Islamic finance is a financial system that is based on principles of Islamic law (sharia) and guided by Islamic economics. It is a form of ethical finance that prohibits the charging of interest (riba) and the acceptance of certain types of investments, such as those that are considered harmful to society or involved in activities that are not permissible under Islamic law.
Islamic finance is based on the principles of sharia, which is the body of Islamic law that is derived from the Qur’an and the teachings of the Prophet Muhammad. These principles include the prohibition of riba (interest or usury) and the promotion of profit and loss sharing.
Islamic finance has gained popularity in recent years as an alternative to conventional finance and is offered by a growing number of financial institutions around the world. Islamic finance products and services include Islamic banks, Islamic investment funds, Islamic insurance (takaful), and Islamic mortgages (home financing).
Some of the key characteristics of Islamic finance include:
Prohibition of riba: Interest is not allowed in Islamic finance, as it is considered a form of exploitation. Instead, Islamic finance relies on profit and loss sharing arrangements, in which the investor shares in the profits or losses of the enterprise.
Promoting justice and fairness: Islamic finance seeks to promote justice and fairness in financial transactions and to avoid exploitation.
Encouraging ethical and responsible investment: Islamic finance prohibits investments in certain industries, such as gambling, tobacco, and alcohol, and encourages investments in sectors that are considered socially responsible, such as education, healthcare, and renewable energy.
Risk sharing: Islamic finance emphasizes the sharing of risk between the investor and the entrepreneur, rather than the transfer of risk from one party to another.
Diversification of investment: Islamic finance promotes the diversification of investment in order to reduce risk.
Transparency and accountability: Islamic finance requires full disclosure and transparency in financial transactions, as well as accountability for the use of funds. For further details and inquiry about its products please visit following websites:
- Imarkplace.Com (Shari’ah compliant marketplace
Originally posted 2022-12-27 11:49:51.