CHAPTER-1
INTRODUCTION:
1.1. History of the study
Islam is a complete code of life. Islam tells us everything about our lives, whether it is religion (Salah, Fast, Zakah etc) or our social life (Marriage, Trading etc) is concerned. Being a Muslim it is our religious duty that we all work in accordance with our religion. Islam has explained everything very well. Trade has a sufficient importance in Islam. If we study the life of all messengers of Allah Almighty, they did trading. It is mandatory for a Muslim that he should trade in circle of Islam whether he is trading individually or globally. Islam teaches us (interest-free) business. Interest (Riba) is Haram (Forbidden) in Islam. So for this purpose Allah Almighty has revealed so many Ayats in Quran-e-Pak about interest (Riba) and there are also so many Ahadees of beloved Prophet Mohammad (Sall-Allahu Alayhi Wa sallam).
Now take some Quranic Ayats as well as some Ahadees about interest (Riba)
Quranic Ayats:
Verses in Quran-e-Pak on Riba in order of compilation.
1. Surah Al Baqarah Verses 275-281
2. Surah Aal’e Imran Verses 130
3. Surah Nissa Verses 161
4. Surah Ar- Rum Verses 39
First time in Surha Ar-Rum verses on Riba were revealed.
"And whatever Riba you give so that it may increase in the wealth of the
People, it does not increase with Allah." (39)
Allah Almighty says in another place people warning in Surah An- Nissa
"And because of their charging Riba while they were prohibited from it."
In Surah Aal-e-Imran Allah Almighty says
"O those who believe do not eat up Riba doubled and redoubled." (3- 130)
In Surah AL-Baqarah (275-281) Allah Almighty is elaborated the prohibition of Riba in detail.
"Those who take interest will not stand but as stands whom ...
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... system a lender can earn abnormal profit without participating in the business process of profit and loss share.
Islamic Financing System:
Islamic financing system is not manmade system like conventional financing system. This system is fully based on Shariah rules and regulations. These rules and regulations are derived from the Holy Quran and Ahadees. All the transaction, dealing, business types, products features, responsibility etc should be within the limit of Shariah,
Shariah has made some principals for the Islamic financing system. These are
There should be interest-free (Riba) transactions.
Economic activities are sanctified by oppression. (zulm)
Economic affairs should be free from speculation. (gharar)
The introduction of an Islamic tax, zakat
To deny the production of goods and services that is violated Islamic value. (haram)
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
In this chapter of Naked Economics, by Charles Wheelan, he describes many aspects of trade. It begins by showing the capabilities of trade and how it affects everyone as a whole. It makes it so that everyone is better off than normal. To put it into perspective, he put the image in your head of how hard your life would be without trade, you would have to make your own clothes, find a way to get/make your own food, make your own car, etc... After showing some of the advantages to trade, he applies it to a global persona and begins to introduce his opinion on how global trade (globalization) makes us richer. One of the key explanations of this point is that trade frees up time in our busy schedule, therefore allowing us to use that freed up
The Qur’an (which is extremely reliable as it is the Islamic holy law and read and practiced by most Muslims) read, “ And give full measure when you measure out and weigh with true balance. This is fair and better in the end” (Doc 2) This discusses how that trade is meritable when it is done with honesty and respect for others and the Islamic church itself. Similarly a monk believed that profit lead to eventual charity. He said, “ Sixteen years as a merchant, and began to think of spending on charity, to God’s honor and service, the goods which he had laboriously acquired. He therefore too the cross as a pilgrim to Jerusalem” (Document 3) This is important as it depicts that once one has worked for years to acquire his assets he will return those to not only charity but God. Muslims also believed that trade had once been beneficial and flourishing, but recently mishandled. The Islamic court said, “ The aforementioned has now acted contrary to the old custom; We do not agree with this” (Doc 7). This quote depicts how in the Islamic realm they believed that merchants and trade had the possibility of being great. These all directly supports the previous claim which said that trade is great when handled
Document 2 shows that Muslims only support equal trade because unfair commerce is not endorsed by the Qur’an. In Document 4, it shows that Christians will not pardon the practice of double dealing. Ibn Khaldun writes that commerce, by definition, is a deceitful practice, full of lies and tricks, but that at the same time, it’s a natural way of life that still requires Muslims to practice the fair exchange of goods (Doc 5). This shows that Muslims also knew the nature of the job they endorsed, and warned against becoming a sinful merchant. The Islamic court of Ankara judged a case where the Turkish weavers’ guild brought up charges against a merchant for unfair purchase and hoarding of materials (Doc 7). This shows the animosity that Muslims hold for unjust commerce. They found it unfair for one person to monopolize on an industry and leave every other merchant of the same trade with nothing. This source is reliable because of its state importance. As a government document, there is little chance of bias being in it. All of these documents show that both Christianity and Islam are shown to oppose deceptive trading
It is stated in the chapter that there were sixty-nine different categories of traders. They all had different goods to trade, but no matter where you came from you went by scale, loans, contracts, and also used a money system called coachtili. Business was negotiated many different ways, but within each trader, buyer and selling, they knew the international language of business.
