Introduction to Islamic Finance


Video Tutorial: Why Islamic Finance

Watch an introductory video tutorial available for free at

Understand the problem with artificial wealth creation.

Learn how Islamic finance differs from conventional finance.

Find out how Islamic finance makes money.

Familiarize yourself with basic Islamic finance principles.

Watch here.



Introduction to Islamic Finance 

By Mufti Taqi Usmani

Read online HERE


The concept of Musharakah
The basic rules of Musharakah
Distribution of Profit
Ratio of Profit
Sharing of Loss
The nature of the capital
Management of Musharakah
Termination of Musharakah
Termination of Musharakah without Closing the Business

Business of the Mudarabah
Distribution of profit
Termination of the Mudarabah
Combination of Musharakah and Mudarabah

Musharakah & Mudarabah as Modes of Financing
Project financing
Securitization of Musharakah
Financing of a Single Transaction
Financing of the Working Capital
Some objections on Musharakah financing
Risk of Loss
Secrecy of the Business
Clients’ Unwillingness to Share Profits
Diminishing Musharakah
House Financing on the Basis of Diminishing Musharakah
Diminishing Musharakah for Carrying Business of Services
Diminishing Musharakah in Trade

Some Basic Rules of Sale
Bai’ Mu’ajjal (Sale on Deferred Payment Basis)
Murabaha as a mode of financing
Murabahah as a Mode of Financing
Basic Features of Murabahah Financing
Some issues involved in Murabaha
Different Pricing for Cash and Credit Sales
The Use of Interest-Rate as Benchmark
Promise to Purchase
Securities against Murabahah Price
Guaranteeing the Murabahah
Penalty of Default
No Roll Over in Murabahah
Rebate on Earlier Payment
Calculation of Cost in Murabahah
Subject Matter of Murabahah
Rescheduling of Payments in Murabahah
Securitization of Murabahah
Some basic mistakes in Murabaha financing

Basic rules of leasing
Lease as a mode of financing
The Commencement of Lease
Different Relations of the Parties
Expenses Consequent to Ownership
Liability of the Parties in Case of Loss to the Asset
Variable Rentals in Long Term Leases
Penalty for Late Payment of Rent
Termination of Lease
Insurance of the Assets
The Residual Value of the Leased Asset
Assigning of the Lease
Securitization of Ijarah

Salam and Istisna’
Conditions of Salam
Salam as a Mode of Financing
Some Rules of Parallel Salam
Difference Between Istisna’ and Salam
Difference Between Istisna’ and Ijarah
Time of Delivery
Istisna’ as a Mode of Financing

Islamic Investment Funds
Equity fund
Conditions for Investment in Shares
Ijarah fund
Commodity fund
Murabahah Fund
Mixed fund

The Principle of Limited Liability
Bait ul mal
Joint stock
Inheritance under debt
The limited liability of the master of a slave

 The Performance of the Islamic Banks —A Realistic Evaluation



Meezan Bank’s Guide to Islamic Banking

By Dr. Imran Usmani

Section I: Introduction to Islamic Economic System

Section II: Riba, Its Prohibition & Classifications

Section III: Islamic Contract

Section IV: Islamic Modes of Financing

Section V: Banking in Islam

Section VI: Applications of Islamic Financing



Fiqh or Fiction: Is Islamic banking truly Islamic, or is it just cosmetically-enhanced conventional banking?

By Atif Khan (

Islamic bankers, caught between scholars and layman, devote much of their time to an often-skeptical public about the authenticity of their products. Time well spent. The purgative effects of ridding the Islamic financial sector of pretenders (and there are many) at the hand of an educated consumer are obvious. Too often, however, this educational process is long on theory and short and practical relevance.

The following are among the most commonly asked questions by customers new to Islamic banking (ordered in increasing degree of complexity).

Read the rest …



21 Commonly Asked Questions Regarding Islamic Finance & Banking

By Atif Khan (

We spoke to bankers, both Islamic and conventional, and laymen, both sincere and skeptical, and compiled 21 of the most commonly asked questions related to conventional mortgages. We confirmed the answers with qualified scholars who referred back to the Qur’an; Sunna of the Prophet, may God bless him and give him peace; the scholarly consensus of the four traditional schools of Sunni jurisprudence, the Hanafi, Shafi‘i, Maliki and Hanbali schools, the same ones followed by imams Bukhari, Muslim, Nawawi, Suyuti, Ghazali and the other leading jurists of Islam; and the Shari‘a standards of the world’s largest regulatory body governing Islamic banks, the Accounting and Auditing Organization for Islamic Financial Institutions in Bahrain.

The following are actual questions posed by Muslim

homebuyers and industry practitioners:

Part 1

Part 2

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