Index ABC International Bank 163 application of funds 60–1 ABN AMRO 17, 20 sources of funds 59–60 Accounting and Auditing Organization for Islamic current accounts 59–60 Financial Institutions (AAOIFI) 15, 20, 35, 56, investment accounts 60 66, 69, 86, 98, 131, 176, 185, 189, 211, 218 savings accounts 60 adverse selection risk 53 bank–client relationship 50 ajr 129 Bank Islam Malaysia 13, 15, 20 Al Azhar 35 Bank Islami Bangladesh 20 Al Khattab, Umar ibn 1, 29 Bank Muamalat 20 Al Khawarizimi Colleges and Westford School of Bank of England 16 Management in the UAE 250 Bank of International Settlements (BIS) 66 Al Manfaah 130 Barclays Bank 18, 20 Al Masnu 156 barter system 2 Al Mawdudi, Abul Ala 6, 241 Basel regulations 68 Al Medini 35 Bedouin 170 Al Musania 156 beneficiary 173, 178, 179 Al Mustasni 156 bilateral or simple Mudaraba 99 Al Rajhi Banking and Investment (Saudi Joint binding promise 82 Stock Company) 20 BNP Paribas 20 Al Rajhi Trading and Exchange Corporation 20 BOT (build, operate and transfer) financing 65 Al Rayan Bank 16, 20 buy-back condition 88, 147 Al Siddique, Abu Bakr 11, 29 Al-Adl 8 capital market 205–6 Al-Ihsan 8 Islamic perspective 208–10 Alwi, Dr Sharifah Faigah Syed 63 Shariahcompliant stocks 208–9 Amanah 58, 60, 97 dealing with non-compliant stocks 209–10 Amanah Bank 16 central bank, relationship with 50–1 Ansar Financial and Housing Cooperative 16 Centre for Research in Islamic Economics 19 application of funds 60–1 Chapra model 253 Aquila 169, 174 cheque clearing services 51 Arab Banking Corporation of Bahrain 163 Christianity Arab Islamic InsuranceCOPYRIGHTED Company 171 ethics MATERIAL 31 Arbun 63, 84 on private property 5 Aristotle 4, 5, 242 prohibition of interest in 241 Asset-backed Sukuk 227 on usury 5 Asset-based Sukuk 227 Citi Islamic Investment Bank, Bahrain 58 Citibank 17, 20 Badr al-Islami 58 Citigroup 58 Bahrain Central Bank 15, 185 classic economic problem 7 Bahrain Islamic Bank 16, 19, 70, 171 clear financial segregation 173 Bait-al-Maal 9, 11 client credit risk 52 balance sheet 59–61 client selection, prudent 4 277 Habib371007_bindex.indd 277 5/30/2018 7:01:16 PM 278 INDEX close-ended fund 211–12 financial intermediation 2 command economy 6 conventional 54 Commenda 11 conventional vs Islamic 58–9 commodity market 206 definition of 54 Conference of Foreign Ministers of Islamic Islamic 54–5 Countries, Third 19 two-tier Mudaraba 56–7 constant or permanent Musharaka 112 two-windows model 57–8 contracts in Shariah law 61–2 Wakala model 58 contracts of exchange in Shariah law 62–3 financial screening 209 conventional economics vs Islamic economics 9–10 Financial Services Authority (UK) 16 conventional finance versus Islamic finance 242–3 Fiqh 28 conventional insurance 191–2, 217 Fiqh al-Muamalat 61 conventional lease 136–8 foreign exchange market 206 cooperative savings bank economics 13 FTSC Global Islamic Index 210 corporate governance 38 Fuqaha 28 cost of capital 9 Council for Islamic Banks & Financial GAAP 65 Institutions 20 General Council for Islamic Banks and Financial credit cards 63–4 Institutions (CIBAFI) 71 credit risk 216 General Takaful 177 of banks 160 Gharar 31, 32–3, 39, 48, 146,170, 171, client 52 172, 207, 208 seller’s default 151 Gharar Fahish 33 Credit Suisse 20 Gharar Yasir 33 currency risk 52 global financial crisis (2007–2008) 68 current accounts 49, 59–60 Global GCC Islamic Index 210 goldsmiths 3 Dallah Albaraka Group 16 Great Depression 68 Dar Al-Maal Al-Islami Trust 20 Gulf Cooperation Council (GCC) countries 1 Darul Uloom, Deoband 35 Darul Uloom, Karachi 35 Hadith 28, 29 Daruriyyat 28 Hajiyyat 28 debt-based Sukuk 226 Hajj 13, 17 declaratory rulings 27–8 Hajj management bodies 68 default after delivery 157 Halal 7, 30, 97, 99, 130 default before delivery 157 Halal trade 7 default risk 53 Hambali 30 of banks 160 Hanafi 30 derivative market 206 Hanover Re 176 Deutsche Bank 20 Haram 28, 30, 207 Dhaman (Dhamanah) 60, 62 Hawala 63 diminishing Musharaka 113 Hiba 61 Dow Jones Islamic Market Index 210 history of banking Dubai Islamic Bank 14, 19, 21, 70, 171, 246 conventional 2–3 Dururah 29 Islamic 1–2 history of economics 4–7 El-Najjar, Dr Ahmad 13, 19 in ancient times 4–5 equity-based Sukuk 226 modern 5–6 equity investment risk 53 Islamic 6–7 exchange traded fund (ETF) 212 HSBC 17, 20 HSBC Amanah 16, 58 Faisal Finance House 16 hybrid model (Mudaraba–Wakala) 181, 185 Faisal Islamic Bank of Egypt 19 Faisal Islamic Bank of Sudan 19, 171, 246 Ibadat 28 Family Takaful 173, 178–9 Ijab 129 Fidya 174, 199 Ijara (leasing) 11, 61, 67, 129–41, 208 Habib371007_bindex.indd 278 5/30/2018 7:01:16 PM Index 279 documentation 136 International Islamic Rating Agency Ijara agreement 136 (IIRA) 70–1, 229 undertaking to purchase leased asset International Islamic regulatory and