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81-506: Arcapita was founded in 1997. Around that time, Islamic banking started to gain popularity, but the industry lacked Sharia compliant investment opportunities. Arcapita's Sharia compliant model was created offering private equity and real estate alternative investments. Arcapita's first exit was Computer Generation Incorporated in December 2000. In 2003, Arcapita opened a London office. In the year that followed, Arcapita acquired Church's Chicken,

162-511: A sin if carried out by a Muslim . They ask you about wine and gambling. Say, "In them is great harm and (yet, some) benefit for people. But their harm is greater than their benefit..." By bringing up the word "benefit" as an opposite to "sin", verse 2:219 of the Quran clarifies that haram is that which is harmful, in opposition to that which brings benefit; therefore, sin is that which hurts others or oneself. An Islamic principle related to haram

243-683: A "bad taste" was left "in the mouth" of the market for Islamic financial products. The Islamic Bank of Britain , the first Islamic commercial bank established outside the Muslim world, was not established until 2004. By 2008 Islamic banking was growing at a rate of 10–15% per year and continued growth was forecast. There were over 300 Islamic financial institutions spread over 51 countries, as well as an additional 250 mutual funds complying with Islamic principles. Worldwide, approximately 0.5% of financial assets were estimated to be under Sharia-compliant management according to The Economist magazine. But as

324-432: A Rs 10000 product and paying an extra Rs 500, cost very nearly the same and is considered very nearly the same as paying in cash, using a three-month loan at 20% per annum. Haram Haram ( / h ə ˈ r ɑː m , h æ ˈ -, h ɑː ˈ -, - ˈ r æ m / ; Arabic : حَرَام ḥarām [ħɑˈrɑːm] ) is an Arabic term meaning 'forbidden'. This may refer to either something sacred to which access

405-454: A common consensus that it is unholy and against the word of God to have romantic relations with someone of the same gender. This idea is not explicitly stated in the Quran, but is heavily frowned upon by the Islamic community. It is considered haram for a Muslim woman to marry a non-Muslim man. This is due to the idea that the man is the head of the household, the one who supports the family, and

486-404: A fatwa stating they had "no objection to the use of the term 'interest'" in loan contracts for purposes of tax avoidance provided the transaction did not actually involve riba , and the Islamic bankers used the term for fear that lack of tax deductions available for interest (but not profit) would put them at a competitive disadvantage to conventional banks. Muslim customers were not persuaded, and

567-505: A form of teasing. The word is also used to instruct children in how to behave by telling them that harming other children or animals is haram, among other things. The binary concepts of halal and haram are used in a number of cultural phrases, most notably ibn (boy) al-halal and bint (girl) al-halal . These phrases are often used to refer to appropriate spouses in marriage, and stand in contrast to ibn al-haram or bint al-haram , which are used as insults. In this case,

648-415: A minority of Islamic scholars ( Muhammad Abduh , Rashid Rida , Mahmud Shaltut , Syed Ahmad Khan , Fazl al-Rahman, Muhammad Sayyid Tantawy and Yusuf al-Qaradawi ) have questioned whether riba includes all interest payments. Others (Muhammad Akran Khan) have questioned whether riba is a crime like murder and theft, forbidden by Sharia (Islamic law) and subject to punishment by human beings, or simply

729-461: A number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community. Their number and size has grown, so that by 2009, there were over 300 banks and 250 mutual funds around the world complying with Islamic principles, and around $ 2 trillion was Sharia-compliant by 2014. Sharia-compliant financial institutions represented approximately 1% of total world assets, concentrated in

810-456: A problem for borrowers finding funds, because – according to Usmani – it is in part to discourage excessive finance that Islam forbids interest. Zubair Hasan argues that the objectives of Islamic finance as envisaged by its pioneers were "promotion of growth with equity ... the alleviation of poverty ... [and] a long run vision to improve the condition of the Muslim communities across the world." Some (such as convert Umar Ibrahim Vadillo) believe

