ISLAMIC BANKING & FINANCE

Q1: The end result of Islamic Banking and Conventional Banking is the same. Then how
can we say that both are different?

The validity of a transaction does not depend on the end result but rather the process and activities executed
and the sequence thereof in reaching the end. If a transaction is done according to the rules of Islamic
Shariah it is halal even if the end result of the product may look similar to conventional banking product.
This could be understood by the following example. Khalid requires Rs.100/-. He approaches Zaid and
requests him for a loan. Zaid agrees to give Zaid this loan on a condition that he will repay him Rs.110/- at
the end of the tenure. This transaction is clearly an interest-based loan which is Haram and prohibited.
Khalid leaves Zaid and goes to Ahmad. Ahmed asks Khalid the reason for taking the loan. Khalid tells
Ahmad that he has got visitors and would like to purchase some fruit for them. Instead of giving him a loan,
Ahmed purchase fruit of the value of Rs. 100/- and after taking possession of them, sells them to Khalid for
Rs.110/-. The transaction that Ahmed has concluded with Khalid is one of a sale and purchase agreement
in which he first purchased fruit for Rs.100/- from the market, took possession of them and thereafter sold
them to Khalid. If one has to analyze both the situations above, then indeed there is a similarity between
Ahmad and Zaid’s transactions from this point of view that Ahmad has earned the same amount of profit
by selling the fruit that Zaid was demanding in the form of interest. Despite this resemblance, no person
who is acquainted with the principles of Shariah can ever say that the profit that Ahmed has earned is Haram
and impure because he has earned (in the form of interest) by giving a loan. Rather, it will be said that since
Ahmad has upheld all the principles of Shariah and concluded a valid sale then just because of this outer
resemblance one cannot deem his sale impermissible.
Other examples are
- A normal McDonald’s burger in USA and Pakistan may look similar, smell similar and taste similar
but the former is haram and the latter is halal due to its compliance of Islamic guidelines of
slaughtering animals.
- Similarly, if a person is feeling hungry, he may steal a piece of bread and eat or alternatively buy a
piece of bread to eat. The apparent end result would be same but one is permissible in Shariah and
the other is not allowed.
The same is also true for Islamic and conventional banking. Therefore, it can be concluded that it is the
underlying transaction that makes something “Halal” (allowed) or “Haram” (prohibited) and not the result
itself. Apparently, Islamic banks may look similar to conventional banks, however the contracts and product
structures used by Islamic banks are quite different from that of the conventional bank. In the verse 2:275
of the Holy Quran, Allah the Almighty has responded to the apparent similarity between trade and interest
by resolutely informing that he has permitted trade and prohibited Riba (though they may look similar to
someone).

Q2: Islamic banks use interest base system (KIBOR) as a Bench Mark while determining profit;
how Islamic banking can be said to be Islamic?

In Pakistan, whether conventional or Islamic banks, both use KIBOR (Karachi Inter Bank Offered Rate) as
a benchmark. There is absolutely no doubt that making an interest rate a benchmark to determine
permissible profits or rentals is indeed not liked. Islamic banks should ideally have their own benchmark
system for determination of profit. Since, the industry is in its initial stage of development, it is using the
available benchmark for the banking industry. It is expected that once it is grown to a sizable level, it would

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have its own benchmark. However, using Interest Rate benchmark for determining the profit of any
permissible transaction does not render the transaction as invalid or haram. It is the nature/mechanism of
the transaction that determines its validity or otherwise. If an Islamic bank fulfills all the other conditions
of a sale or Ijarah contract etc, then the transaction cannot become invalid just because an interest rate is
used to determine the profit.
This can easily be understood by an example.
Mr. A and Mr. B are two neighbors. Mr. A sells liquor which is totally prohibited in Islam whereas Mr. B,
being a practicing Muslim dislikes the business of Mr. A and starts the business of soft drinks. Mr. A wants
his business to earn as much profit as Mr. A earns through trading in liquor. Therefore he decides that he
will charge the same rate of profit from his customers as Mr. A charges over the sale of liquor. Thus he has
tied up his rate of profit with the rate used by Mr. A in his prohibited business.
One may say that Mr. B uses an undesirable benchmark in determining the rate of profit, but obviously no
one can say that the profit charged by him is haram because he has used the rate of profit of the business of
liquor only as a benchmark.
The same is true for Islamic banks, it is most desirable and preferable that Islamic banks develop their own
benchmark however; in the absence of any such alternative, interest rate related benchmark can be used.

