Assignment

Islamic Banking and Finance

SUPERIOR UNIVERSITY LAHORE

Submitted to : Sir junaid

Submitted By : M Husnan
Roll NO : 37
 What is Shariah Index?
The Shariah Index is an index of companies that are in accordance with Shariah law. Shariah law
forbids profiting from interest, so banks are not included in a Shariah index. Likewise, companies
that deal with pork, tobacco, alcohol, etc. aren’t included either. Even companies that carry more
than 33% debt do not qualify.

As Islam forbids gambling, activities such as derivatives (Futures & Options), day trading, buying
or margin, etc. are not part of a Shariah Index of stocks.

Difference Between Conventional Leasing and Islamic

Leasing (Ijarah)

A conventional lease is a commutative contract between a lessor and lessee

whereby an asset (property) is placed at the disposal of the latter for an agreed
period of time in return for a series of payments to be made by the latter to the
former. The lessor retains ownership of the asset while the lessee only utilizes the
asset over the agreed period (in other words, the lessee only owns and enjoys the
usufruct of the leased asset).

Ijarah (Islamic lease) has the same meaning, but with different risk-reward profile
and contractual elements as shown in the table below:

Conventional Islamic leasing

Aspect
leasing (Ijarah)

Leased The leased asset is not The leased asset is owned by

asset owned by the leasing bank. the leasing bank.

The bank cannot be held

The bank bears the risk of
Liability for liable for any losses that
loss if it is not caused by
losses might be incurred on the
negligence of the lessee.
asset.
 No rent (ujrah) can be
Rent is charged and billed
Rent charged and billed prior to
prior to delivery of the leased delivery of the leased asset.
payment asset.

The agreement gives the
leasing bank a unilateral right
Termination to terminate it at its own
discretion.
Ijarah is a binding
contract and hence neither
party can terminate it
without mutual consent
unless the contract is
breached by either party.

Penalty on late payment is

Late Penalty on late payment is considered impermissible
payment charged. and hence it cannot be
charged.

Companies.
(1) Altas Hondam Ltd (Atlh)

(2) Bata Pakistan Ltd (Bata)

(3) Bank Islami Pakistan (BIPL)

(4) Fauji Food Ltd (FJL)

(5 )Gillete Pakistan Ltd (GLPL)

(6 ) Meezan Bank Ltd (MEBL)

(7 ) Nestle Pakistan Ltd(Nestlr)

(8) Nstion Food Ltd (NATF)

(9) Pakistan Gables Ltd (PCAL)

(10) Unilever Food Pakistan Ltd (UPFL)