891-798: A quick-serve chicken restaurant chain, based in the United States. In 2005, First Islamic Bank, Crescent Capital Inc. and Crescent Capital Europe rebranded to Arcapita to unify their global brand across three offices in Atlanta, Bahrain, and London. Arcapita recorded a performance of $ 360 million in fiscal year 2008, and extended their geographical presence by opening an office in Singapore that would handle investments in Asia. In 2010, Arcapita moved its head office to Bahrain Bay . In 2013, Arcapita completed its restructuring which

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972-704: A role in hiring or promotion of employees. Islamic banking Islamic banking , Islamic finance ( Arabic : مصرفية إسلامية masrifiyya 'islamia ), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics . Some of the modes of Islamic finance include mudarabah (profit-sharing and loss-bearing), wadiah (safekeeping), musharaka (joint venture), murabahah (cost-plus), and ijarah ( leasing ). Sharia prohibits riba , or usury , generally defined as interest paid on all loans of money (although some Muslims dispute whether there

1053-556: A similar vein, Mahmoud El-Gamal states that Islamic finance "is not constructively built from classical jurisprudence". It follows conventional banking and deviates from it "only insofar as some conventional practices are deemed forbidden under Sharia." A broader description of its principles is given by the Islamic Research and Training Institute of the Islamic Development bank , The most important feature of Islamic banking

1134-503: A sin to be inveighed against, with the reprimand left to God, since "neither the Prophet nor the first four caliphs nor any subsequent Islamic government ever enacted any law against riba ." With an increase in the Muslim population in Europe and the current lack of supply, opportunities will arise for the important role which Islamic finance plays in Europe's economy. In particular, Luxembourg

1215-458: A walkout when they were denied it. When the upset members of parliament returned, their leader (Sahibzada Fazal Karim), stated that since the Pakistan Council of Islamic ideology had decreed that interest in all its forms was haram (forbidden) in an Islamic society, no member of parliament had the right to "negate this settled issue". The council's decree notwithstanding, over the years

1296-405: A war with Allah and His Messenger! But if you repent, you may retain your principal—neither inflicting nor suffering harm. If it is difficult for someone to repay a debt, postpone it until a time of ease. And if you waive it as an act of charity, it will be better for you, if only you knew. According to the orthodox, an "increase over the principal sum" in loans of cash are riba. An increase over

1377-463: A wife who is not favorable to him an inheritance. Additionally, it is haram for one relative to deprive another relative of his inheritance through tricks . Riba , any excessive addition over and above the principal, such as usury and interest, is prohibited in Islam in all forms. Interest goes against the Islamic pillar of zakat , which allows wealth to flow from the rich to the poor. Riba

1458-433: Is a consensus that interest is equivalent to riba ). Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also haram ("sinful and prohibited"). These prohibitions have been applied historically in varying degrees in Muslim countries/communities to prevent un-Islamic practices. In the late 20th century, as part of the revival of Islamic identity,

1539-448: Is approved by a four-member Shari'ah advisory board. In accordance with Islamic Shari'ah law, the company does not invest in any businesses which offer credit or charge interest , or any other product that conflicts with Shari'ah law. According to representatives of the company, the Shari'ah advisory board does not make decisions about the financial merits of investments, and does not play

1620-401: Is considered haram for a Muslim man to propose to a divorced or widowed woman during her iddah (the waiting period during which she is not allowed to marry again). The man is able to express his desire for marriage, but cannot execute an actual proposal. It is also forbidden for a Muslim man to propose to a woman who is married to another man. Relating to the topic of marriage, there is

1701-481: Is emerging as a leader and hub for Islamic funds. While revivalists like Mohammed Naveed insist Islamic Banking is "as old as the religion itself with its principles primarily derived from the Quran", secular historians and Islamic modernists see it as a modern phenomenon or " invented tradition ". It is argued that the fundraising business of Zubayr ibn al-Awwam was practically Banking with zero interests. Zubayr pioneering this practice by technically modified