Q3: The rental amount under Ijarah transaction is normally linked to interest-based benchmark
like LIBOR or KIBOR. Is not it an interest-based financing?

The difference between an interest-based financing and a valid lease does not lie in the amount to be paid
to the lessor. The basic difference is that in the case of lslamic Ijarah, the ownership and title in the
asset/property rest with the lessor who assumes the full risk of the corpus of the leased asset. If the asset is
destroyed during the lease period, the lessor will suffer the loss. Similarly, if the leased asset loses its
usufruct without any misuse or negligence on the part of the lessee, the lessor cannot claim the rent, while
in the case of an interest-based financing, the financier is entitled to receive interest, even if the debtor did
not at all benefit from the money borrowed. So far as this basic difference is maintained, (i.e. the lessor
assumes the risk of the leased asset) the transaction cannot be categorized as an interest-bearing transaction,
even though the amount of rent claimed from the lessee may be equal to the rate of interest.
Therefore, the use of the rate of interest merely as a benchmark does not render the Ijara contract invalid as
an interest-based transaction. It is, however, advisable at all times to avoid using interest even as a
benchmark so that an Islamic transaction is totally distinguished from an un-Islamic one, having no
resemblance of interest whatsoever.

Q4: Interest rates are subject to unknown variations and linking the amount of rent with interest
rate will create uncertainty (Gharar) impermissible in Shariah. How would the Ijarah contract
remain valid under this scenario?

It is one of the basic requirements of Shariah that the parties to the contract must exactly know its
considerations. Under Ijarah agreement, amount of rent is one of the prime considerations of the agreement.
So far as the parties are agreed with mutual consent upon a well-defined benchmark which would serve as
a criterion for determining the rent, and whatever amount is determined, based on such benchmark, will be
acceptable to both parties, therefore, there should not be any dispute.

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However, in order to save the parties from unforeseen losses due to the either way movement in the interest
rate, the scholars have advised that there should be a floor and cap for the amount of rentals stipulated in
the contract in case variable benchmarks is taken to determine the rental amount. (Further support your
answer by the explanation I have provided you in the class)

Q5: Is not Ijarah Tamweeliyah (Ijarah Muntahiya Bit tamleek , Ijarah wa iqtina, Al Ijarah
Thumma Al Bai) just like conventional finance/capital lease having two contracts (Lease and Sale) in
a single arrangement?

It is allowed in Shariah that the lessor signs a separate promise, (but not an agreement or contract) to gift
the leased asset to the lessee at the end of the lease period, subject to his payment of all amounts of rent.
There can also be a unilateral promise by the lessee to purchase the asset at the end of the Ijarah period.
Alternatively, there may be an undertaking by the bank to sell the asset to the lessee at the end of the Ijarah
period. However, Ijarah agreement should not be dependent either on the promise by the lessee (to purchase)
or the undertaking by the bank (to sell). This arrangement is called 'Ijarah wa iqtina and it has been allowed
by a vast majority of contemporary scholars and is widely used by the Islamic banks.
However, the validity of this arrangement is subject to two basic conditions:
1. The agreement of Ijarah should not have the clause regarding the lessor’s promise to gift or sell the leased
property to the lessee at the end of the Ijarah period.
Therefore, there should be a separate document stipulating this promise by the lessor.
b) The promise should be unilateral and binding on the promisor only. It should not be a bilateral promise
binding on both parties because in this case it will be a full contract becoming effective on a future date,
which is not allowed in the case of sale or gift.
(*****Note: For details, refer to the defects in finance lease and its comparison with IMBT)

Q6: Why should not we simply leave (reject) the banking system? Why the bank should be on the
basis of Islamic Shariah? Do We Really Need Islamic Banks?

