamic Business with permissible products and services .

We provide such support, that assist in re-ordering, personal intention and conduct to re-orientate individuals to right conduct, compliance and permissible personal goal setting for planned successful outcomes..

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PlcCompliant Entity

We develop our own compliant models to deliver solutions in custom coaching and business plans geared to transform your Operations to Compliant Businesses with permissible products and services.

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PlcCompliant Financiers

We recommend your verified services to prospect clients to be Business Matched and in which activity you may re-purchase qualified performing loans of your choice for permissible financing and provide new opportunities.

Our services introduce you to a wider client base previously unknown to your right conduct, compliance and permissible corporate performance

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"business done by a man with his own hands and every, permissible commercial transaction"

We provide products through our custom programmes and arrangement with specific benefits and specific performance requirements in a roll-out.

Products are aesthetic, cost effective, energy lean, environmental sustainable and satisfies a specific trigger and user service proposition for the target demographic, be it individuals, companies, city chambers of commerce, industry sector interests, standing governments of countries or party interests of the same country

Getting off on the right foot requires a proven game plan. We do stagings that provide the raised the bar on performance for your company that allows you to achieve faster concept to target implementation, so that you don’t have to. We may be your best option in finding the best-fitting solution just-in-time.

Private

At the personal level the obligation is to (a) engage in halal professions and business activities. (b) Facilitate seamless transitions from conventional business practices to a Islam Compliant Practices; (c) Be a catalyst in the enhancement of permissible lifestyle businesses from concept to product delivery, and customer satisfaction.

Corporate

At the corporate level the obligation is to seek to (a) establish a system that facilitates such individual efforts and discourage their opposites in our community; (b) research, establish, and support, promote compliant Businesses activities; (c) increase the successful small to medium owner managers pool of entrepreneurs (d) transition and convert conventional business to compliance; (e) be an intermediary between diverse cultures; (f) be a bridge-builder facilitator in trade, commerce and business relations, on a best practices of Islam

Governorate

At the greater collective level we intend to be in the vanguard of establishing, maintaining and propagating Businesses Best Practice, based on Islam

THE FINE PRINT.

Business and it’s environment is risky beyond control, companies of all sizes are facing critical issues of resources and seek agile multi-skilled individuals and locations for economies of scale and everywhere life's dynamism creates new challenges.

HOW YOU ENGAGE US.

Recommendation or Expression of Interest Communication Product/Service Introduction.

Where We Are Intro To Company, We Conduct A Customer/Entity Readiness Evaluation to determine if we are a good fix

COMPETENCIES

These are issues which arise from the things clients are not so good at or, the things they are not sure how to do or they are not sure if they're dong it right or just the things they don't like doing or even some of the things they are good at - but it's no longer profitable to do it., or even some of the things that you are good at, but just cannot do now.

DELIVERABLES

Fixed Cost, Fixed Time, On Terms, On Time, First Time

SHARED RISKS/BENEFITS

Shared vision from risks framed in common terms, through shared costs and collaborative action that fosters the catalyses Shared opportunities for Shared benefits Custom Methods & Processes allows us to provide the deliverables exactly on requirements above 90% of the Time. 5% to 10% of the time, deliver according to adjusted deliverables..

COMMON TERMS

We work on common terms which ensures that if we do well, you do well and if you do not, we do not either.

If you do an early termination, you forfeit 50% of your fees. If We terminate Early, we return 100% of your fees.

THREE (3) DAYS

If perchance, you are not provided with your complete deliverable we will return 50% of We provide you with a respite of three (3) business days to sign off on our project after we have been paid – and if you are not satisfied with our solution, we will return 50% of your total fees

BILLNG TERMS

Billed fees are 100% earned and due.

GOLD STANDARD

Our standard fees rate is 4.5Grams of 99.999 purity gold per hour or the equivalent in your currency.(if we need a custom fee for your delivery it may be multiples of 4.5Grams or percentages of 4.5Grams

LIABILITY

Our declared liability is 50% the fees collected for our agreed solution.

WE DONT DO DISCLAIMERS

As Muslims involved in business and technology consulting, we rely completely on the tenets of Islam to determine our praxis and counsel, our business relationships, our products and our associates. Islam is its own culture, a way of life, a form of government, a social structure, as well as a regulatory norm for the full range of human and human/other relationships.

The conduct of business is no exemption.

Our socio-politico-economic-ethico*-moral theories should be consistent with guidance and instruction and the basis of all of them must be one. and when the Creator and His Messenger has made a decision, it is not for Mankind and ins to have an opinion on it

Islamic society preserves the notions of free enterprise and social solidarity, social responsibility and an alternative form of humanity for all.

This precedes and supersedes self-interest, and that also is the object of many specific guarantees in Islam

WEBSITE

On this site our descriptions are longer than many others, primarily because we know what we can do and it the declaration provides a clear indication of our capabilities, the value we exchange and what the standards and delivery options we should be held observed.

PRINCIPLES

We provide our solutions against the background of the Islamic Aadaabs Of Khidmat (Service To Others) of which there are three conditions of Kidmaat, viz.

Sincerity: The motive of rendering the service must be nothing other than Muhabbat (affection).

Congeniality:  The hearts of the Khaadim (the one who renders the service) and the Makhdoom (the one who is being served) should be at one. There should be congeniality (Munaasabat) between them. They should not be strangers.

Ability: The Khaadim should know how to render the service he is to undertake. | CEO.IKRIMAH - In Other Words We Will Not Take The Project Unless We Can Deliver. {iA}

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IKRIMAHPLC controls these sites from its offices in Singapore. You agree that any action proceeding, or other matters relating to your access to, or use of, the information on these sites shall be governed by Islamic Laws and permissible Singapore law. Here you choose (a) compliance and confidence with