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1782-574: Is left to Allah. As for those who persist, it is they who will be the residents of the Fire. They will be there forever. Allah has made interest fruitless and charity fruitful. And Allah does not like any ungrateful evildoer. Indeed, those who believe, do good, establish prayer, and pay alms-tax will receive their reward from their Lord, and there will be no fear for them, nor will they grieve. O believers! Fear Allah, and give up outstanding interest if you are ˹true˺ believers. If you do not, then beware of

1863-585: Is not allowed to the people who are not in a state of purity or who are not initiated into the sacred knowledge; or, in direct contrast, to an evil and thus " sinful action that is forbidden to be done". The term also denotes something "set aside", thus being the Arabic equivalent of the Hebrew concept חרם ( ḥērem ) and the concept of sacer (cf. sacred) in Roman law and religion . In Islamic jurisprudence , haram

1944-554: Is part of a broader Islamic principle of avoiding luxurious lifestyles. It is considered haram for both men and women to wear clothing that fails to cover the body properly (which stated in clothing guidance, the term aurat/awrah ) and clothes that are transparent. Additionally, Islam prohibits excess beautifying that involves the altering of one's physical appearance. In some Sunni sects, there are physical alterations that are considered haram such as tattoos, shortening of teeth, cosmetic surgery, etc. Some Islamic sects also prohibit

2025-596: Is prohibited because it keeps wealth in the hands of the wealthy and keeps it away from the poor. It is also believed that riba makes a person selfish and greedy. All business and trade practices that do not result in a free and fair exchange of goods and services are considered haram, such as bribery , stealing, and gambling . Therefore, all forms of deceit and dishonesty in business are prohibited in Islam. Many Islamic jurists and religious bodies, including Permanent Committee for Scholarly Research and Ifta of Saudi Arabia , have considered MLM trade to be haram,

2106-415: Is that if something is prohibited or forbidden, then anything that leads to it is also considered a haram act. A similar principle is that the sin of haram is not limited to the person who engages in the prohibited activity, but the sin also extends to others who support the person in the activity, whether it be material or moral support. The five categories of الأحكام الخمسة , al-ʾAḥkām al-Ḵamsa or

2187-416: Is that it promotes risk sharing between the provider of funds (investor) on the one hand and both the financial intermediary (the bank) and the user of funds (the entrepreneur) on the other hand ... In conventional banking, all this risk is borne in principle by the entrepreneur. Some proponents (Nizam Yaquby) believe Islamic banking has more far reaching purposes than conventional banking, and declare that

2268-614: Is the basis of Islamic finance) was demonstrated in Pakistan—when a minority (non-Muslim) member of the Pakistani parliament questioned it, pointing out that a scholar from Al-Azhar University , (one of the oldest Islamic Universities in the world), had issued a decree that bank interest was not un- Islamic . His statement resulted in "pandemonium" in the parliament, a demand by members of leading Islamist political party to immediately respond to these allegedly derogatory remarks, followed by

2349-474: Is used to refer to any act that is forbidden by Allah and is one of the five Islamic commandments ( الأحكام الخمسة al-ʾAḥkām al-Ḵamsa ) that define the morality of human action. Acts that are haram are typically prohibited in the religious texts of the Quran and the sunnah category of haram is the highest status of prohibition. Something that is considered haram remains prohibited no matter how good

2430-469: The Gulf Cooperation Council (GCC) countries, Bangladesh , Pakistan , Iran , and Malaysia . Although Islamic banking still makes up only a fraction of the banking assets of Muslims, since its inception it has been growing faster than banking assets as a whole, and is projected to continue to do so. The industry has been lauded for returning to the path of "divine guidance" in rejecting

2511-720: The Nile Delta town of Mit Ghamr , did not specifically advertise its Islamic nature for fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the Gamal Nasser regime . Also in that year the Pilgrims Saving Corporation was founded in Malaysia (although not a bank, it incorporated basic Islamic banking concepts). The Mit Ghamr experiment was shut down by the Egyptian government in 1968. Nonetheless, it

