Name : Annastasia Luyah Anak Henry Class : AC2206C

Matric No: 2016263132

QUESTION 1
A. 3 main objectives of introduce Islamic banking and finance
 Provide more option for investors to invest beside the conventional market and give the
benefits such as Sukuk, Murabahah and Mudharabah
 In term of religious objective, it is to collect and distribute zakat
 Promote shariah law towards investment and business companies

B. definition and used of Ijarah financing.

Ijarah is a type of contract in Islamic finance where it is a contract of proposed and
known usufruct with a specific and lawful return for the effort of work. Basically, ijarah is use
by Islamic Financing institutions for financing plant and equipment, car fleet, trucks and other
technical items. This is where Islamic bank will purchase an asset or equipment at a request of
client and lease it to the client. Besides, ijarah can be specified into two types which is
operating and finance lease.

C. 3 Islamic Financial money market instrument traded in Bank Negara Islamic Money
Market.
 Bank Negara Monetary Notes – I (BNM-i)
 Sukuk
 Islamic commercial paper

D. Islamic financing facilities available in the market that will suit Munir’s hotel
business:
Munir can take Istisna financing as it is a long-term financing contract whreby the
funding party agrees to deliver a commodity or an asset at a pre-determined future time at an
agreed price. Later, the asset will be deliver to Munir upon completion.
QUESTION 2
A. 3 prohibitions of Shariah principles
 Prohibition of riba ( interest)
 Prohibiton of gharar ( uncetainty)
 Prohibition maysir ( gambling and speculative trading)

B. 3 major challenges to the development of Islamic financial market.

 Performance benchmark
Islamic banking has been criticized using the same benchmark as at conventional
banks. This related to Islamic funds does not have any benchmark to compare their
performance based on Shariah principles.

 Product innovation and development

Here, Islamic products is being criticized to compete with conventional interest-
based products where Islamic products should have innovation and development to
meets the public’s needs and in line with Shariah compliance.

 Leveraging on information technology

In Islamic banking, information technology is important to strength risk management
capabilities. Therefore, Islamic financial institution should have effective system that
able to capture and store long-term historical data in order that the expected
probability and return can be estimated.

C. Islamic house financing option

i) Suitable type if Islamic financing contract:
The customer should take diminishing murabaha as it is an Islamic financing where
seller will provides the cost and profit margin of an asset. Furthermore, Murabaha is
not an interest-bearing loan yet still an acceptable form of credit sale under Islamic
law. Purchaser will not become the owner of asset until the loan is fully paid.
ii) Process of diminishing murabaha
Firstly, customer will apply murabaha contract in Islamic bank to finance an asset.
Later, bank will acquires the asset from a supplier on cash basis. Next, customer will
buy it back form the bank and pay it based on monthly basis. Later, customer
become the owner only once the house is fully paid.

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QUESTION 3
A. 3 benefits of Maqasid Shariah in context of Islamic Finance
 Remove severity and hardship
 Help Bank Negara issuing the standard based on Islamic Finance Institution
 Prevent of harm and corruption

B. Concept of Islamic Finance

Islamic finance is a financing activities that strictly comply with Islamic law. The main
difference between conventional and Islamic finance is where some of the practices used in
conventional are prohibited under Islamic laws. This is where they do not include riba,
maysir and gharar. Basically, Islamic finance features banks, capital markets, investment
firms and insurance companies. Besides, Islamic finance is also based on two other crucial
principles which are material finality of the transaction where each transaction must be
related to a real underlying economic transaction. Second is the profit or loss sharing where
parties entering into the contract in Islamic finance share the profit or loss and risks
associated with the transaction.

C. Discuss skilled human resources

In this Islamic industry, it is obvious that people who is well educated with Islamic
financial as well as competent is insufficient. This is worrisome as these people can bring
the industry into another level where they can educate the public and community to
understand the industry. However, this problem can e solve if only we implement joint
effort by the industry and academic institution to give exposure of the reality happened in
the industry.

D. Modus Operandi of Accepted Bill-I (AB-i)

Accepted Bill-I (AB-i) is an acceptance financial facility that arranged with a bank. The
required documentary evidence of trade will be present to the bank for the purpose of
drawing of an AB-i on the bank or purchaser. Later, once the bank is satisfied that the
documents are in order and AB-i complies with the terms of AB-i facility and all applicable
conditions for the creation of AB-i specified in these guidelines, therefore bank shall draw
an AB-i to be accepted by purchaser in case of AB-i Purchase or accept the AB-i in case of
AB-i sale