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The finance industry has evolved over hundreds of years and covers a wide range of areas, including banking, credit, investment, and insurance.  Primarily, it relates to the allocation of resources between those who have a surplus and wish to invest, and those who need funds in order to finance a project or complete purchase transaction.  Simply put, it is a mechanism for reallocating funds between those who have and those who need these for industry, business, trade or purchase of goods & services for personal consumption.
The finance industry also includes the insurance sector where individuals or those in business safeguard themselves or their assets against injury or loss by the transfer and pooling of risks.
Islamic banking offers Riba-free banking in line with Islamic Shari'a rules.  Unlike conventional bank, Islamic bank does not treat money as commodity where people can have price on money (interest) without taking the risk. In Shari’a, a person is legitimized to generate profit from money only if he or she involves in risk-sharing or engages in an economic endeavor which contributes the broader economy. In Shari’a, this principle is called Al Ghunm bil Ghurm (الغنم بالغرم ) and Al Kharaj bid Daman (الخراج بالضمان ).

Islamic banking neither gives nor takes loans on interest because every loan in Shari’a must be settled neither with addition nor deduction from the principal.  It operates as a trading company which buys, sells and enters into different modes and contracts of investment such as Mudaraba, Musharaka, etc.
Islamic finance involves the revival of trade and investment principles and practices established centuries ago in the context of a modern financial system. As a relative newcomer to the finance industry, it has arisen because conventional finance does not meet the requirements of Shari’a principles and rules, and does not conform to the beliefs and precepts of Islam. Key to the evolution of Islamic finance is the belief held by Muslims that absolute ownership belongs to God, and man as the servant and vicegerent acts in trust in administering wealth in a just and equitable manner. Oppressive behaviour, such as usury, is prohibited and the charging and receiving of interest is unacceptable. Hence, a moral code and social order is prescribed based on the Islamic belief system.
Islamic banking has been defined as banking which conforms to the value system of Islam. It involves banking practices which follows principles laid down by Islamic Shari'a while also observing compliance with the conventional good governance and risk management rules. Interest-free banking is a narrow concept denoting a number of banking instruments or operations, which avoid interest. Islamic banking, in more general term is expected not only to avoid interest-based transactions, prohibited in the Islamic Shari'a, but also to avoid unethical practices and participate actively in achieving the goals and objectives of an Islamic economy.
  • Forbiddance of Interest (Riba):
Interest must not be charged or paid to on any financial transaction as it is deemed unlawful
  • Restriction on Uncertainty (Gharar):
Excessive uncertainty in contractual terms and conditions is forbidden
  • Prohibition of Forbidden Activities:
Financing weapons, gambling, liquor, pork, hoarding, speculation, etc. are deemed unlawful
  • Profit & Loss Sharing Mechanism:
Both parties in a financial transaction must share the risks and rewards of the transaction
  • Asset-Backing Principle:
 Transactions must refer to a tangible, identifiable underlying asset
No, Islamic banking services are available to Muslims and Non-Muslims alike. There is no precondition of being a Muslim to avail Islamic banking services.
Islamic banks do not provide any assistance, especially financial assistance, to industries promoting social evils, e.g., liquor, gambling, weapons, narcotics, pornography, tobacco, hoarding, speculation, etc. Hence these evils will be confined to personal levels only, whereas conventional banks generally sees the repayment ability of the applicant and feasibility of the project and provides funding to build liquor factories, casinos, gambling dens, or provide funding to companies involved in hoarding or speculation, etc. promoting social evils in the society. Hence, Islamic banking acts in a more socially responsible manner.
Our capital has been separately raised from shareholders of the bank; it has not come from OAB. Al Yusr pays all its expenses from its own sources. We also pay rent / fee to OAB if we use any of their services.
No, Islamic banks do not offer loans; they offer financing through Shari'a-compliant modes of investment and transactions, which means they sell goods, acquire plant & machinery and give on rental basis, and enter into Musharaka with the customer such as in the case of housing finance under Diminishing Musharaka product.
Riba (or interest) is rent of money.  Interest could be fixed or floating, simple or compounded, and of different rates.  Riba is strictly prohibited and must not be present in any form of contract or transaction.  The presence of riba in any contract would void the contract as riba is considered unfair and exploitative.

