Islamic banking and finance books free download

islamic banking and finance books free download

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    islamic banking and finance books free download

    Islamic law restricts the role of the insurance company to that of an ordinary trustee who is responsible to the participants. In conventional insurance business, the insurance company is a profit-making entity that agrees to bear the financial burden and losses of its policyholders. The shareholders own the insurance company and are entitled to receive any profit and bear the burden of any deficit recorded at the end of the financial year.

    Conversely, in Islamic law, the role of the operator of the cooperative insurance business is clearly defined and segregated from the role of the participants. The takaful model determines the exact roles of the participants on the one hand and the operator on the other. These will be explained later in this chapter when we discuss the models of takaful. The The policies that are used to amount of liability to be accepted and the extent of coverage fall under the underwriting determine the extent of risk- policies.

    Investment of insurance funds should premiums. For instance, investment in breweries and casinos are forbidden in Islam. The main features of takaful are based on a number of core principles underlying the whole concept of mutual indemnity. As shown in Box 8. These elements are the source of major differences between takaful and conventional insurance.

    The major differences between the two frameworks are parties to the contract, payment of premiums, and investment of insurance funds.

    It is the first building block in the structuring of a takaful transaction. Each takaful participant makes this commitment to fulfill the objective of mutual assistance through premiums. Books mutual assistance is seen as an important aspect of the daily lives of Muslims, which is adapted to the needs of entrepreneurs, investors, and merchants in the Islamic finance industry. Prohibition of riba usurygharar excessive risk or uncertainty and maysir gambling or speculation As in all other commercial transactions, there is a general prohibition on riba, gharar, and maysir in takaful undertakings.

    This is because, in most cases, the pool of funds contributed by participants is invested in profitable business to increase the asset base of the takaful scheme. The takaful operator, who technically manages and oversees the takaful funds, must consider the mandatory islamuc in commercial transactions when making investment decisions.

    Source: Islamic Financial Services Board. December Parties to the Contract Nad are two main parties in conventional insurance, i. The insured party has nothing to do with other insured parties in terms of guaranteeing one another against any loss. The insured party is only concerned about itself. Conversely, bahking parties in takaful are many.

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    Anv participants in the takaful scheme mutually insure one another against any loss. Islamid participants insure themselves against any loss based on mutual agreement and mutual sense of responsibility. If the contingent event stated in the insurance contract occurs, the insurance company guarantees the payment of compensation. This contractual arrangement is based on probability because such an event may occur or it may not vinance during the period of the insurance cover.

    That is, the payment of compensation is contingent on the contractual events that may or may not occur. The premiums may also be forfeited under certain circumstances in conventional insurance. As a result, issues such free gharar, maysir, and exploitation arise. However, in takaful, premiums are not finabce as regular installments to guarantee the receipt of compensation in books event that the insured-for occurrence happens.

    The premiums are paid instead as a donation from the participants into the common fund in order to banling other participants downloaad the agony of any eventual loss. Takaful premiums are considered as trust held by the operator on behalf of the participants. It would be considered an injustice for the takaful operator to add a clause into the insurance contract that would allow the participants to forfeit their premiums.

    The participants remain the owners of the premiums even though they have donated them into a pool of funds to indemnify any member of the group. Investment of Insurance Funds There are no strict restrictions on the type of business in which conventional insurance banking can invest their funds. Profits from investment are distributed on the basis of pre-agreed ratios in the underlying takaful contract.

    The model of takaful adopted by the stakeholders determines the profit distribution as well as the remuneration of the takaful operator. Other specific differences between takaful and conventional insurance are summarized in Table 8. The idea of islamic assistance is innate and thus was common among the early And. The ancient Arab traders had a common practice of lslamic protection that was upheld and aqilah preserved by the Prophet based on Islamic ideals with the advent of Islam.

    The concept An ancient Arab custom based on mutual agreement. Takaful: Philosophy, Legitimacy and Operation. In Dar, H. London: Finahce Publications Limited. The companions of the Prophet laid down this golden precedent of mutual download and shared responsibility under his close supervision. Figure 8. Finance modern history of takaful dates back to when the Islamic Insurance Company Challenge was established in Sudan.

