Islamic Finance Lessons

Investorpedia is one the highly referenced website for finance learning with short and simple videos to help the beginner to understand the complicated concept.

The United Arab Emirate (UAE) based The Islamic Economics Institute has introduced short has introduced short and simple videos on Islamic finance terms.

These videos can help the beginners of Islamic finance to understand the Islamic finance concepts, term and principle easily with colorful animated series in YouTube.

What is Islamic Finance

Short videos on Islamic finance. Islamic finance is one of the fastest growing industry with 15% growth rate and total of $3 trillion asset worldwide. Islamic finance includes Islamic banking, Islamic insurance, Islamic insurance (Takaful) and Islamic bonds (Sukuk). For further detail information on Islamic finance, follow our course in Udemy.com

Prohibitions in Islamic Finance – Interest/Usury (Riba in Arabic)

Types Riba (Interest/usury)

This video is about two types of usury in Islamic finance (Riba in Islamic finance).

The usury is of two kinds: First, Riba al-nasiah: This riba is based on money lending; the lender and borrower agree upfront on a fixed amount of money to be paid as a reward for the money lent.

Second, Riba al-fadl: This riba is the excess that arises during an exchange of homogenous commodities in unequal quantities or qualities. If you have low – quality gold, for example, and you want to purchase high-quality gold, you can’t exchange the two and pay the other party cash to make up the difference in value.

Prohibitions of Gambling (mysir/qimar)

Islam prohibits business transaction based on 1. Interest/Usury 2. Gharar (Uncertainty) 3. Gambling 4. Prohibited industries

Prohibition in Islamic Finance – Gharar (Deception/Deceiving)

Prohibitions in Islamic Finance – Gharar

Prohibited industry in Islamic Finance

Mudaraba – Partnership

Restricted and Unrestricted Mudarabah Account of Islamic banks

Islamic banks receives money as source funds from the customers as investments. Islamic banks invest these funds in two different ways; 1. Unrestricted investment 2. Restricted investment.

Islamic finance product – Tawaruq or Tawaruqq or Reverse Mudarabah

Islamic banking – Equity financing (Mudarabah financing and Musharaka financing)

One of the source of Islamic bank is from financing activities. The financing activities includes 1. Equity financing 2. Trade financing 3. Asset financing

Islamic banking – Asset based financing (Murabaha, Ijarah and Istisna)

One of the source of Islamic bank is from financing activities. The financing activities includes 1. Equity financing 2. Trade financing 3. Asset financing