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2592-418: The "forbidden usury" refers to charging extra for late payment ( late fees ), and the "they" refers to non-Muslims who did not understand why if the first was allowed both were not. For this reason (according to Usmani) it is not true that "whenever price is increased taking the time of payment into consideration, the transaction comes within the ambit of interest". Instead of "principal" and "interest rate",

2673-493: The "guiding principles" for Islamic finance include: "fairness, justice, equality, transparency, and the pursuit of social harmony", although others describe these virtues as the natural benefits of following Sharia. (Taqi Usmani describes the virtues as guiding principles in one section of his book on Islamic Banking, and benefits in another.) Nizam Yaquby, for example declares that the "guiding principles" for Islamic finance include: "fairness, justice, equality, transparency, and

2754-511: The "political and economic dominance" of the West, and noted as the "most visible mark" of Islamic revivalism; its most enthusiastic advocates promise "no inflation, no unemployment, no exploitation and no poverty" once it is fully implemented. However, it has also been criticized for failing to develop profit and loss sharing or more ethical modes of investment promised by early promoters, and instead merely selling banking products that "comply with

2835-524: The 'toxic assets' built up on the balance sheets of US banks as these were not Sharia-compliant and not owned by Islamic banks. In 2009, the official newspaper of the Vatican ( L'Osservatore Romano ) put forward the idea that "the ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service". (The Catholic Church forbids usury but began to relax its ban on all interest in

2916-587: The 16th century.) However, the drop in valuation of real estate and private equity – two segments heavily invested by Islamic firms – following the collapse of Lehman Brothers Islamic did hurt Islamic financial institutions. As of 2015, $ 2.004 trillion in assets were being managed in a Sharia-compliant manner according to the State of the Global Islamic Economy Report. Of these $ 342 billion were sukuk . The market for Islamic Sukuk bonds in that year

2997-467: The 20th century, Islamic revivalists/Islamists/activists worked to define all interest as riba , to enjoin Muslims to lend and borrow at "Islamic Banks" that avoided fixed rates. By the 21st century this Islamic Banking movement had created "institutions of interest-free financial enterprises across the world". Loans are permitted in Islam if the interest that is paid is linked to the profit or loss obtained by

3078-674: The Citi Islamic Investment Bank in Bahrain. The first successful benchmark for the performance of Islamic investment funds was established in 1999, with the Dow Jones Islamic Market Index (DJIMI). Also in the 1990s, a false start was made in Islamic banking in the UK, where bankers declared returns "interest" for tax purposes, while insisting to depositors they were actually "profit" and so not riba . Islamic scholars issued

3159-605: The International Economic Conference in London in 1977) were instrumental in applying the application of theory to practice for the first interest-free banks. At the First International Conference on Islamic Economics, "several hundred Muslim intellectuals, Sharia scholars and economists unequivocally declared ... that all forms of interest" were riba . By 2004, the strength of this belief (which

3240-586: The Islamic banking movement has so far failed to follow the principles of Sharia law, or at least failed to follow them sufficiently strictly. On the other hand, Usmani preached that an Islamic economy free of the "imbalances" in society – such as concentration of "wealth in the hands of the few", or monopolies which paralyze or hinder market forces – would follow from obeying "divine injunctions" by banning interest (along with other Islamic efforts). (Later in his book Introduction to Islamic Finance , he argues that Islamic principles should include "the fulfillment of

3321-564: The Islamic banking sector, and since 1975 it has spread globally. In 1975, the Islamic Development Bank was set up with the mission to provide funding to projects in the member countries. The first modern commercial Islamic bank, Dubai Islamic Bank , was established in 1979. The first Islamic insurance (or takaful ) company – the Islamic Insurance Company of Sudan – was established in 1979. The Amana Income Fund,

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3402-485: The Islamic banking theory of finance is: "Money has no intrinsic utility; it is only a medium of exchange." Other restrictions include In general, Islamic banking and finance has been described as having the "same purpose" as conventional banking but operating in accordance with the rules of Sharia law (Institute of Islamic Banking and Insurance), or having the same "basic objective" as other private entities, i.e. "maximization of shareholder wealth" (Mohamed Warsame). In