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    The takaful it offered was based on the cooperative insurance Can you establish any model. InMalaysia enacted the Takaful Actthe development of the which provides for the regulation of takaful business in Malaysia and other incidental Islamic financial industry matters. Since then, contemporary Islamic scholars islamoc issued numerous resolutions on and the emergence of the takaful component of the permissibility of takaful as a cooperative insurance.

    The first of these resolutions was the industry? Takaful products have spread all over the globe. While growth in the takaful industry remains promising, there is a need to further make the products conventionally viable and competitive in the light of modern developments in the global insurance industry. These finznce strategic issues shown in the figure. There is much room for expansion of takaful emerging markets, there was a surge in the growth of products beyond the MENA lslamic and South-East Asia.

    However, there is a need to restructure Takaful Enaya, headquartered in Bahrain. We estimate that the global takaful takaful.

    While some of these models are based on a free Islamic product, hybrids banking models and structures of takaful. Finance will be seen in the different types of takaful models. Meanwhile, keep in mind that takaful operator the main two parties involved in the implementation of the takaful system are the The party books manages and takaful operator and the participants.

    The ielamic operator is the party who manages administer the takaful fund. The party is neither the owner of the funds nor the participants owner of the company but the trustee of the takaful funds. The agents of the fre The owners of the takaful fund. Islamic are only entitled to commissions or and based on the terms bbooks upon by the parties. The participants are the owners of the takaful fund.

    They are the investors or fund contributors in whatever model is adopted by the manager of the takaful fund. The Mudarabah Model mudarabah model of takaful The mudarabah model of takaful is download on the Islamic finance product known as An Islamic insurance model mudarabah trust financingand is commonly frre in trust financing.

    Islamic Financial Markets Rle Banking Finance. Download Islamic Financial Markets Rle Banking Finance PDF/ePub or read online books in Mobi eBooks. Click Download or Read Online button to get Islamic Financial Markets Rle Banking Finance book now. This site is like a library, Use search box in the widget to get ebook that you want. Brief Modern History of Islamic Finance Interest in reviving a banking and financial system started in early s. s –Appearance of early writings about problems of conventional economic systems and how Islam’s principles of economics offer an alternative. s –End of colonialism and independence of countries s –Oil revenues (Perto-$) create demand for banking without interest. Islamic Finance Urdu Islamic Books PDF Free Download Online Library | Sunni Deobandi. Islamic Banking & Finance with from Islamic Perpective. Murrwajah islami Bankari. Sood.

    In this model, based on a trust partnership between the and operator finance in Figure 8. The participants jointly free the PRF, as it is for the sole purpose of mutual indemnification. The example of a mudarabah realized from the islamic model of takaful illustrated in Figure 8. Part of the funds is invested as PIF.

    A fund derived from a portion books the pool of funds The strategic position of the takaful participants makes them both the capital provider contributed by the participants, and the owner of the whole takaful undertaking. Free as the takaful undertaking involves which is specially earmarked both insurance coverage and investment, the takaful books is considered a business for investment or savings purposes.

    The profit-and-loss sharing principle is based on the classical mudarabah contract where the ratios of profit distribution are predetermined. The financial loss is borne by the capital providers who in this case are the takaful participants. On the other hand, the islamic, i. In terms of the management of banking the risks on behalf of the participants, surplus the takaful operator is remunerated from the underwriting surplus as agreed upon by The amount that remains the parties in the underlying takaful contract.

    In the underwriting of risks on behalf after deducting all expenses of the participants, any loss recorded must be borne by the participants as the capital and management fees for the administration of the takaful providers, provided there is no element of negligence on the part of and takaful operator. If this amount is negative, it is managerial takaful business with the participants, it must ensure that the total share called a deficit.

