Principles of Islamic finance

Prof. M. Muzahidul Islam

Dept of Banking
University of Dhaka
 Principles of Islamic Money
 Money is considered as servant
 Money is considered as only the medium of exchange
 Money should not be stored or used for speculative purpose
 Money is not considered as commodity and hence can not be
traded
 Value of money should be kept stable at any cost
 Money is considered as blessing as it help avoiding ’Riba AL
Fadl’
 Principles of Islamic Money

 Supply of money is controlled and conditional

 Credit Money is discouraged
 It is the duty of the Islamic Govt. to do everything
possible to keep the value of money intact,
 Islamic Govt. should not take any policy that may
cause the value of money eroded.
 Hoarding of money is prohibited
 Principles of Islamic Banking
 Principle of not transacting on credit.
 Principle of Establishing a banker –customer relationship
on the basis participation in profit and loss.
 Principle of segregating capital funds from deposits firm.
 Principle of mobilizing resources to use for development
not only for profit
 Principle of acting as a multipurpose bank.
 Principles of Islamic Banking
 Principle of Earning reasonable profit through Halal
transaction.
 Principle of Investmenting on profit sharing or Profit and
loss sharing
 Principle of Prohibition of Interest
 Principle of not creating credit.
 principle of establishing Baiya
 Principle of establishing good and eliminating evils.
 Principle of upholding socio-economic requirement of the
country
 Principles of Islamic Banking
 Principle of establish good and eliminate evils.
 Principle of creating more employment opportunities by
increasing economic activities.
 Principle of ensuring equitable distribution of resources
 Principle of not creating credit.
 principle of establishing Baiya (Trade, Com. & Industry)
 Principle of establish good and eliminate evils.
Principles of Islamic Insurance
 Principle of observing Islamic Shariah
 Principle of making insurance Riba free
 Principle of making insurance Maisr free
 Principle of making insurance Gharar free
 Principle of selecting shariah permitted Nominee
 Principle of Mudharaba contract
 Principle of Tabarru’ Principle of Halaal Investment
 Principle of Transparancy
 Principle of Cooperation and brotherhood
 Principles of Islamic Microfinance
• Target Group is marginal farmer, trader and self
employed persons
• Investment provided against profit sharing, P&loss
sharing or service charge
• Sometimes Trading mode could be followed
• Generally collateral free
• Repayment at the convenient of the investment taker
• Supervised in nature