Principles Of Islamic Financing You Need To Know About

1. Principles Of Islamic Financing You Need To Know About Islamic financing follows a system that strictly adheres to Islamic laws, particularly Sharia law, which oversees not only religious practices but also commercial and financial transactions. There are some transactions and practices common in conventional banking but are not permitted in Islamic finance. These restrictions distinguish Islamic finance from traditional banking, creating a unique banking system grounded in ethics, equity, and fairness. In this article, let us explore the essential practices and principles of Islamic finance and how they influence financial activities in line with Sharia law.

2. Imposing Riba (Interest) Is Not Allowed Islamic financing prohibits the practice of riba (interest), viewing it as exploitative and unjust, particularly toward borrowers who are already experiencing financial difficulty. Its principles emphasize fairness and mutual benefit, discouraging profits derived from others' hardships. Rather than relying on interest, Islamic finance promotes wealth creation through productive investments and risk-sharing, with all parties involved equally sharing both the risks and rewards of economic ventures. Participating In Gharar (Uncertain) Transactions is Highly Discouraged Transactions involving ambiguity or uncertainty, referred to as Gharar, are strictly forbidden in Islamic finance. Under Sharia law, the parties involved in any contract must maintain full transparency and control over their business dealings. Complete information about the transaction must be shared with both parties before finalizing any agreement so that neither side is left exposed to unclear terms or unforeseen risks. Engaging In Maysir (Gambling) Is Prohibited In Islam, acquiring wealth through unethical or immoral means is strictly prohibited because it contradicts the principles of justice and fairness central to Islamic teachings. This includes activities like Maysir. Maysir refers to gambling and speculative ventures, such as traditional insurance bonds, as they carry inherent uncertainty and risk since payouts depend on unexpected events, which can foster exploitation and unjust enrichment. Investing Only In Certain Industries In Islamic finance, specific activities are deemed haram or forbidden, such as the production, sale, and distribution of alcohol and pork,

3. along with investments in sectors like pornography, prostitution, and drugs. Islamic financial institutions prioritize ethical practices that steer clear of these industries, which are seen as detrimental to society and contrary to social responsibilities. This principle stems from the belief that financial activities should serve the community and promote moral values. At Devon Islamic Finance, we are dedicated to strictly following Sharia principles across all our faith-based financial products. This commitment of ours strongly influences how our esteemed agents manage your banking transactions, seeing to it that each interaction reflects these core values. Reach out to us today to learn more about our financial services. We are prepared to assist and support you on your journey with Islamic financing.