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Kafalah

by economypedia
written by economypedia

Kafalah is a guarantee or suretyship agreement that serves as assurance regarding obligations or performance. In other words, kafalah is useful to stop any unfavorable alteration that can result in ambiguous or unforeseen outcomes with regard to the purpose or foundation of a transaction.

 In order to safeguard the import of products, guarantees are frequently employed. In this situation, a bank will offer a guarantee once the exporter releases the third party from responsibility for the items. 

Both the exporter and the importer may be sure that they will receive their agreed-upon payments in the end—the price for the exporter and the goods for the importer, respectively.

Kafalah is also spelled “kifalah“.

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Islamic FinanceK

Kafil

by economypedia
written by economypedia

Kafil is the party that guarantees an initial party’s performance under a commutative contract or agrees to stand surety is the party that enters into a contract of kafalah (also spelled kifalah). To put it another way, a kafil is someone who combines his obligation to the principal’s (makful or makful anhu) culpability in claims involving debts, bodily harm, or material possessions.

Kafil can alternatively be spelt as “kafeel“.

 

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Islamic FinanceK

kafeel

by economypedia
written by economypedia

kafeel is the party that guarantees an initial party’s performance under a commutative contract or agrees to stand surety is the party that enters into a contract of kafalah (also spelled kifalah). To put it another way, a kafil is someone who combines his obligation to the principal’s (makful or makful anhu) culpability in claims involving debts, bodily harm, or material possessions.

kafeel can alternatively be spelt as “kafil“.

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Islamic FinanceK

kifalah

by economypedia
written by economypedia

kifalah a guarantee or suretyship agreement that serves as assurance regarding obligations or performance.

In other words, kifalah is useful to stop any unfavorable alteration that can result in ambiguous or unforeseen outcomes with regard to the purpose or foundation of a transaction.

In order to safeguard the import of products, guarantees are frequently employed. In this situation, a bank will offer a guarantee once the exporter releases the third party from responsibility for the items. Both the exporter and the importer may be sure that they will receive their agreed-upon payments in the end—the price for the exporter and the goods for the importer, respectively.

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Islamic FinanceR

Ribawi Items

by economypedia
written by economypedia

Ribawi items six substances goods which are sold by weight and by measure. The items are specified as followings:

  1. Gold
  2. Silver
  3. Wheat
  4. Dates
  5. Salt
  6. Barley

Exchange of these items of the same basis and of the same kind (i.e Gold with Gold ) it must be in the same weight and measurement with immediate of possession transfer ( القبض Qabdh ).  

While the exchange of the Ribawi items of the different kind of the same basis (i.e Gold with Silver) the different of the weight and measurement and number of units are allowed, however the possession transfer ( القبض Qabdh ) is a must to be immediate .

Finally the exchange of the Ribawi items of the different kind of the different basis (i.e Gold with Dates) the different of the weight and measurement and number of units are allowed, however the possession transfer ( القبض Qabdh )  could to be immediate on spot or deferred .

These rules in exchange the Ribawi items In order to avoid the (Riba al Fadhl ربا الفضل ) which occurred because of exchange unequal amounts (measures and weights) of same kind and same basis Rabawi items . As well as avoiding (Riba al Nasiah or Riba Yad ربا النسيئة ) 

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GIslamic Finance

Gharar

by economypedia
written by economypedia

Gharar refer to an arabic terms of (الغرر ) which is mean unknown, risk, uncertainty or hazard that might lead to destruction or loss.

something which its consequence is undetermined.
Hanafi scholars
anything that the end result is hidden or the risk is equally uncommon, whether it exists or not.
Al-Sarakshi

it refers to any transaction of probable items whose existence or characteristics are not certain, due to lack of information, ignorance of essential elements in the transaction to either party.

Due to the uncertainty and risk involved, it makes a transaction similar to gambling. which is the main reason behind the prohibition of gharar.

The rationale of prohibition of gharar is to ensure full consent and satisfaction of the parties in a contract. Without full consent, a contract may not be valid.
Full consent can only be achieved through certainty, full knowledge, full disclosure and transparency.

There are two types of Gharar:

  1. Gharar Yasir (light or minor uncertainty)
  2. Gharar Fahish (excessive or major uncertainty).

Both forms of gharar are not haram. Gharar Fahish is the haram kind of Gharar. Gharar Yasir is under the halal class of Gharar.

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Islamic FinanceM

Maisir

by economypedia
written by economypedia

Maisir (Maysir) refer to an arabic term ( ميسر ) which is a game of chance (Gambling) was played by arab before islam. 

The Maisir (Maysir) arises when one party profits at the expense (loss) of the other, in an uncertain event. Earnings through it have been strictly forbidden by  Sharia  (the islamic law).

Gambling and all games of chance have been strictly prohibited by the Quran.

“They question thee about strong drink, and games of chance. Say: In both is great sin, and (some) utility for men; but the sin of them is greater than their usefulness.” (Al-Quran 2:219)

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FIslamic Finance

Islamic Finance

by economypedia
written by economypedia

Islamic finance is the concept of practicing the financial activities according to Sharia  (the islamic law) . though that the original concepts of the islamic finance can be tracked to beginning of the islam back 1400 years ago, the formal islamic finance occurred only in the 20th with launching the islamic banks in Saudi Arabia and united Arab Emirates .Islamic finance grows very fast with range of 15%-25$ per year, increasing the value of the asset which is managed according to the islamic finance rules from $200 Billion in 2003 to oversee over $2 trillion.

According to the Sharia islamic law, which is considered the principles source of the Islamic finance,
Some actives are strictly prohibited :
1-Interest Charging.
2-Investing in business activates which are prohibited in Islam.
3-Speculation – gambling (maisir)
4-Uncertainty and risk (gharar)

In additional to two principles of :
1- Transactions must be based on assets and legitimate trade.
2- Risks and benefits should be shared.

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