Profit on the other hand is earned through natural trade and represents the premium that a seller charges over and above actual cost through the exchange of commodities for money or through barter trading.  This represents his effort to make available the product to customer.
Our funds are not intermingled with OAB. Al Yusr has its own capital and we pay rent or charges for each and everything that we use of OAB. An Islamic window, like Al Yusr, within a conventional bank cannot operate unless following three operational functions are in place:
  • Shari'a Governance Structure ensuring Shari'a Compliance.
  •  Segregation of Funds achieved through setting up a separate entity, establishing different accounts & reporting systems.
  • Adopting Accounting Standards, such as, AAOIFI.

 Besides the above measures, Central Bank being the licensing authority keeps an independent check on all activities of Islamic windows ensuring no cominglingof funds takes place.

Transactions in Islamic banking are based on Shari'a-compliant structures; however, their pricing matches standard financial indicators so that these will remain competitive. Shari’a allows such practice.
All investments are first approved by our Shari'a Board and only then these are offered to our customers. The Shari’a auditors monitor the operations of the Bank and the implementation process. If they find any transaction done by the bank which is not Shari’a compliant, they ask the bank to deposit profits of such transaction in charity account. Such charity amount is distributed among poor people or social causes on a periodic basis.
No, both have the same meaning. Qur’an, Sunnah and Fiqh do not differentiate between the two. Islam terms what is known as interest or usury as riba and therefore prohibits it.
No, Islam does not allow business in prohibited items, such as, liquor, pornography, narcotics, weapons, tobacco, hoarding, speculation, etc. This is one of the major differences between an Islamic bank and a conventional one.
Yes, Islamic banks offer interest free credit card facility for which the client pays a monthly fee irrespective of the way he uses the card during the period. The fee is in lieu of some real services that a credit card holder becomes entitled to. The fee neither increases nor decreases on the basis of the use, frequency of usage or non-use of the card by the customer.
The Islamic banks invest / utilize the funds received from the Account Holders / customers in real economic transactions under Islamic modes of financing such as Murabaha, Ijarah, Salam, Istisna’a and investment contracts such as Mudarabah, Musharakah, Wakala, etc. to generate profit. Such financing is provided to businesses, trading companies or individuals who want to acquire real assets.
Islamic banks do not announce future profit rates or commit to pay certain percentage of profit. Islamic banks declare the profit of their investment pools periodically, and the declared rates can be referred to show their past performance with a clear disclaimer that the bank may or may not perform similarly in future.
Following are the most commonly used modes of Islamic banking and finance:
  • Murabaha
It is a sale contract in which an individual/ entity sells an asset at cost plus an agreed profit. The sale price could be paid on spot or deferred payment basis
  • Ijarah
It is a leasing contract in which the owner of an asset or its usufruct sells the usufruct of the underlying asset to the lessee for an agreed rental.
  • Mudarabah
Is a form of partnership where one party provides the funds while the other provides management services against a pre-agreed share in the profit of the investment. However, if there is any loss, it is borne solely by the capital provider.
  • Musharakah
Is a partnership with all the parties contributing to the capital of the Musharakah on the basis of profit and loss sharing. The profit shall be shared as per the agreement but the loss will be borne pro rata of investments.
  • Salam
It is a kind of sale in which payment is made on spot while the delivery of the goods is deferred. It is mainly used for agricultural produce. Payment is required to be paid full in advance and it is used for commonly available commodities.
  • Istisna'a
It refers to a sale in which the buyer orders the manufacturer to produce and deliver a fully described commodity, from raw materials of its own. It is basically an order to manufacture; this can't be used for financing ready goods / equipment, etc.
Yes, the Account Holder bears the loss proportionate to his / her investment.
The fact that the difference between Sale (Halal) and Riba (Haram) is and will remain fine is acknowledged by Allah SWT in the verse 275 of Surah al-Baqarah:…they say: "Sale is but like riba.", whereas Allah has permitted sale, and prohibited riba…(…قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَل اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا…)

