Some Basic Principles of Islamic Economy (Brief Introduction)

Basic Introduction:

An Islamic bank is defined as a bank that
conducts its business on the principles prescribed by the Shariah and all
transactions are within the scope of the Shariah. The current model of Islamic
banking was first introduced in Malaysia and Egypt in 1963, and has since
continued to be used in other parts of the Muslim world. Islamic banking did
not gain much traction until 1970, but since the twentieth century the world
has begun to research and critique it.
Today, the Islamic system is not only popular in
Arabia and Ajam, but it is also being adopted in 2007 as matters of life and
education “Economic Recession” what happened was that the international
financial institutions of the Western world, including the United States, were
selling out due to the crisis, after which the Islamic economic system was
adopted. The only way to understand and put this system into practice was to
discuss the European currency crisis in Europe in the "Euro Crisis"
of 2010. This led to research in European universities, and eventually the
European world began a practical and academic effort on Islamic banking in
their countries, which was incorporated as an alternative system.
The Islamic banking system can be used as a tool
for the benefit and development of the economic system. 
There are two types of products of Islamic Bank, one is deposit in general 
which is called deposit and the other is financing - the following principles 
are followed in Islamic banking.
Supra:

Supra is one of the basic and early principles in the Islamic economic system which “Accounting and Auditing Organization for Islamic Financial Institutions” Supra refers to a partnership between two parties in which one party is called "Rab-ul-Mal" which provides its money in the business as capital for investment and the other party which "Superior" is responsible for managing the affairs of this business - in case of profit the profit will be distributed according to the ratio fixed between the two partners whereas in case of loss only the Lord of Finance will bear the loss.

In savings and current accounts in Islamic banking, Supra is usually used by banks for "Project Financing" in which the bank provides capital and does not participate in any business activities and Supra acts as the project manager. Yes - in case of profit the profit is distributed according to the fixed ratio and in case of loss the bank bears the loss - in Supra the ratio of profit is fixed but the ratio of loss is not fixed.

Sinus:

Marabaha is derived from the word “Rabh” meaning profit. In Marabaha Islamic Bank buys anything at the request of its customer and receives its actual price and profit. The risk in Marabaha remains with Islamic Bank till then. Until the ownership is transferred from Islamic Bank to the customer.

Murabaha contract is usually done under financing facility - Murabaha is a type of sale in which the price and profit of the item is stated in advance - for the bank customer what he wants to buy on credit. Buys and the bank buys and sells again to the customer at a profit, including the cost price - the customer returns the money to the bank on the due date, after which the bank may charge a compensation fee if The customer could not pay on the due date.

Lease:

Lease literally means lending something and charging rent in return - lease is a product in which the bank buys goods or property for the customer and lends it to the customer while the customer is in the process of borrowing. Makes Expected Payments - The first bank buys goods from the supplier in advance and sets the delivery date according to customer requirements - the second part is the asset usage contract - lease use in two ways One is the "operating lease" and the other is the "finance lease" - similarly if the lease ends with the transfer of ownership to the customer along with the rent, it is called "monopoly lease".

Peace:

Salam is a type of sale in which the seller promises to deliver the specific item to the buyer on the due date and receives the payment in advance so that the seller is paid and the buyer In Islamic banking it is the moral responsibility of the seller to deliver the goods to the buyer on time. In some places in Slim currency slim is also considered legal.

The practical aspect of Slim is usually used for small farmers who need money to prepare their crops and meet their household expenses. The Holy Prophet (PBUH) allowed them to sell their crops ahead of time.

Describing:

Istisna is derived from the word "Sana'a" which means to make something new on order - in this contract you order someone to make something for you on a fixed amount - this is a long time in Islamic finance. There is a villa contract that lasts until one party starts making an asset on the responsibility that it will build and deliver to the customer - the payment is made in the form of installment which lasts till the completion of the project. Yes, istisna is also proven by the hadith.

Partnership:

The word partnership is derived from “shirkah” which means partnership and it also means shirk. Partnership under the Partnership Act 1932 in Pakistan: “A relationship between two parties in which both parties make a profit” and business. Agree to run together.

Banks and customers are partners in partnership - Profits are in proportion to the default ratio and losses are in proportion to the share of assets shared. Estate is used for investment - every party that invests is involved in management.

Guarantee:

Kafala means to combine something - Kafala is a very important contract in the transaction of Islamic economy which protects the rights and obligations of the contracting parties - Kafala contract is an option to strengthen any other contract. Can be used as - In Kafala, one's responsibility is combined with another's responsibility to improve payment performance.

Kafala is described as such in the Contract Act, 1872.

A contract of guarantee in which the promise is fulfilled and the liability of the third servant is removed if he breaks. The person who is giving the guarantee is called “Surety”. And a person whose fault is being guaranteed is called a “Principal Debtor”. And the one who is being guaranteed is called “Creditor”.

Reference:

Reference (Agency) The word hawala is derived from tawheel, which means that the responsibility of repaying a debt is transferred from the original debtor to another person. The first person is called the principal (guarantor) and the second person is the agent (lawyer).

Financial Certificate:

The word sukuk comes from "suk" - sukuk is an Arabic name used for a financial certificate which means a certificate or legal instrument - sukuk is used in Islamic banking as a substitute for bonds and stocks Islamic banking Believes that bonds and stocks are based on usury and interest.

According to AAOFI “Sukuk” this is how it is described “Securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets”. For example, the sukuk holders, who are the property being built, are considered the owners of the property - thus the sukuk holders receive benefits as rent of the property which is halal - in Islamic law because they own this asset. Are showing ownership.

Silver:

Tork is derived from the common term "foil" which means (silver). According to AAOFI the process of purchasing at a lower price under Marabaha and selling it to a third party for cash in order to raise capital. Is done for.

Remember that the prevailing Islamic banking is run by fatwa or by taqwa - it is very important to understand that if there is anything above the fatwa then it is taqwa - most of the commands are justified by fatwa The Islamic banking has been declared permissible by the fatwa and many pious people do not use any Islamic product for themselves whether it is Takaful or Mudaraba, the business of polytheism - Islam has always been a legitimate source. Our leader Quaid-e-Azam Muhammad Ali Jinnah was very much interested in introducing Islamic banking system in the country.

We are currently breathing in the atmosphere of the interest system where every child in the world is indebted to usury where even if you buy the Qur'an, food they buy only by paying indirect interest - pay a little attention to this. Researchers should link the Islamic banking system with the current system and seek solutions from the old system, while modern banking should be introduced keeping in view the principles of Islam which would bring harmony with the old conventional system and Compatibility can also be removed.

It is important to note here that there has been a collection of jurisprudence from all jurists and imams on the jurisprudence of financial affairs - 1400 years ago there was a complete code of conduct and it is still there today - the time when the Islamic economic system is so perfect Reach out that the examples of Moakhaat Madinah model and Hazrat Umar bin Abdul Aziz can be repeated.

Islamic banking is still in its infancy which is entirely related to scientific research - before establishing itself on Islamic banking there are a few things to keep in mind that the traditional banking system has been under research for three centuries, millions. PhD, MS, M.Phil. As a result of which today it has become a strong financial system while Islamic banking system is still in its research stages - after the last financial crisis almost the whole world is moving towards Islamic finance There are many terms that are really needed in Islamic banking right now and we pray to Allah to give us the strength to contribute to this good endeavor. Ameen.