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