In order to assess the need of the bank, we need to look at the functions it performs.
In any society, be it a secular or Islamic one, the main function of the bank is to mobilize funds from the
surplus units and allocate these to the shortfall units or to the units having budget constraints. This function
is performed through the process of financial intermediation in the financial markets where banks are the
most important operators. Financial intermediation enhances the efficiency of the saving/investment
process by eliminating the mismatches inherent in the requirements and availability of financial resources
of savers and entrepreneurs in an economy.
Normally the surplus units/savers are the small households or individuals who save relatively small amounts
whereas the entrepreneurs are firms which often need relatively large amounts of funds. Financial
intermediation removes this size mismatch by collecting the small savings and packaging them to suit the
needs of entrepreneurs. In addition, entrepreneurs may require funds for periods relatively longer than
would suit individual savers. Intermediaries resolve this mismatch of maturity and liquidity preferences
again by pooling small funds. Moreover, the risk appetite of savers and entrepreneurs are also different. It
is often considered that small savers are risk averse and prefer safer placements whereas entrepreneurs may
wish to deploy funds even in risky projects. The role of the intermediary again becomes crucial. They can
substantially reduce their own risks through the different techniques of proper risk assessment and risk

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management. Furthermore, small savers cannot efficiently gather information about opportunities to place
their funds.
Financial intermediaries are in a much better position to collect such information which is crucial for
making a successful placement of funds.
The role and functions of banks outlined above are indeed highly useful and socially desirable. Hence, we
reach to the point where the banks become the need of any economy.

Commercial banks normally operate on lending basis. They may not be unduly much bothered about the
use of funds as long as the borrower pays back the loan regularly.
This does not ensure that the amount advanced to the borrower was used for the productive or unproductive
purpose. Thus the impact of commercial banking on economic development, therefore, may remain below
potential. Whereas, Islamic bank provides finance which has a greater focus on the productive use. Islamic
banks’ financing targets both the equity as well as the working capital needs of enterprises. It is expected
that its impact on economic development will be more pronounced. The avoidance of interest by Islamic
banking is an additional plus. It is mentioned that allocating financial resources on a productive basis is
more efficient than their allocation on a purely lending basis. It has also been argued that the whole banking
system would be more stable and less liable to suffer from financial crises. A monetary system based on
riba is also unjust as it allows savers and banks to get away with interest (guaranteed fixed rate of return on
their loans) without bearing a fair part of the risks faced by entrepreneurs.

Q7: If banking were to be based on interest-free transactions, how would it work in practice?

Islamic bank like other banks is an institution whose main business is to mobilize funds from savers and
use these funds to finance the economic activities of businessmen/entrepreneurs. While a conventional bank
uses the rate of interest for both obtaining funds from savers and lending these funds to businessmen, an
Islamic bank performs these functions using various financial modes which are compatible with the Shariah.
For mobilizing resources, it uses either the contract of Mudharabah or Wakalah with the fund owners. Under
the first contract, the net income of the bank is shared between fund user (Mudharib) and fund providers
(Rabul-Maal) according to a predetermined profit-sharing formula. In the case of loss, the same is shared
by fund providers in proportion to the capital contributions. As far as the nature of investment deposits are
concerned, these could be either general investment deposits or specific investment accounts in which
deposits are made for investment in particular projects. In addition, there are current accounts that are in
the nature of an interest-free loan to the bank. The bank guarantees the principle in case of current accounts
but pays no profit on such accounts.
Under the Wakalah contract, clients give funds to the bank that serves as their investment manager. The
bank charges a predetermined fee for its managerial services. The profit or loss is passed on to the fund
providers after deducting such a fee.
On the assets side, the bank uses a number of financial instruments none of which involves interest. A wide
variety of such modes of financing is available as discussed throughout this course of IBF.

Q8: What is the correct way to acquire reasonable and reliable information regarding Islamic
Banking?

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It is a reality that presently there is a shortage of individuals who have a reasonable amount of knowledge
regarding Islamic banking. Therefore, there are various institutions that are busy conducting training
sessions in Islamic banking. However, most of the individuals who undergo this training are those who
have worked in conventional banks for many years and it is very obvious that they will not be able to
acquire expertise in the depths of Islamic banking from a single course. It is for this reason that sometimes
the employees of Islamic banks are unable to explain the different methods of Islamic financing properly.
This becomes more evident when they are required to speak with someone who is acquainted with the law
of the Shariah. They are unable to give the correct explanation, from which this conclusion is reached, that
the present form of Islamic banking is not in compliance with the principles of the Shariah. This method is
not correct. One who is searching for the truth should not suffice on meeting with the employees of an
Islamic bank. Rather, the best method would be that such a person acquires clarification on the transactions
from the Shariah Advisor of that bank or at least he should seek guidance from some reputable and
competent scholars who have more knowledge in this field. In this manner, one would gain assistance in
understanding Islamic banking in a better way Insha’Allah.