3483-859: The Muslim world. The first Muslim majority-owned banks did not emerge until the 1920s. An early market economy and an early form of mercantilism , sometimes called Islamic capitalism , was developed between the eighth and twelfth centuries. The monetary economy of the period was based on the widely circulated currency the gold dinar , and it tied together regions that were previously economically independent. A number of economic concepts and techniques were applied in early Islamic banking, including bills of exchange , partnership ( mufawada , including limited partnerships , or mudaraba ), and forms of capital ( al-mal ), capital accumulation ( nama al-mal ), cheques , promissory notes , trusts (see Waqf ), transactional accounts , loaning , ledgers and assignments . Muslim traders are known to have used

3564-516: The Ottoman Empire. Still another source (International Business Publications) states that during the "Islamic Golden Age" the "common view of riba among classical jurists" of Islamic law and economics was that it was unlawful to apply interest to gold and silver currencies, "but that it is not riba and is therefore acceptable to apply interest to fiat money – currencies made up of other materials such as paper or base metals – to an extent." In

3645-505: The Quran). Prohibition of gharar is based on ahadith declaring as forbidden gharar the sale of things like "the birds in the sky or the fish in the water". Maisir is thought to be banned by verses 2:219, 5:90, and 91 in the Quran. However, "the Islamic evaluation" of modern banking centers around the definition of interest on loans as riba. Twelve verses in the Qur'an deal with riba ,

3726-847: The acquisition. Arcapita acquires interest in midsized companies with an emphasis on the United States , and the Middle East . Arcapita's private equity portfolio contains 6 active and 41 exited investments. Some past investments include: Arcapita acts as principal, arranger and manager of real estate investments, and has completed transactions worth $ 13 billion. Arcapita focuses of the following sectors: industrial and logistics assets, and rental housing, which includes senior living and student housing communities. Arcapita currently has 16 real estate investments under its management, and over 50 exited investments. Past real estate investments include: Every investment made by Arcapita and its subsidiaries

3807-564: The capital raise. In 2017, Arcapita acquired branding firm Stratus; they then sold the firm to Vestar Capital Partners for an enterprise value of more than $ 450 million, reportedly three times the value at the time of Arcapita's purchase. In April 2021, Arcapita announced the purchase of the Cedardale Distribution Center in Dallas used by FedEx. The value of Arcapita's US industrial real estate portfolio became over $ 200 million after

3888-473: The cheque or ṣakk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate . Organizational enterprises independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced during that time. Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards. In

3969-699: The credit taker is paying "cost" and "profit rate". (Another difference with conventional finance is that there is no penalty for late payment.) While Usmani and other Islamic Banking pioneers envisioned credit sales like murâbaḥah being a limited part of the Islamic Banking industry and subordinate to profit and loss sharing , it has become the "most common" mode of Islamic financing. The distinction between credit sales and interest has also come under attack from critics such as Khalid Zaheer and Muhammad Akram Khan – criticizing it from opposite points of view. Zaheer considers profit from credit sales to be riba ,

4050-491: The elimination of interest followed a "gradual process" in early Islam, "culminating" with a "fully fledged Islamic economic system" under Caliph Umar (634–644 CE). Other sources ( Encyclopedia of Islam and the Muslim World , Timur Kuran), do not agree, and state that the giving and taking of interest continued in Muslim society "at times through the use of legal ruses ( ḥiyal ), often more or less openly," including during

4131-599: The formal requirements of Islamic law", but use "ruses and subterfuges to conceal interest", and entail "higher costs, bigger risks" than conventional ( ribawi ) banks. Although Islamic finance contains many prohibitions—such as on consumption of alcohol, gambling, uncertainty, etc. – the belief that "all forms of interest are riba and hence prohibited" is the idea upon which it is based. The word " riba " literally means "excess or addition", and has been translated as "interest", "usury", "excess", "increase" or "addition". According to Islamic economists Choudhury and Malik,