standard 136 setting bodies 68–72 in Islamic banks 130 International Islamic University, Islamabad 250 practical contract 139 International Islamic University, Kuala calculation of lease rentals 139 Lumpur 35, 250 Shariah rules and 132–6 International Organization of Securities Majur or Ijara asset 132–6 Commissions (IOSCO) 66 types of 130–1 investment accounts 13, 60 vs conventional lease 136–8 investment markets and products 205–7 vs conventional loan contract 138 investment risk reserve (IRR) 56 Ijara fund 213 Islamic asset and fund management 210–11 Ijara Muntahia Bittamleek 130, 131–2 Islamic balanced fund 213 Ijara Sukuk 220–1, 230 Islamic Bank of Asia 16 Ijara Thumma al Bay 132 Islamic Bank of Britain 16, 20 Ijara wa Iqtina 130, 131–2 Islamic banking 16, 47–8 vs diminishing Musharaka 139 birth of 12 Ijma 29, 39 challenges faced by 67, 248–9 Ijtihad 11, 28, 29 core objectives 48 Ikhtiyar 29 current status 17–18 Inan or limited Musharaka 112 definition of 3–4 income distribution, purification of 210–11 development timeline 18–20 Indemnity 173 distinctive features 3–4 Industrial Revolution 3, 5 future of 254–5 industry screening 209 global achievements 247–8 initial public offering (IPO) 212 global growth of 243–5 insurable interest 173 growth of 14–15 insurance history of 2–3 conventional 191–2, 217 in the Middle East and the GCC 246 Islamic 68 and Muslim community 245–6 insurance claim 174 in Muslim countries 15–16 insurance premium 174 in non-Muslim countries 16 interest rate risk 52 periods of 14–15 International Accounting Standards Board in South and South-East Asia and beyond 247 (IASB) 66, 69 sub-sectors 16–17 International Association of Islamic Banks, 253 vs conventional banking 3, 4, 12–13, 15, 49–51 International Centre for Education in Islamic Islamic banking products 63–5 Finance (INCEIF) in Malaysia 250 corporate 64–5 International Conference on Islamic bank guarantees 64 Economics, First 19 banker’s acceptance 64 International Financial Reporting Standards bill of exchange 64 (IFRS) 65–6, 68 letter of credit 64 International Financial Services Board project finance 65 (IFSB) 15 syndication 65 International Institute of Islamic Banking and trade finance 64 Finance in London 250 retail 63–4 International Islamic Centre for Reconciliation credit cards 63–4 and Commercial Arbitration for Islamic Finance current, savings and investment accounts 63 Industry (IICRCA) 71 home financing 64 International Islamic Financial Market personal loan 64 (IIFM) 20, 70 Islamic banks, challenges faced by 67 International Islamic Fiqh Academy 72 default penalty 67 International Islamic Insurance Company 171 global auditing standards 67 International Islamic Liquidity Management lack of skilled employees 67 (IILM) 70–1 partnership ventures 67 Habib371007_bindex.indd 279 5/30/2018 7:01:16 PM 280 INDEX Islamic banks, challenges faced by (Continued) Islamic law 11 profit and loss system 67 Islamic leasing and factoring companies 17 regulatory issues 67 Islamic mercantile law 11 and Salam and parallel Salam 148–9 Islamic microfinance 17 Shariah scholar confusion 67 Islamic non-bank financial institutions 17, 68 Shariah scholar, multi-skilled, shortage of 67 Islamic private equity 213 taxation 67 Islamic Real Estate Investment Trusts 213–14 Islamic capital markets 17, 68 vs Real Estate Investment Trusts 214–15 risks and challenges in 216 Islamic Research and Training Institute credit risk 216 (IRTI) 20, 71, 250 fiduciary risk 216 Islamic Shariah scholars 35 foreign exchange risk 216 Islamic unit trust or mutual fund 211–12 liquidity risk 216 Islamic venture capital 213 market risk 216 Islamic window 14, 16 Shariah non-compliance risk 216 Ismail model 253 Islamic commodity fund 212 Istihsan 29 Islamic cooperative savings bank accounts 13 Istishab 29 Islamic debt fund 212 Istisna 32, 61, 62, 67, 79, 32 Islamic Development Bank (IDB) 14, 19, 21, 71, Islamic banks and 159 229, 246, 250 Istisna and parallel Istisna process 159–60 Islamic economics 6–7 practical application 163–4 Islamic equity fund 213 buy, operate, transfer (BOT) 163–4 Islamic ETFs (I-ETFs) 212 parallel phased Istisna (PPI) 163 Islamic finance problems related to Istisna and parallel challenges faced by 248–9 Istisna 160–1 current status 17–18 Shariah rules and 156–8 definition of 3–4 asset specifications 156 development timeline 18–20 cancellation or termination of contract 157 distinctive features 3–4 default 157 future of 254–5 after delivery by buyer 157 global growth of 243–5 after delivery by seller 157 growth of 14–15 before delivery by buyer 157 and Muslim community 245–6 before delivery by seller 157 in Muslim countries 15–16 delivery 156–7 in non-Muslim countries 16 exception to valid sales contract 156 periods of 14–15 independent of Istisna and