    It is important to observe that this mudarabah model is generally losing ground in the industry because many takaful undertakings now prefer to adopt the wakalah model. The Wakalah Model wakalah model of takaful The wakalah model of takaful is based on the Islamic finance product known as wakalah Download Islamic insurance download agency. This fred is widely used in the takaful industry. This form of takaful, outlined that is based on a contract of agency between the takaful in Figure 8.

    That is, the ownership of the takaful fund iislamic in the participants while the real owners of the fund the takaful operator merely acts as an agent in the management and administration of while the latter acts as an agent. The operator only receives an agency fee based on the terms in the contract. The finance of the wakalah model of takaful outlined in Figure 8. Participants pay contributions into a common fund. The common fund is delegated to the takaful operator as an agent for a mutually agreed fee, which also includes management expenses.

    Claims and underwriting surpluses can be made on the Banking. Any end-of-year surplus is financf to the participants. A performance fee may be paid to the takaful operator for prudent downloa of the fund. This principal—agent relationship is strictly enforced and built into the underlying contract to establish the dpwnload and duties of each of the parties to the contract. It is in the best interest of the takaful operator to reduce management expenses through prudent policies, which financr ordinarily attract some incentives or bonuses.

    Apart from the normal agency fee, which is pre-agreed by the parties and built into the contract, there can be an additional performance-related fee, where some incentives are given for good management and governance related to the underwriting output. It is always good when circumstances that may lead to the payment of such performance-related fees are made explicit in the underlying takaful contract.

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    These incentives will encourage good practice in the industry and promote competitiveness and prudent management of the takaful funds. Hybrid Wakalah-Mudarabah Model hybrid takaful model This hybrid takaful model is a combination of the wakalah and mudarabah models. It An Booke insurance model uses these two specific models for two different purposes in the takaful fund. Under that combines and effectively this hybrid model of takaful, the wakalah model is employed for the underwriting while uses more than one financial instrument in its structuring.

    Under the wakalah model adopted for the underwriting activities, the takaful operator is entitled to an agency Challenge fee or a mutually predetermined commission in their role as a wakil or agent who manages the takaful funds. In addition, they are entitled to a share in the profits realized Why do you think the hybrid model of takaful for managing the finanxe activities of the fund in their role as an entrepreneur is better than the single mudarib.

    This twin role makes the hybrid model unique and is the reason why it is model?


    In fact, the Central Bank of Bahrain CBBformerly known as the Bahrain Monetary Agency, only allows takaful companies operating in Bahrain to adopt either the wakalah model or the hybrid model for their business. Although the CBB does not have a specific law for regulating takaful operations, Volume 3 of its Insurance Rulebook summarizes the regulatory requirements for takaful and retakaful operations as part of its oversight function on financial institutions in Bahrain.

    The steps in the hybrid model, as illustrated in Figure bools. The participants appoint the takaful operator as an agent, for a mutually agreed fee. The investment profit from the PIF, based on the mudarabah model, is shared between nad participants and the takaful operator. Any profits and underwriting surplus may be distributed to the participants. The hybrid model, sometimes called the mixed model, is the dominant model in the Middle Eastern markets and it is widely embraced all over the world.

    This is what we refer to as the ultra-hybrid model of takaful.

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    Waqf means a charitable endowment that has been structured into an Islamic financial product for contracts that involve charitable dispositions such as takaful and microfinance. This new model, where wakalah is combined with the waqf, has been adopted by takaful companies in South Africa and some other countries, including Swiss Re retakaful in Malaysia. The agency contract is important in most financial transactions, hence the continued emergence of wakalah in most Islamic download products.

    In this model, the shareholders of a takaful company make donations to a common free of funds that has been established as a waqf. It is important to note that it is only the returns from the investments that are used for the benefit of the participants. The original capital amount contributed to the common pool of funds must remain for the purpose of reinvestment in order to ensure that there is continuity in the waqf funds, which is one of the main features of waqf.

    In this way, cash waqf is used for the purpose of mutual benefit. The model described in mutual indemnification Figure 8. The cooperative and collaborative element of 1. Participants pay contributions as waqf into the common pool of funds for mutual takaful where the participants indemnification. Participants enter into an agency contract with the takaful operator, who is paid a fixed event of any mishap.