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4212-451: The hierarchy of acts from permitted to non-permitted are: The two types of haram are: The religious term haram , based on the Quran , is applied to: Linguistically, the root of the term haram (compare Ancient Hebrew herem , meaning 'devoted to God', 'forbidden for profane use') is used to form a wide range of other terms that have legal implications, such as hariim (a harem) and ihraam (a state of purity). In addition,

4293-450: The industry grew it also drew criticism (from M.T. Usmani among others) for not progressing from "debt-based contracts", such as murabaha , to the more "genuine" profit and loss sharing mode, but instead moving in the opposite direction, "competing to present themselves with all of the same characteristics of the conventional, interest-based marketplace". During the 2007–2008 financial crisis , Islamic banks were not initially impacted by

4374-557: The intention is or how honorable the purpose is. Sins, good, and meritorious acts are placed on the mizan (weighing scales) on the Day of Judgement and are weighed according to the sincerity of the doer. Views of different madhhabs or legal schools of thought can vary significantly regarding what is or is not haram based on the scholarly interpretation of the core religious texts (Quran and hadith ). Actions that are haram result in harm one way or another and are therefore considered

4455-507: The investment. The concept of profit acts as a symbol in Islam as equal sharing of profits, losses, and risks. The movement started with activists and scholars such as Anwar Qureshi, Naeem Siddiqui , Abul A'la Maududi , Muhammad Hamidullah , in the late 1940 and early 1950s. They believed commercial banks were a "necessary evil," and proposed a banking system based on the concept of Mudarabah , where shared profit on investment would replace interest. Further works specifically devoted to

4536-557: The late 19th century Islamic Modernists reacted to the rise of European power and influence and its colonization of Muslim countries by reconsidering the prohibition on interest and whether interest rates and insurance were not among the "preconditions for productive investment" in a functioning modern economy. Syed Ahmad Khan , argued for a differentiation between sinful riba "usury", which they saw as restricted to charges on lending for consumption, and legitimate non- riba "interest", for lending for commercial investment. However, in

4617-447: The law—and guided by Islamic economics, the contemporary movement of Islamic banking and finance prohibits a variety of activities, some not illegal in secular states: Money on the most common type of Islamic financing – debt-based contracts – "must be made from a tangible asset that one owns and thus has the right to sell – and in financial transactions it demands that risk be shared." Money cannot be made from money. Another statement of

4698-405: The man is considered responsible for his wife. Muslims do not believe in giving women to the hands of those who do not practice Islam and having them responsible over Muslim women because they are not concerned with protecting the rites of the religion. It is considered haram for a father to deprive his children of inheritance. It is also haram for a father to deprive the women or the children of

4779-489: The middle of the 20th century, some organizational entities were found to offer financial services complying with Islamic laws. The first, experimental, local Islamic bank was established in the late 1950s in a rural area of Pakistan which charged no interest on its lending. In 1963, the first modern Islamic bank on record was established in rural Egypt by economist Ahmad Elnaggar to appeal to people who lacked confidence in state-run banks. The profit-sharing experiment, in

4860-589: The money keeping service to be a loan which Zubayr obligated to pay off, while Zubayr also got privilege to manage the money he kept to do his business. The practice of Zubayr to accept deposits from peoples while not charging any interest to his clients were causing Zubayr to suffered an inflated debt of 2,000,000 Dinar during his death. However, al-Zubayr invested the deposit moneys of the clients for his own lucrative businesses, so his inheritors managed to settle his debts, while still leaving many heritage for his family. After his death, his son Abdullah ibn Zubayr sold

4941-539: The name of Allah. Herbivores or cud-chewing animals like cattle, deer, sheep, goats, and antelope are some examples of animals that are halal and only if they are treated like sentient beings and slaughtered painlessly while reciting the words Bismillah and Allahu Akbar . If the animal is treated poorly, or tortured while being slaughtered, the meat is haram. Islam is very strict in prohibiting zina , whether it be adultery or sexual intercourse between two unmarried individuals. In terms of marriage proposals, it

