A - H  ,  I - Q  ,  R - Z

Ajr: Fee or wage charged for delivering services or labour.

Al Maal:  Al Maal is the wealth an individual or an organization owns. It includes cash, tangible assets, intangible (usufruct) assets, consumable assets, goods in trade and debt receivables.

Al-Sarf:  Sale of monetary value for monetary value; currency exchange. In Islamic law, foreign exchange is only spot exchange, which means immediate delivery of exchanged currencies at the prevailing rate. 

Amanah:  Reliability, trustworthiness, loyalty, and honesty. An important value of Islamic society in mutual dealings. It also refers to deposits in trust, where a person may hold property in trust for another. 

Bai:  An agreement between two parties whereby the supplier agrees to supply a product on an agreed price, on an agreed mode of payment.

Bai al Arboon:  Deposit-secured sale. A sale agreement in which a security deposit is provided in advance as part payment towards the price of a commodity. The deposit is forfeited if the buyer does not meet his obligation. If the sale is completed Arboon deposit becomes part of the price. 

Bai al Inah:  The instant sale and buy back of an asset for a higher price than that for which the seller originally sold it. This type of transaction is considered void by Shariáh scholars because it is considered to be a cover up for a Ribawi transaction. 

Bai Bithaman Ajil:  Deferred payment sale. Also known as Bai Mua'jal. The sale of goods on a deferred payment basis. Equipment or goods requested by the client are bought by the bank, which subsequently sells the goods to the client for an agreed price, including a mark-up (profit) for the bank. The client may pay by installments within a pre-agreed period, or in a lump sum at the end of the contract period.

Bai Dayn:  Islamic term for sale of debt. Most Islamic scholars do not approve sale of debt because according to them this involves Riba and Gharar. 

Bai Istisna'a:  A sale contract for manufacturing of tangible assets, allowing cash payment in installments and future delivery of the product. For example, a manufacturer or a builder agrees to produce or build a well described asset for a given price and promises delivery on a date in the future. 

Bai Mua'jal:  A sale of commodity wherein the price is paid on deferred payment basis.

Bai Salam:  A sale contract in which full payment is made in advance for goods to be delivered later. The seller undertakes to supply specific goods to the buyer at a future date in exchange for an advanced price paid at the time of signing the contract.

Darura:  A necessity or emergency. This is a condition in which aspects of Shariáh may be suspended in order to preserve life, or to assure safety of the Muslim community, or an individual.

Dayn:  A debt which comes into existence as a result of commitment to pay later. It is incurred by way of rent, sale, purchase,marriage, etc., which leaves an obligation on an individual or an organization.

Diminishing Musharaka:  This specific form of partnership, also known as Al-Musharaka Al-Mutanaqisa, allows equity participation and sharing of profits in a pre-agreed ratio, and sharing of losses on a pro-rata basis. This provides a method through which the bank keeps on reducing its equity in the project, ultimately transferring ownership of the asset to the participants. The contract provides for payment to purchase equity shares held by the bank, over and above the profit paid to the bank. Simultaneously the entrepreneur purchases some of the bank's equity, progressively reducing it until the bank has no equity and that results in ending the partnership.

Fatwa:  A legal verdict given on a religious basis. The sources on which a fatwa is based are Holy Qur'an, Sunnah of the Prophet (peace and blessings of Allah be upon him), Ijma'a and Qiyas. 

Fiqh:  Fiqh is Islamic jurisprudence or Islamic law. It is an important part of Shariáh. It is the set of rulings written down by well recognized Islamic Scholars since the time of Prophet Muhammad (peace and blessings of Allah be upon him).

Fiqh al Mu'amalat:  Islamic commercial jurisprudence or the rules of transacting business in a Shariáh-compliant manner. 

Gharar:  An exchange in which there is an element of ambiguity or deception, either through ignorance of goods or price, or through faulty description of goods. For example, selling goods you are not in a position to deliver, such as a runaway horse, would be Gharar.

Hadith:  The sayings of Prophet Muhammad (peace and blessings of Allah be upon him) as narrated by his companions (may Allah be pleased with them).

Halal:  Anything permitted by Shariáh.

Haram:  Anything prohibited by Shariáh.

Hanafi:  Islamic school of law founded by Imam Abu Hanifah. Followers of this school are known as Hanafis.

Hanbali:  Islamic school of law founded by Imam Ahmad Ibn Hanbal. Followers of this school are known as Hanbalis.

Hamish Jiddiyah:  A security deposit. An amount of money paid by a purchaser upon request of a seller to make sure that the purchaser is serious about the transaction. If the purchaser fails to carry out his promise to buy the asset, the seller can use the deposit to cover any losses incurred.  