Q9: How will you differentiate Ijarah Muntahiyah Bit Tamleek (IMBT) from Diminishing
Musharakah (DM)?
Some of the differences between IMBT and DM are presented in the table below as:

Title Diminishing Musharakah (DM)- Ijarah Muntahiyah Bit

Musharakah Mutanaqisah
Nature of the contract -Based on Shirkat-ul-Milk
Commencement of-Asset jointly owned (Shirkah)
Agreement - Lease Agreement
- Sale Agreement (Gradual purchase of
units by client).
(Note: Here these three agreements are not
combined in a single arrangement rather
these are based on unilateral undertaking
which are not dependent upon each other)
Termination of Contract terminates with complete transfer
Contract and transfer of ownership through gradual decrease in
of ownership the share of one (Bank) while increasing
that of the other (Client).
Note that unit price remains the same till the
maturity while rental payments decreases
with decrease in ownership of the lessor
(Bank).
Risk of Loss Both partners bear loss according to their
share (ownership) at any point of time.
Tamleek (IMBT)
-Based on Ijarah (Rental)
contract
- Lease (Ijarah Agreement)
- Unilateral promise (Gift/Sale)
Contract terminates at the
maturity of Ijarah period and at
the end ownership is transferred
either through gift or through
sale.
Only Lessor (Mujir) i-e Bank
bears the risk not the Lessee
(Mustajir) if there is no
negligence/fraud of the lessee.

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Q: Write a short note on the following international Islamic regulatory and standard
setting bodies
a. IFSB
b. AAOIFI

ISLAMIC FINANCIAL SERVICES BOARD

Background
The Islamic Financial Services Board (IFSB), which is based in Kuala Lumpur, was officially
inaugurated on 3rd November 2002 and started operations on 10th March 2003. It serves as an international
standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the
soundness and stability of the Islamic financial services industry, which is defined broadly to include
banking, capital market and insurance. In advancing this mission, the IFSB promotes the development of a
prudent and transparent Islamic financial services industry through introducing new, or adapting existing
international standards consistent with Shariah principles, and recommend them for adoption.
To this end, the work of the IFSB complements that of the Basel Committee on Banking Supervision,
International Organization of Securities Commissions and the International Association of Insurance
Supervisors.
As at April 2019, the 182 members of the IFSB comprise 79 regulatory and supervisory authorities, 8
international inter-governmental organizations, and 95 market players (financial institutions, professional
firms, industry associations and stock exchanges) operating in 57 jurisdictions.
Malaysia, the host country of the IFSB, has enacted a law known as the Islamic Financial Services Board
Act 2002, which gives the IFSB the immunities and privileges that are usually granted to international
organizations and diplomatic missions.
Adoption of Standards
Since its inception, the IFSB has issued thirty Standards, Guiding Principles and Technical Notes for the
Islamic financial services industry.
Awareness Promotion
The IFSB is actively involved in the promotion of awareness of issues that are relevant or have an impact
on the regulation and supervision of the Islamic financial services industry. This mainly takes the form of
international conferences, seminars, workshops, trainings, meetings and dialogues staged in many
countries.

Brief Introduction: Accounting and auditing organization for Islamic Financial Institutions (AAOIFI)-
established in 1991 and based in Bahrain- is an international finance industry infrastructure development
body that is responsible for development and issuance of standards on Shariah, Accounting, Auditing,
Ethics and Governance for Islamic Financial Institutions (IFIs). AAOIFI carries an experience of about 28
years in the field and has issued 100+ standards and other technical pronouncements in issue, on the areas
of Shariah, Accounting, Auditing, Ethics and Governance.
AAOIFI is a non-profit and its operations are currently funded mainly through incomes from institutional
membership fees, sponsorships of its conferences, sales of standards publications, and professional
development programs.
AAOIFI is currently supported by over 200 institutional members-including central banks, IFIs and other
participants of the international Islamic Finance Industry-from over 45 countries. Its standards are fully or