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5022-405: The needs of the society" giving "preference to the products which may help the common people to raise their standard of living", but that few Islamic banks have followed this path.) Another source ( Saleh Abdullah Kamel ), described the changes anticipated for the Muslim community by following Islamic approach to economics, banking, finance, etc., as a "move towards economic development, creation of

5103-418: The popular conceptions, in turn, change how the legal system defines and punishes haram actions. In the Quran and reports by early Muslims, forbidden meat includes pork, carnivores (lions, tigers, wolves, dogs, cats, etc.), non-ruminants (donkeys and horses), animals that were slaughtered in the name of a god other than Allah, animals that died due to illness, injury, stunning, poisoning, or slaughtering not in

5184-500: The principal sum in financing a purchase of some product or commodity is another matter. These are not riba – according to the orthodox interpretation – at least in some circumstances. (These are sometimes known as "credit sales".) According to noted Islamic scholar Taqi Usmani , this is because in Quran aya 2:275 ("they say, 'Trafficking (trade) is like usury,' [but] God has permitted trafficking, and forbidden usury") "trafficking (trade)" refers to credit sales such as murabaha ,

5265-461: The principal" of a loan. (Although at least one source states "it is commonly argued" that riba is "defined by hadith".) Those who consume interest will stand ˹on Judgment Day˺ like those driven to madness by Satan’s touch. That is because they say, “Trade is no different than interest.” But Allah has permitted trading and forbidden interest. Whoever refrains—after having received warning from their Lord—may keep their previous gains, and their case

5346-424: The property for 1.600.000 dinar . This practice was allowed according to classical scholar consensus, such as Ibn Taymiyyah in his Majmu Fatawa . According to Timur Kuran, by "the tenth century, Islamic law supported credit and investment instruments" that were "as advanced" as anything in the non-Islamic world, but prior to the 19th century there were no "durable" financial institutions "recognizable as banks" in

5427-425: The pursuit of social harmony". Some distinguish between Sharia- compliant finance and a more holistic, pure and exacting Sharia- based finance. " Ethical finance " has been called necessary, or at least desirable, for Islamic finance, as has a " gold-based currency ". Taqi Usmani declares that Islamic banking would mean less lending because it paid no interest on loans. This should not be thought of as presenting

5508-630: The reasons behind which are as follows: in this process, followings are related – exchange without labor and labor without exchange, contract on another contract or condition on another condition, similarity with riba (interest), similarity with gambling , widespread uncertainty of profits and losses, not everyone benefiting equally, financial fraud and torture, lying and exaggeration, etc. In Islam, both gold adornments and silk cloths are prohibited for men to wear but are permissible for women as long as they are not used to sexually attract men (other than their husbands). The prohibition of these adornments

5589-635: The same as interest, and notes the lack of enthusiasm of orthodox scholars – such as the Council of Islamic Ideology – for credit sales-based Islamic Banking, which they (the council) call "no more than a second best solution from the viewpoint of an ideal Islamic system". Khan calls the distinction "frivolous and laboured", a way of charging interest using another name, necessary because businesses "cannot survive where cash and credit prices are equal". Others note that in terms of standard accounting practice and truth-in-lending regulations getting 90 days credit on

5670-454: The same word ( haram ) is used in the Quran to denote the sacred nature of the Ka'ba and the areas of Mecca, Medina, and Jerusalem. This category of sacred, holy, and inviolable also includes spouses and university campuses. As such, the legal use of the root ح-ر-م is based on an idea of boundaries between the profane and the sacred, as opposed to prohibitions, as is normally assumed. Colloquially,

5751-700: The subject of interest-free banking were authored by Muhammad Uzair (1955), Abdullah al-Araby (1967), Mohammad Najatuallah Siddiqui , al-Najjar (1971) and Muhammad Baqir al-Sadr . The involvement of institutions, governments, and various conferences and studies on Islamic banking (Conference of the Finance Ministers of the Islamic Countries held in Karachi in 1970, the Egyptian study in 1972, The First International Conference on Islamic Economics in Mecca in 1976, and