    The wakalah element comes in to play with the role of the takaful operator. The shareholders of the takaful company make donations in order to establish a waqf fund. This delegation of authority is in the form of waqf-wakalah-mudarabah an agency contract for which the company receives an agreed fee. The company also model manages the investment of the waqf funds as an entrepreneur, the implication being A combination of charitable that the company is also entitled to its share in the profit realized from the investment.

    Thus, rather than calling it a wakalah with waqf model, it is more appropriate of Islamic insurance. TABLE 8. Profit to be shared the participants Profit to be shared Operator and between operator and end-of-year between operator participants share and participants. Agency fee and participants. Surplus to be investment of distributed to distributed to cash waqf funds. Returns from waqf investment of the participants to be added to And. The available products have been their expansion into the classified into two main types of product—general takaful and family takaful.

    These are global insurance market. General Takaful General takaful may also be called composite takaful because it embraces a wide range of products. A general takaful contract provides short-term takaful cover where the assets and other proprietary belongings of participants are protected from foreseeable material loss or any form of damage.

    The takaful participants pay certain specified contributions while the takaful operator undertakes to manage the risk through the administration of the underwriting activities. The proceeds that accrue from these investments are returned to the fund Challenge for the purpose of indemnifying the takaful participants. Name three examples General takaful can be further categorized into a number of products according to the of general takaful aside type of takaful the participants choose to invest in.

    The available takaful is divided from the examples given in this chapter. This list is not exhaustive but represents some notable takaful schemes in the industry. General takaful is a short-term policy renewable periodically according to the terms and conditions of the takaful contract. Underwriting surpluses of the takaful funds are distributed to the participants annually.

    An example of general takaful is outlined in the Islamic Finance in Practice box, where one of finance key takaful products of HSBC Amanah Takaful, which was introduced to cater for its Home Financing-i customers, is briefly examined. The Homeowner Takaful products covers a range of unexpected disasters that could befall any of the contributors to the Takaful Risk Fund. As this form of takaful cover involves life and family issues, it is usually offered as a long-term policy cover that may span between 10 and 30 years depending on books structure of the product.

    The symbiotic relationship is enhanced covered by the policy. The total banking Amanah Takaful for consideration and onward of coverage is calculated in accordance with the processing. An amount of up to Source: www. These three categories are different in the arrangement the participants adopt in mutually indemnifying one another. Despite the fact that all three are collaborations for mutual indemnification under the management of a takaful operator, the scope differs.

    The premiums they contribute to the takaful fund are used for underwriting activities in the event of any mishap or disaster on the part of any of the members download the books. Any successful claim is paid directly to the participant or their banking in accordance with the underlying takaful contract. Collaboration with Savings This second type of cover includes both collaboration through mutual indemnification and also acts as a savings account.

    Parties contribute through donations into a common pool of funds from which the underwriting activities are carried out. This second pool of funds is managed by the takaful operator but strategically segregated from the donations, which constitute the main takaful funds. Collaboration with savings has two significant advantages. Second, they benefit individually from their self-indemnification through long-term savings where they or their nominated beneficiaries can recover enough funds to cater for any eventuality, disaster, or the educational needs of orphans whose parents were participants in the fund.

    Collaboration based on specific groups This type of family plan is usually structured in a manner that reflects communal, ethnic, or finance needs. Participants from the same community, district, or social group may come together to establish a common pool of funds for a specific purpose expressly mentioned in the underlying contract. Contributions to the fund may be made jointly or separately by the organization and the participants.

    Membership of the scheme is limited islamic those who come from the same community or group and benefits from the common pool of funds can only be enjoyed by the participants or their beneficiaries. If the takaful industry is to consolidate, the products need to make inroads into the global markets, particularly in the United States and Europe.

    The tremendous growth recorded in previous years justifies the need for conventional insurance companies in the western countries to further explore takaful products. Mr Moody says Islamic finance is radiating out from the Middle Dominic Moody, senior vice-president at insurance broker East to other parts of the world. However, this is not being Marsh in the Middle East, says the market for insurance products matched by equivalent insurance products.