Hawala:  Transfer or assignment of rights and responsibilities in a contract. It can also mean remittances of money.

Hawalat Dayn:  It is an arrangement of assignment of debt to a third party whereby that third party accepts to pay or collect a debt. 

Hibah:  Gift (usually a property).

Hila:  Forbidden structure. A transaction which appears permissible, but is in fact structured in an un-Islamic way. For example, Bai al Inah is a transaction
which is considered as Hila.

Ijarah wal Iqtina (alternatively Ijarah Muntahia bil-Tamleek)

Ijab and Qubool:  Ijab is an offer in a contract; and Qubool is an acceptance of an offer. 

Ijarah:  Sale of a definite usufruct of an asset in exchange for a definite reward (rental payments). It is an arrangement under which the Islamic bank leases equipment, building or other facility to a client, against an agreed rental amount.

Ijarah Mawsufah:  A forward lease. It is a lease contract where the asset involved is not present there at the time of signing of the contract. The usufruct can only be realized on a future date, and hence the rent can be realized only in the future dates as well.

Ijarah wal Iqtina (alternatively Ijarah Muntahia bil-Tamleek)

A contract under which the Islamic bank finances equipment, building or other facility for the client against an agreed rental which includes a binding promise by the lessor to transfer the ownership of the leased property to the lessee, either at the end of the term of the lease period or by stages during the term of the contract. The lessee is under no obligation to buy the asset. 

Ijma'a:  Consensus of the majority of all the leading and qualified jurists on a certain matter in a certain time period. Such rules then become part of Shariáh.  

Ijtihad:  The effort of a qualified Islamic jurist to interpret or reinterpret sources of Islamic law in cases in which no clear directives exist.

Istihsan:  Judicial preference for one legal analogy over another, often in view of public interest. The strict application of Istihsan would require that preference be given to the soundest of the two analogies. Istihsan is one of many tools used by jurists in the process of Ijtihad (see Ijtihad above). 

Jahala:  Ignorance, lack of knowledge, indefiniteness and ambiguity in a contract often leading to Gharar.

Jua'alah:  Wages, pay, stipend, or reward in exchange for a service provided.

Kafalah:  Guarantee or surety-ship. In Kafalah a third party guarantees the performance of another party involved in a contract. Islamic scholars differ over whether a fee can be collected by the Guarantor in such a transaction.

Kharaj bi-al-Daman:  It was narrated in a Hadith of Prophet Muhammad (peace and blessings of Allah be upon him) that gain accompanies liability for loss. This forms a basic principle of Shariáh. For example, Islamic banks guarantee current accounts, and that is why they enjoy returns realized from the use of money in these accounts. (See Al Ghunm bil Ghurm).

Maaliki:  Islamic school of law founded by Imam Maalik Ibn Anas. Followers of this school are known as Maalikis. 

Manfaa:  The usufruct or benefit derived from an asset. For example, in an Ijarah transaction Manfaa or the benefit of the leased asset is the subject matter underlying the contract. That is why Ijarah may also be defined as a sale of Manfaa (see Ijarah above).

Maysir:  Gambling or playing games of chance with the intention of making an easy profit. Shariáh considers Maysir a form of Gharar, and it is Haram act in Shariáh law.

Mubah:  An object that is lawful. It is any thing which is permissible to use or to trade in.

Mudarib:  Managing partner in a Mudaraba (see Mudaraba). Generally, Mudarib is a contributor of labour and/or management rather than capital.

Mudaraba:  A form of partnership where one party provides funds while the other party provides expertise and management. They agree to share profit on a pre-agreed ratio; but loss, if any, is borne by provider of funds. 

Murabaha:  A sale contract of a tangible asset for a mark-up (profit) above the cost of the asset, and an agreed mode of payment (payment can be spot but often defined in the form of installments). In Murabaha the seller has to reveal his cost to the buyer.  

Musawamah:  A general kind of sale in which price of the commodity to be traded is bargained between the seller and the purchaser without any reference to the price paid or cost incurred by the seller.

Musharaka:  A partnership between two parties, both of whom provide capital towards the financing of a project. Both parties share profits on a pre-agreed ratio, but losses are shared on the basis of equity participation. Management of the project is carried out either by both parties or any one of them.

Nisab:  Exemption limit for the payment of Zakat, which differs for different types of properties. For example, Nisab for Zakat on gold is 87.48 grams in weight of gold and Nisab for Zakat on silver is 612.36 grams in weight of silver.

Qabd:  Possession of an asset. 

