Shariah -Compliant

Make Yourself Shariah-Compliant

Why is Shariah-Compliance Important? • Our lifelong objective is to seek the pleasure of Creator • ‘Islam’ is a complete ‘way of life’ – What does this Mean? • The Muslim Code of Life – stipulated from Quran and Sunnah • More than just Ibadah! • Widespread ignorance of Mu’amalat matters

Three Basic principles of Shariah-Compliance • The subject matter of any transaction must be Shariah-compliant • The transaction must not involve any interest based lending or borrowing • Contemporary contracts fall foul of Shariah Principles in FOUR key areas

Basic principles of Shariah-Compliance Contracts - Four Key Issues Penalty clauses which require the householder to pay interest charges if they default on payment Seller not having possession/ ownership of goods or selling something that is not in existence yet – e.g. financial markets such as derivatives and options and short selling Contracts must be devoid of excessive uncertainty (gharar) Contracts must not be interlinked so as to form a contract within a contract

Mortgage Alternatives (Islamic Home Purchase Plans) • Why are conventional mortgages not permitted? • How do Islamic Home Purchase Plans differ? • Who provides Islamic Home Purchase Plans? • SOME KEY CHALLENGES: • Type of Shirkah (aqd / amwal etc.) • Contract within a contract • Rental rate being similar to interest rate • Spirit vs Letter of Shariah

Islamic Bank Accounts • Why are conventional bank accounts not permitted? • How do Islamic bank accounts differ? • Diminishing Musharaka ? • So who provides Islamic bank accounts? • SOME KEY CHALLENGES: • Centrality of constructive possession • Spirit vs Letter of Shariah

Investments, Pensions & Child Trust Funds (CTF) • What’s WRONG with conventional investments? • So how do Shariah-Compliant investments work? • Who provides Islamic Investments? • KEY CHALLENGE: • Rationale behind 5% and 33%

Personal Loans • What is WRONG with a conventional personal loan? • How does an Islamic loan work? • What is Tawaruk and how does it work? • SOME KEY CHALLENGES: • Why is it controversial? Is there an alternative? • Also need to consider if the underlying need for the loan is valid

Car & Equipment Leases • Are normal leases haraam? • Responsibilities of lessor & lessee • Penalties on default • Interlinked contracts • KEY CHALLENGE: • Differentiating behind a Faasid condition and a void contract • Where does bending the rules differ from breaking the • rules?

Insurance & Takaful • So what’s WRONG with conventional insurance? • So how does Islamic insurance work? • Takaful ? • What about those scholars who view conventional insurance as permitted? • SOME KEY CHALLENGES: • How to resolve key issue of Gharar? • Aqd Tabarru and debate around this

Guarantees, Warranties & Credit Cards • Are warranties considered to be insurance? • Are conventional credit cards acceptable? • Some key challenges: • What is the difference between a guarantee, a warranty • and insurance? • Is breakdown cover insurance, a guarantee or a warranty? • Is there a difference between pre-paid cards / debit cards and credit cards?

Summary • Zakah and Islamic Wills to be covered via dedicated session • Each of the areas could easily have it's own dedicated session • Each of above areas is a challenge British Muslims have to overcome if we want to submit to Shariah with regards to financial and legal matters • Widespread ignorance is prevalent not only amongst Muslim community but also amongst Scholars on these matters

Key outcomes of this session are to: • Raise awareness of some of the key legal / financial areas where Muslims need to be aware of Shariah principles to either avoid a clear haram or to fulfill a Fardh Ain obligation • To suggest ways for further study as this session is simply to raise awareness and each area needs more research • Most importantly for you, the audience to recognise that disseminating and implementing this knowledge amongst the community is a personal challenge!

Any Questions ?

Shariah -Compliant