Examples of the Islamic Business Modes

Aqd-e-Ihsaan (Social Welfare Based Modes)

Qard-e-Hasana: A loan extended without interest; gracious loan without interest in which the
benefit to be derived is gifted by the owner to the beneficiary without this charitable act, the use
of the money for a period would be considered an unjustified excess transferred to the
beneficiary.

Example: Our University (University of Management and Technology) has the policy of giving
Qard-Hasana to the needy and deserving students. In this the students who cannot afford their
studies are given Qard-e-Hasana so that they can continue their studies. This is without interest.
Once the students have completed their studies and are employed, then they have to return the
and loan given to them as Qard-Hasana.

Aariat: Lending anything without any charge.

Example: I have a book on any subject or novel and my friend wants to borrow it for a week. I
will lend it without any charges or fee.

Another example my father has a generator at his shop. One of his friends wanted to lend it for
15 days. My father gave it to him without any rent or charges.

Waqf: Endowment. A charitable trust in the name of Allah, usually in perpetuity, and usually for
the purposes of establishing the Deen of Islam, teaching useful knowledge, feeding the poor or
treating the sick.

Example: A person owns money and with it he builds a mosque as a charitable trust in the name
of Allah.

Amanah/Wadia: Contract of deposit, bailment

Example: A person puts the gold jewelry in the bank. The bank allots a locker to the person. The
bank will charge only for the locker and not for the jewelry. In this case the gold jewelry is the
amanah for the bank.

Ameen (Trustee): To look after the investment responsibly, except in case of natural calamities.

Example: One of my friends gave me some gold jewelry as Amanat because he was going to
some foreign country for a month. In this case I will act as trustee to take care of his jewelry and
return as it is when he comes back.

Jo’alah (bonus): Agreement with an expert in a given field to undertake a task for a pre-
determined fee or commission.
Example: I give a dress for stitching to the tailor. He promises to give me within a week. But if
he’ll give me in two days, I will pay him more. In this case the additional amount given to the
tailor on the basis of his expertise is Jo’alah.

Rahan: Pledge or mortgage.

Example: A person needs money and he has his asset suppose jewelry of gold. He gives to his
friend and takes the required money. In this case the gold jewelry is Rahan and when the person
returns the money, he will get the jewelry back. In this case the jewelry can’t be used for any
purpose by the person.

Hibah: Gift

Example: There is company named Honda. Suppose you buy a bike from them and pay them Rs
50,000. But at the same time, they fill a form and add your name in the lucky draw. You win
another bike. This gifted bike will be Hiba from the company.

Hamish Jiddiyah: Security Deposit.

Example: You take the loan from the bank and bank keeps the anything for example the legal
papers or your land as the security deposit.

Urboon: Token Money

Example: In real estate the person intending to buy the plot reserves it initially by buying the
token of Ras 10,000. This amount will add up in the final price of the plot. It will not be charged
as the extra amount.

Zamanah/Zamanat: Being Zamin without any charge.

Example: Suppose person A buys car on installments from person B. Person C will act as Zamin
and will give the zamanat on behalf of person A. Here Person C will charge no money.

Zamin: To provide for the loss suffered by the mudarabah due to any act on his part.

Example: In mudarabah contract the mudarib acts as Zamin. He has share in the profit but he
provides only services. But if there is any loss in the business. Suppose he has started the
business of wheat and he did not take care responsibly and the crop destroys. Then he has to
provide for the loss to Rab-ul-Maal.

Hawalah: Assuming someone’s liability with mutual agreement of all the parties.

Example: Suppose person A owes debt to person B. Person C is held liable with the mutual
agreement of A and B. In this case person C will not charge for acting as Hawalah.
AQD-E-IHSAN (SOCIAL WELFARE BASED MODES)
1. QARD E HASANA:
A loan extended without interest in which the benefits to be derived is gifted by the owner to the
beneficiary without any extra charges, without this chartable act, any extra charges demanded will be
considered as Riba-Al-Nasiah.