The building block of Islamic banking transactions is trading or sales of real assets whereas conventional banking transactions are riba based.
Islamic banks do not offer loans, they offer financing through Shari'a compliant modes of investment and transactions. These modes of investments are based on Islamic contracts and have real assets backing those transactions. The extra documentation in Islamic banking is for clearly demarcating ownership, responsibilities and rights of all the contracting parties so as to remove all possible ambiguities that otherwise give rise to conflicts.
No, Al Yusr does not offer overdraft facility as overdraft facility is not allowed in Islamic banking. Islamic banks may offer Shari'a compliant alternatives for such a facility, such as Murabaha, etc.
All persons (individuals, corporate entities, firms, societies, clubs, government organizations, statutory bodies / corporations, public and private institutions, etc.) are eligible to open account in Islamic banks provided they fulfill the banks’ and the regulatory authorities’ requirements.
Members of Al Yusr Shari'a Supervisory Board are:
  • Dr. Essam Al-Enezi (Chairman)
  • Dr. Ahmad Ayyadi (Member)
  • Dr. Abdulaziz Al-Qassar (Member)
Yes, as per Shari’a, it is lawful for the bank to accept a fee for the services it performs as an agent on behalf of the payer or payee bank.
Yes, as per Shari’a it is permissible. If Islamic banks do not impose any penalties on late payment the customers shall not pay in time and thus the Islamic banks will not be able to run their business efficiently and give a good return to the investors who have invested their funds trusting good management in the bank.

Therefore, Shari’a Board has allowed to take irrevocable undertaking from each client that in case of late payment he shall be charged a penalty which shall be donated to a charity supervised by the Shari’a Board of the bank independently from the bank. The Islamic banks do not use these donations for their own benefit, but incorporate such provisions in their contracts to check potential default.
Sukuk are Islamic Investments certificates issued against shares in the underlying assets. These could be existing or described assets promised to be delivered in future, or shares in the usufruct of such assets or shares in services.
If a buyer purchases an item without having first seen it, he is entitled to return it upon physical inspection without delay, whether provided for in the contract or not, even if the item is not of low or defective quality; particularly relevant in cases where delivery occurs considerably later than the finalization of the contract (e.g. mail-ordered purchases);

If a seller sells an item without having first seen it, he is not entitled to demand it back, though the buyer is still entitled to return it upon inspection;

If partial physical inspection proves satisfactory at first but later the buyer discovers that the uninspected portion of the item is of low or defective quality, it is permissible to return the unsatisfactory portion of the item (if practicable, otherwise the whole item) once inspected.
Conventional insurance is not Halal and hence not allowed due to the factors of Riba and Gharar. The form of Islamic insurance is Takaful which is based on Shari'a rules. In case of absence of a Takaful based company, Islamic banks are allowed to get insurance cover through conventional insurance to avoid exposing the investors’ deposits to high risk.
Takaful is the Islamic way of Insurance. Takaful means mutual protection and joint guarantee through contribution by each member. In such arrangement Takaful policy holder contribute funds which are managed by Takaful Operator to disburse against valid claims. Takaful Company is primarily owned by Takaful premium contributors.
Takaful eliminates the element of chance, gambling and ambiguity by:
  • Investing the deposit pool in only Shari'a compliant products.
  • The participants are investors and they share the profit of their investment.
  • A Takaful Company manages the Takaful Fund on Wakala or Mudarabah basis. At the same time they compensate those of the group who are exposed to losses.