    Other hurdles include making sure that insurance contracts Dagwood Ahmedji, head of Islamic financial advisory services comply with Islamic principles and evolving regulations. Analysts islamic that for takaful to reach its potential, it must Despite the headwinds, analysts are still upbeat on prospects. It was never going to be an overnight One challenge and to extend the insurance available for commercial phenomenon, because it is about introducing a new product to lines.

    This manner is premised on the origin of the surplus, which is invariably the premiums contributed by the participants. With the increasing prevalance of profit-oriented takaful institutions that compete free with conventional insurance companies, there have been some misgivings on the appropriate method for the distribution of surplus in takaful undertakings.

    In order to properly regulate this, the underwriting surplus is calculated for a specific financial year. Accordingly, all indemnities paid for deserving claims, the retakaful policy and changes in technical provisions must be deducted from the total premium contributions of the participants. Total indemnities paid in respect of claims during the financial period are the underwriting activities carried out by the takaful company to indemnify the claims of deserving participants.

    Net of reinsurance implies that all retakaful operations must be taken into account when calculating the underwriting surplus. This should be reflected in the financial statement of the takaful company. Changes in technical provisions include unpaid claims and unearned premiums.

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    All these must be adjusted in the method of accounting to reflect the actual financial and of the takaful fund. Changes in the technical provisions mainly relate to the method of accounting and balancing the financial statement. Right of Policyholders to Surplus The policyholders or takaful participants have the right to the surplus. Box 8. The surplus originated from the policyholders who made the financial contributions.

    The ruling states that these contributions are amounts wholly or finance donated in accordance with the Islamic insurance system in which participation is considered to be an implicit acceptance of the conditions set out in the insurance policies or the by-laws relating to the disposition of the insurance surplus in the various cases, the most important of which are mentioned below. They may also be made contingent upon certain conditions, according to some fuqaha.

    Gharar uncertainty in Islamic insurance is forgiven in the case of donations because according to the Maliki school of thought gharar does not invalidate the contracts of donations. The policy should also specify a deadline for policyholders to express any objection they may have regarding the consideration payable. Otherwise the company will assume that policyholders books no objections. FAS and There should be a clear segregation between the An insurance policy that is assets, obligations, and results of operations of the policyholders and the shareholders based on the Islamic insurance model, which is based on of the takaful company.

    The shareholders are not entitled to the takaful surplus but will islamic cooperation. Allocating the Insurance Surplus There are numerous methods of allocating takaful surplus. Transparency is essential in these kinds of books dealings. The methods are not banking but alternatives among which the takaful undertaking may select its specific method.

    AAOIFI banking that when the takaful policy or by-laws is silent on the specification of allocation methods, the first method listed above should be followed, whereby all policyholders will benefit equally from the surplus. Covering the Free Deficit qard islamic In order to cover any deficit, the takaful operator may provide a qard hasan benevolent Benevolent loan that is devoid loan to the takaful fund to undertake the underwriting activities.

    Generally, in practice, of interest without any share retakaful companies come to the rescue of takaful undertakings by bailing out the in profit that accrues from the use of such funds. As in most cases there are two main funds in the takaful undertaking, i. To settle the deficit from the reserves of policyholders, if any. Articles: Use these articles to inform yourself and others finance the basics of Islamic free. An Introduction to Islamic Finance by Mufti Muhammad Taqi Usmani: An excellent introduction for someone new to Islamic finance; covering principles, products, and practices.

    Imran Usmani: Use this section for a more detailed understanding of the industry's core products from one of its leading scholars. Islamic Finance Contracts: Use these sample contracts to educate yourself download your bank about various Islamic finance instruments. Recommended Reading for Practitioners: Use this reading list to help develop your worldview on finance.

    Recommended Reading for Entrepreneurs: Use this reading list to help you jump start your Islamic finance idea. Glossary of Commonly Used Terminology: Use this download to understand the industry's most commonly used terminology. Play a Training Video. Kitts And Nevis St.

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