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partially adopted by multiple regulations in 18+ countries, besides several others who follow these as
guidelines of adapt them to develop their own standards and regulations.
Objective of standardization: The standards are developed and issued to achieve the AAOIFI’s overall
objectives to standardize and harmonize international Islamic finance practices and financial reporting, in
accordance with shariah rulings and principles, so as to support the growth and expansion of international
Islamic finance industry.
Career Opportunities: AAOIFI offers a blend of its past experience in standard setting and regulations
development, coupled with the combined experience of experienced team as well as select external teams
of experts from across the globe suitable for the right job.
Adoption: The standards are followed as part of mandatory regulatory requirement or IFIs’ internal
guidelines in various jurisdictions and are adopted on a voluntary basis or used as guidelines in IFIs across
the globe. Consequently, the standards have introduced greater harmonization of Islamic Finance practices
across the world.
Certifications and seminars/trainings: In order to support understanding and application of the
standards, AAOIFI also offers professional development programs, i-e Certified Sharia Advisor and
Auditor (CSAA) and Certified Islamic Professional Accountant (CIPA) - which includes both
certification/examination and trainings.
Number of standards:
Total: 100+
Shariah Standards: 56 Accounting standards: 30+ Auditing Standards: 06
Ethics Standards: 02 Governance Standards: 07

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*****Process flow of Diminishing Musharakah (Musharakah Mutanaqisah).

Diminishing Musharakah is kind of Shirkat-ul-Milk which involves taking share in the ownership of a specific
asset and then gradually transferring complete ownership to the other partner.
Stages in DM:
The Procedure of this product consists of three stages.
Stage1:In the first stage the Islamic bank and the client jointly buy a house in which usually the share of
the Islamic bank is greater than the clients share. For example, a house is jointly bought by the client and
the bank in such a manner that the share of the bank is 80% in the property and the share of the client is
20%.
Stage2: Banks share is divided into small units. For instance, in the above example, the banks ownership
of 80% share will be divided into 80 units and the client will gradually purchase these units, which will result
in an increase in the client’s ownership and decrease in the bank’s ownership.
Stage3: As the client wishes to use the bank’s share, a separate rent agreement is executed between the
bank and the client, through which the client uses the banks share and pays a certain rent. But as mentioned
above, the client gradually purchases the bank’s ownership share, the rent amount also gradually
decreases until the client becomes the sole owner of the property.

Process Flow:
- The customer approaches the Bank with the request for Project/Machinery/House financing.
- The Bank enters into a Musharakah (Joint Ownership) agreement with the customer and both of
them pay their respective shares to the seller of the asset.
- Customer pays rent for the use of banks share in the property
- The value of Bank’s share in Musharakah property is divided into units, which it sells to the
customer. Ownership of the asset is gradually transferred to the customer upon payment of asset
price.
- Units will be worked out by dividing Bank’s financed amount by number of months for which finance
to be allowed.
- With each purchase of unit by the customer, the Bank’s share in the Musharakah property starts
diminishing, whereas customer’s share starts increasing, correspondingly.
- Finally, the customer becomes the sole owner of the property after having purchased all units from
the Bank, along with the rentals thereon.

***** Financial lease

The type of Ijarah which is used in the banks is the finance lease. This type of lease was adopted as a form
of capital investment and Ijarah was used as a tool of financing. The asset is leased out for a specific period
like 3-5 years in which the lessor receives the principal with the profit of the asset in the shape of rent and
after the lease period the ownership is transferred to the client or lessee.

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Defects in Conventional lease