5832-538: The term haram is used to mean ill-mannered or indecent, instead of strictly meaning 'unlawful'. Halal and haram are also used in regards to money ( mal ). Mal al-haram means ill-gotten money, and brings destruction on those who make their living through such means. These cultural interpretations of what is haram influence and are influenced by the legal definitions used at a local level. This means that popular conceptions of haram are partly based on formal Islamic jurisprudence and partly on regional culture, and

5913-413: The value added factor, increased exports, less imports, job creation, rehabilitation of the incapacitated and training of capable elements". The Sharia law that forms the basis of Islamic banking is itself based on the Quran (revealed to the Islamic prophet Muhammad ) and a hadith (the body of reports of the teachings, deeds and sayings of the Islamic prophet Muhammad that often explain verses in

5994-501: The word haram takes on different meanings and operates more closely as a dichotomy with halal , which denotes the permissible. In Arabic-speaking countries, saying "haram" can mean 'what a shame' or 'what a pity' (this meaning has been adopted by Modern Hebrew slang as well and is alike to the Italian use of peccato ). The term can be used formally as a method for chastising strangers who behave inappropriately, or between friends as

6075-427: The word appearing eight times in total, three times in verses 2:275 , and once in 2:276 , 2:278 , 3:130 , 4:161 and 30:39 . Riba is mentioned numerous times in a hadith , including Muhammad's Farewell Sermon . A number of orthodox scholars point to Quranic verses (2:275–2:280) as declaring riba "categorically prohibited" and "unjust" ( zulm ), and defining it to mean any payment "over and above

6156-564: The world's first Islamic mutual fund (which invests only in Sharia-compliant equities), was created in 1986 in Indiana. From 1980 to 1985, Islamic investments underwent a "spectacular expansion" throughout the Muslim world, attracting deposits with the promise of "great gains" and "religious guarantees" supplied by Islamic jurists who were "recruited to issue fatwas denouncing conventional banks and recommending their Islamic rivals." This growth

6237-574: Was considered a success by many, as by that time there were nine similar banks in the country. In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank, which as of 2016 was still in business in Egypt. Source: Islamic Finance Project Databank The influx of "petro-dollars" and a "general re-Islamisation" following the Yom Kippur War and 1973 oil crisis encouraged the development of

6318-809: Was established in Algiers by a group of Islamic financial institutions. Also in that year the Islamic bond market emerged when the first tradable sukuk – the Islamic alternative to conventional bonds – were issued by Shell MDS in Malaysia. In 2002, the Malaysia-based Islamic Financial Services Board (IFSB) was established as an international standard-setting body for Islamic financial institutions. By 1995, 144 Islamic financial institutions had been established worldwide, including 33 government-run banks, 40 private banks, and 71 investment companies. The large US-based Citibank began to offer Islamic banking services in 1996 when it established

6399-490: Was initiated in 2012. This restructure was due to the effects of the world economic crises that lead Arcapita to file for Chapter 11. A year later, Arcapita raised a new equity capital from shareholders to fund its growth strategy. In 2017, Arcapita along with Mumtalakat Holding Company , acquired a controlling interest in NAS United Healthcare Service, making it Arcapita's first private equity investment since

6480-461: Was made up of 2,354 sukuk issues, and had become strong enough that several non-Muslim majority states – UK, Hong Kong, and Luxemburg – issued sukuk. There are multiple Shari'ah-compliant indexes, created by Shari'ah screening of companies. Such indexes include DJIM, S&PSI, MSCI and country-based indexes like KMI-Pakistan and SCM-Malaysia. To be consistent with the principles of Islamic law ( Sharia )—or at least an orthodox interpretation of

6561-531: Was temporarily reversed in 1988 in the largest Arab Muslim country, Egypt, when the Egyptian state – worried that Islamist movements were building up a "war chest" and being given financial independence – reversed its tacit support for the industry, and launched a media campaign against Islamic banks. The ensuing financial panic led to the bankruptcy of some companies. In 1990 an accounting organization for Islamic financial institutions ( Accounting and Auditing Organization for Islamic Financial Institutions , AAOIFI),

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