Zamir Iqbal - An Introduction to Islamic Finance

In the Name of Allah, the All Merciful, the All Beneficent

Glossary of Arabic terms

A

ajar: Reward for doing good

akhlaq: Personality disposition stemming from individual character

akl amwal alnas bi al-batil: Enrichment through non-permissible means

al-adl : Justice

al-amal: The concept of work

al-bay: Exchange

al-ihsan: Behaving with full consciousness of the Supreme Creator

al-khiyar/khiyar: Option

al-mal : Wealth or property

al-Momeneen: Active believers

amanah: Trust

aqidah: Binding principles of faith

awqaf ( sing . waqf): Endowments

B

bai bithamin ajil (BBA): Sales contract where payment is made in installments after delivery of goods. Sale could be for long term and there is no obligation to disclose profit margins

barakah: An invisible but material blessing whose results can be observed by any believer who engages in righteous conduct

bashar: Man. This concept refers to the physical/outward attributes, rather than the inner character

bay: Contracts of exchange

bay al-arabun: A portion of the full sale price paid in good faith as earnest money (could be considered as non-refundable down payment)

bay al-dayn: Sale of debt or liability

bay al-istisna: Sale on order (usually manufactured goods)

bay al-muajjil: Deferred-payment sale, either by installments or a lump sum

bay al-salam ( also salaf): Sale in which payment is made in advance by the buyer and the delivery of the goods is deferred by the seller

D

dayn: Debt

dharoora: Necessity

F

fadl: Addition

faqih ( pl. fuqaha): Jurist who gives rulings on various issues in the light of the Quran and the sunnah

fatwa: Religious verdict by fuqaha

fiqh: Corpus of Islamic jurisprudence. In contrast to conventional law, fiqh covers all aspects of lifereligious, political, social, commercial, and economic. Fiqh is based primarily on interpretations of the Quran and the sunnah and secondarily on ijma and ijtihad by the fuqaha . While the Quran and the sunnah are immutable, fiqhi verdicts may change in line with changing circumstances

fiqhi: Relating to fiqh

G

ghabun: The difference between the price at which a transaction is executed and the fair price (unjustified exploitation, loss)

gharar: Literally, deception, danger, risk, and excessive, unnecessary uncertainty (ambiguity). Technically, it means exposing oneself to excessive risk and danger in a business transaction as a result of either having too little information or asymmetric information about price, quality and quantity of the counter-value, the date of delivery, the ability of either the buyer or the seller to fulfill their commitment, or ambiguity in the terms of the dealthereby, exposing either of the two parties to unnecessary risks

H

hadia/hibah: Gifts

hadith ( pl. ahadith): Oral tradition of the Prophet Muhammad (pbuh) as narrated by his companions

hajj/umra: The pilgrimage to Mecca

hajr: Blocking the use of a resource

haram: Prohibited

hawala: Bills of transfer

hifz al-mal: Protection of wealth or property

hila ( pl. hiyal): Refers to strategies in applying juristic rules to ease constraints on a particular transaction that would have been non-permissible otherwise

I

ibada ( pl. ibadat): Adoration of Allah ( swt ) through rule compliance

ijarah: Leasing. The sale of the usufruct of an asset. The lessor retains the ownership of the asset with all the rights and the responsibilities that go with ownership

ijarah sukuk: Instrument issued on the basis of an asset to be leased. The investors provide funds to a lessor (say, an Islamic bank). The lessor acquires an asset (either existing or to be created in future) and leases it out if it is not already leased out. They are issued by the lessor in favor of the investors, who become owners of the leased asset in proportion to their investment. These entitle the holders to collect rental payments from the lessee directly. Can also be made tradable in the stock exchange

ijarah wa qtinah: Hire-purchase agreement

ijma: The consensus of jurists

ijtihad: Exertion of personal effort to understand the wisdom behind the prescribed rules and/or efforts to extend juristic rulings to new situations based on study of the Quran and hadith

ikrah: Coercion

iman: Active belief

insan: This concept refers to a human being who is fully conscious of the human state in relation to the Supreme Creator. cf. bashar

israf: Overspending

istihsan: Judicial preference

istisna ( short form for bay al-istisna): A contract whereby a manufacturer (contractor) agrees to produce (build) and deliver well-described products (or premises) at a given price on a given date in the future. The price need not be paid in advance and may be paid in installments in step with the preferences of the parties, or partly at the front end and the balance later on, as agreed

itlaf: Waste

itraf: Opulent and extravagant spending

J

joalah: Performing a given task for a prescribed fee in a given period

K

kanz ( pl. konooz): Treasure(s). Refers to wealth held in the form of gold, silver, and other precious metals