The finance lease in practice in the conventional banks has the following Shariah defects.
- The agreement comprises of sale and lease contracts since the installments paid by the client are
initially considered as rent, while at the end of the lease period they are supposed to be the price
of the asset and the ownership is automatically transferred from the institution to client without any
further contract.
If such transaction is analyzed in the light of Shariah it will be considered that the client asks the
institution in such a manner that “I will take this car on rent with the condition that at the end of
lease period I will be the owner of the car against the rental paid.
“Islamic jurisprudence will consider this transaction ‘Suf’qataan Fisa’afqa’ or two contracts tied in
a contract which is not permissible. Such a transaction is clearly prohibited in the Hadith.
(see 398/, Nasai # 4629, Tabrani alAwsat # 1633)
- All the liabilities of the leased asset are borne by the lessee, whereas the Shariah only imposes the
liabilities on lessee which are regarding to the usage of the asset. For example, in a car the lessee’s
liability is to make service, change the oil, etc, while the liabilities regarding the ownership are the
responsibility of the lessor, like paying ownership taxes and the maintenance of asset if it is
defected/destroyed without the negligence of the lessee.
- Rentals are charged from the lessee even before the asset is delivered to the lessee while Shariah
does not allow charging any rental unless the asset in working condition is handed over to the
lessee.
How are these defects being eliminated in Islamic banks?
These defects have been eliminated in the Ijarah product, designed for the Islamic banks in the following
manner.
- During the lease period only rental contract is signed between the client and. the bank. Hence the
asset remains in the ownership of the bank from beginning to the end of Ijarah. At the end of Ijarah
after handing over the asset back to the owner, the client is given an option that he might purchase
the car through a separate sale contract.
- It is clearly mentioned in the Ijarah contract that the liabilities regarding “Minor Maintenance” will
be borne by the lessee while the ownership expenses like tax, takaful, defects in case of accident
will be borne by the bank. This is what Shariah requires.
- The bank does not charge any rent unless the asset is handed over to lessee.
A little detail is needed to understand the third point.
Whenever a client comes to the bank for the lease of a car or machinery usually the Ijarah agreement is
not executed on that day. Rather the bank books the car, and after some time when the car is ready it is
handed over to the client and Ijarah comes into existence.

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The rentals of the leased asset in Ijarah usually starts when the asset is handed over to the client, and since
the asset to be delivered usually takes some time, occasionally clients demand to pay some amount from
the beginning for his convenience.
Islamic Banks are instructed not to take rentals unless the leased asset is handed over to the client, but if
the client demands and wants to give some amount from the beginning then the bank may take it as on
account basis. These amounts will not be rentals nor can be treated as income rather it will be on trust
basis, which will result if Ijarah is not executed between the bank and the client, the bank will return the
amount to the client, while the conventional banks treat this amount as their income from the beginning.
The above detail clears the difference between the procedure of Islamic banks and the conventional banks,
and also clears the argument made by some people that there is no difference between them, as some
Islamic banks also take rentals from the very first day.
Difference between Ijarah and Conventional Lease
A common argument is also given that Islamic Banks in Ijarah bear the risk of the leased asset, and like
the conventional banks, even Islamic banks insure their leased asset Therefore, whatever loss occurs, it
will be the loss of insurance company.
The answer to this argument is that first of all, Islamic banks do not insure their asset from the conventional
insurance companies; rather they are bound to have their agreements from Islamic insurance or Takaful.
Conventional insurance is not permissible since it consists of Interest, Gambling &Uncertainty while in
Islamic Takaful these impermissible elements have been removed.
Secondly although the conventional bank insures its asset, in case of loss if the claim amount is insufficient,
the bank does not bear the loss and recovers it from the lessee. On the other hand, in case of loss if the
amount of claim from the takaful company is insufficient, the Islamic bank bears this loss by itself and is not
recovered from the client rather it hands over the security deposit back to the client
This difference clears the fact that the conventional bank does not consider itself as the owner of the asset
nor it is ready to bear the Liabilities of the leased asset while the procedure adopted by the Islamic banks
proves that they consider themselves as the owner and bear the ownership liabilities.

It might be objected that the undertaking of the client to purchase the banks share is similar to make a
condition in a sale. This is because, the bank from the first stage knows that the client will purchase the
banks share, therefore it should be considered as conditional.
It may be replied that making a transaction conditional for the validity of the other transaction is different
from making a unilateral undertaking. Conditional transactions mean that one will be considered complete
when the other is fulfilled.
For example, Khalid says to Ahmad that I will sell my car with the condition that you will rent your house to
me. It means the sale of the car will be completed when Ahmad leases his house to Khalid.
This is prohibited by Shariah as it consists of uncertainty, but if a transaction is not conditional and only
undertaking is done then the transactions will not be considered conditional and a transaction will not be

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dependent on the other. Therefore, in the product of house financing of the Islamic banks it cannot be said
that the purchase of the house jointly by the bank and the client is dependent on the promise of the client,
rather the client in future fulfills his promise or not, the transaction of purchasing the house will take place.
Although the client will be enforced to fulfill his promise, if he excuses do so. But because of his breach of
promise the transaction executed will not be considered as void automatically. It can be said therefore, that
the product of house financing in Islamic banks is not contrary to Shariah principles.

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