First of all, according to an Islamic rhetoric, there is only one god who is Allah, and he is the only one who is transcend and absolute. Therefore, it is hard to say that apostles such as Muhammad, Abraham, Moses and Jesus are admired by people because they are one of gods. Abraham, Moses and Jesus are admired by Islamic people because they received a revelation from God and truly obeyed it. To sum up in a word, Islam is a religion that allowed to obey only one god which is Allah, and revealed to people by a prophet named Muhammad.
Contained in the many intricate and poetic Surahs of the Qur’an are retellings of a number of famous stories of the Hebrew Bible, known to Jews as the Torah, Prophets, and Writings. However, the Qur’an’s account of the lives of certain biblical characters often differs in significant ways from the Jewish version. While a believer in the divine nature of the Qur’an may claim that differences in facts stem from distortions of G-d’s message as recorded in Jewish holy books, both Muslims and non-Muslims might agree that the differences in emphasis are intentional. A more cynical observer might claim that the Qur’an changed the known Bible stories to suit its purposes. By choosing to include certain parts of a famous story and leaving out others, the story itself takes on a very different significance. Occasionally, the Qur’an will also discuss parts of the story which are entirely left out of the Torah, in which case a Muslim may claim the Torah did not deem those facts important for its own reasons. A cynical observer would claim the Qur’an made these additions to make its own message clearer.
... people. It also shows the dependence of people on God. Moses was a man of courage who sought to see the face of the God. He received the laws of the lord and made sacrifices for them when they sinned. Moses acted as a mediator between Yahweh and his people (Woolfe).
Islamic finance is a financial system that operates according to Islamic law (which is called sharia) and is, therefore, sharia-compliant. Just like conventional financial systems, Islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies. However, these entities are governed both by Islamic law and the finance industry rules and regulations that apply to their conventional counterparts. Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process. It would based on two sources which are Al-Quran and As-Sunnah.
Alternatively, when expenses exceed revenue for a defined period, an operating loss shall be recorded. Mudarabah operating loss which is measured during the operating period may be offset against prior or future profits. Loss shall be solely borne by the capital provider except in the event of misconduct, negligence or breach of contract by the manager. The manager may not undertake to bear the loss. The manager may bear the loss at the time the loss is realized without any prior condition or undertaking. A third party may undertake to bear the loss of capital due to misconduct or negligence on the part of the manager. The capital provider may take collateral from the mudarib, provided that the collateral could only be liquidated in the event of negligence or misconduct or violation of term of contract by the Mudarib. Capital loss shall be recognized when the loss occurs prior to the commencement of the business or due to extenuating circumstances beyond the control of the manager and not due to the negligence or misconduct of the manager. The Mudarabah agreement may be mutually reviewed to ascertain whether the capital loss impairs the future performance of the business activity and the partners may decide to restructure the agreement accordingly. Operating loss shall be recognized when the loss occurs during the course of ordinary business. The losses may be carried forward to the next period and subsequently, be set-off against prior or future
The word qurʼān appears about 70 times in the Quran itself, assuming various meanings. It is a verbal noun (maṣdar) of the Arabic verb qaraʼa (قرأ), meaning "he read" or "he recited". The Syriac equivalent is (ܩܪܝܢܐ) qeryānā, which refers to "scripture reading" or "lesson".[20] While some Western scholars consider the word to be derived from the Syriac, the majority of Muslim authorities hold the origin of the word is qaraʼa itself.[1] Regardless, it had become an Arabic term by Muhammad's lifetime.[1] An important meaning of the word is the "act of reciting", as reflected in an early Quranic passage: "It is for Us to collect it and to recite it (qurʼānahu)."[21]
The word business, trade, exchange of commodities are all synonyms. In the early age of civilization business was carried out on the basis of Bata trade as currency came into existence and there were business set Ups our perception started to change towards business but more so since the last 50 yrs with the advent of the information technology the world has turned around. With the establishment of the Internet business has got globalize Businesses are now able to approach overseas market they are no more confined to their areas of their establishment.
First, according to Section 2 IBA 1983, Islamic Banking Business is business whose aims and elements do not involve any element which is not approved by the religion of Islam. Based on the definition stated, it is clear that the Islamic Banking practices must according to or complients with the Shari’ah obliged in the Al-Quran and As-Sunnah. In conjuction with the Shari’ah appliances, the Islamic banking business must not include or prohibited involvement of illegal activities. Unlike Islamic Banking, Conventional Banking practises its system based on man-made laws and not included any religious guidelines to support their systems.
Throughout history, essentially all groups/communities of people have participated in trade. A group’s activity in trade reflects on the entire region they’re from. Religion used to play a big role in what effect trade had on a person. Some say that it is almost a sin to partake in trade and selling goods in general; others say it is not really an issue.
Religion is an important factor in many lives in today’s society. A particular western religion that is taken very seriously by many is known as Islam. Essentially, Islam means “submission”, or in other words a person is to abide by God and peace will follow. In order to comprehend the Islamic religion, it is consequential to view the major themes associated with this religion. By going through the central themes of Islam it could help others comprehend what is involved with this specific religion.