Qard:  An Interest free loan of any fungible commodity, including money. 

Qard e Hasan:  It is a benevolent loan contract between two parties for social welfare or for short-term bridge financing. Repayment is for the same amount as the amount borrowed. The borrower can pay more than the amount borrowed as long as it is not stipulated by the contract. The Islamic view of loans (see Qard) is that it is a moral duty of a Muslim to give Qard to needy borrowers free of charge. 

Qiyas:  Measure, comparison or analogy. A source of law, part of Islamic jurisprudence.

Qur'an:  The Muslim holy book containing the words of Allah (God) revealed to his final messenger, Prophet Muhammad (peace and blessings of Allah be upon him) for the guidance of mankind.

Rabb al Maal: An investor or contributor of capital in a Mudaraba transaction (see Mudaraba above). 

Rahn:  A property given as collateral for payment of an obligation. If in case the debtor fails to make payment, then the creditor can liquidate that property to settle the debt. 

Riba:  Riba denotes the "additional" amount that a lender receives, or a borrower pays, which is in excess of the principal amount of loan given either in money or kind, specified as a condition of a Qard contract. Riba also includes penalty or charge for delay of payment of debt.

Ribawi:  A transaction in which Riba is present. The following items are classified as Ribawi in Shariáh: cash, gold, silver, wheat, barley, dates and salt. A loan in these commodities with an increase in exchange is a Ribawi transaction, which means it involves Riba.

Sadaqah:  Voluntary charitable contribution by a Muslim seeking the pleasure of Allah (God).

Shart:  A stipulation in a contract.

Shariáh:  Divine guidance as given by Holy Qur'an and Sunnah of Prophet Muhammad (peace and blessings of Allah be upon him). Shariáh embodies all aspects of Islamic faith, including beliefs and practices.

Shariáh Supervisory Board:  A body of qualified Shariáh Scholars responsible for ensuring that the products and contracts of an Islamic financial institution comply with the principles of Shariáh. 

Shafi'e:  Islamic school of law founded by Abu Abdullah Ahmad bin Idris or Imam Shafi'e. Followers of this school are known as Shafi'ees.

Suftajah:  A Bill of Exchange between three parties (payer, payee and transmitter), which was used for the delegation of credit during the Muslim period, especially the Abbassi period. It was used to collect taxes, disburse government dues, transfer of funds by merchants and was commonly used by traveling merchants. Suftajahs could be payable on a future date or immediately. 

Sukuk:  Islamic bonds. Asset backed bonds which are structured in accordance with Shariáh. Most of these bonds may be traded in the market, depending upon how they are structured. Sukuk represent proportionate beneficial ownership in the underlying asset(s), which will be leased to the client in order to yield return on the Sukuk. Singular of Sukuk is Suk.  

Sunnah:  It refers to what Prophet Muhammad (peace and blessings of Allah be upon him), said, did, or approved during his life time.

Tabarru':  A donation or gift whose purpose is not commercial, but it is for seeking forgiveness and consideration of Allah (God). This concept has been used in the structuring of Islamic Insurance (Takaful).

Takaful:  Arabic for solidarity (collective protection). This term means mutual assurance or insurance under Shariáh. In some Muslim countries the term is used as a name for Islamic Insurance. In other countries it is used for life Insurance.  

Tawarruq:  In personal financing, a client with a genuine need buys an item on credit from the bank on a deferred payment basis and then immediately resells it for cash to a third party. In this way, the client can obtain cash without taking out an interest-based loan. Islamic banks have used this type of arrangement intensively to place money with each other.  

Trustee:  A person, who has the legal responsibility for holding title in a property for the benefit of another person or party.

Ulema: Shariáh scholars. Islamic jurists who are well versed in Shariáh. Ulema is plural of Alim.

Ummah:  The Islamic nation beyond all national boundaries, ethnicities, colors and races. Used to refer to the worldwide community of Muslims.

Urf:  A custom or generally accepted practice. It becomes part of Islamic law if it does not violate any stipulation of Shariáh.

Wadia:  Safe keeping a property for a fee. Islamic banks in the Middle East use this concept for safe deposit boxes

Wakalah:  A contract of agency in which one person appoints some one else to perform a certain task on his behalf, usually for a certain fee.

Waqf:  A charitable trust (plural is Awqaf). An endowment or a charitable trust set up for Islamic purposes. It involves tying up a property in perpetuity so that it cannot be sold, inherited, or donated to anyone. Waqfs are usually set up for masjids, education, or for benefit of poor.

Zakat:  An annual, specified wealth tax to be paid to specific people, by a Muslim possessing a minimum specified amount of wealth.