Example: Umar needs Rs.400,000 for completing his studies. His university provides him with financial
assistance through Qard e Hasana scheme on that bases when Umar complete his studies and get his job,
he will return that loan of Rs. 400,000 without any extra charges(interest).

2. AARIAT: Lending anything without any charges.

Example: Ahmad and Assad are friends and Ahmad lend bike to Assad for few days and for that time
period Ahmad do not take any rent from Assad so this will be considered as aariat.

3. WAQF (ENDOWMENT):
A charitable trust in the name of Allah usually in perpetuity, and usually, for the purpose of establishing
the Deen of Islam, teaching useful knowledge, feeding the poor or treating the sick.

Example: Ali opens a hospital where he provides free treatment to all his poor patients, charges no fee
and also provides free medicines to all of them just for the sake of charity.

4. AMANAH/WADIA: Contract of deposit; bailment.

Example: Mr. Armaghan gives his money (Rs. 200,000) in the safe-keeping of Mr. Bilal, as he is going
to another city for a piece of work, for ten days, so, Mr. Bilal is liable to return back the same amount to
Mr. Armaghan when he will return back, without using single penny.

5. AMEEN (Trustee): To look after the investment responsibly, accept in the case of natural
calamities.
Example: Person A starts his business of export of paper and gives responsibility to B to look after his
business and give full charge of doing business to B. So, B will be responsible for every matter, but if
there is flood calamity and all the exporting material damaged, then B assumes no responsibility to A.

6. JO’ALAH: Agreement with an expert in a given field to undertake a task for a pre-
determined fee or commission.
Example: Sana got stitched some of her dresses from tailor and he promised that he will return her
stitched dresses in 1 week and charge Rs. 2500, but Sana said if he will return her dresses in 4 days, she
will give Rs.3000 to him (Rs. 500 as a bonus for early stitching).

7. RAHAN: Pledge or mortgage

Example: Aslam borrowed some loan from his friend Saleem for 2 years and as a security he pledged his
house in contract in any case if he will not return his loan after 2 years, his friend Saleem will sell his
house but before that period Saleem is not allowed to use or buy his house for any purpose.

8. HIBAH: Gift
Example: Mutahir stood 1st in his board exams, and his sister Zahra gifted him wrist watch as a gift
(hibah) to appreciate him.
 9. HAMISH JIDDIYAH: Security Deposit
Example: Mr. Ahsan leased a car from Islamic bank on Ijarah and for that bank takes some money as
security and at the end of lease agreement the bank will return back that money (security deposit) as it is.

10. URBOON: Token Money

Example: Mr. A decided to purchase a shop in Rs. 500,000 from Mr. B. Before giving full payment, A
paid Rs. 100,000 as token money as ensuring a deal and that he will give remaining Rs. 400,000 within
one month.

11. ZAMANAH/ZAMANAT: Being Zamin without any charge.

Example: Mr. Umar was in financial difficulties; therefore, he decided to meet with his long-lasting
friend Mr. Murtaza, for requesting a loan of Rs. 35000. Mr. Murtaza accepted and paid him loan on 1 st
may 2013 that is repayable exactly after one year on 30 th April 2014, but he asked Mr. Umar to bring
someone as guarantor, who will take liability to repay loan if you failed to repay. So, Mr. Umar brought
his brother Mr. Usman as guarantor and liable to repay loan if he failed to meet this obligation on 30 th
April 2014. Mr. Usman will act as Zamin without any charges from Mr. Umar.

12. ZAAMIN: To provide for the loss suffered by the Mudarabah due to act on his part.
Example: Mr. Umar acts as Mudarab for Mr. Gillani who is Rab-ul-Maal for Mudarabah contract. If Mr.
Umar damages the business and bankrupts it due to negligence on his part then he will act as Zamin and
provide the entire amount of loss to Mr. Gillani for the negligence and loss in the business.

13. HAWALAH: Assuming someone’s liability with mutual agreement of all parties.
Example: Mr. Ali was in financial difficulties; therefore, he decided to meet with his long-lasting friend
Mr. Ahmad, for requesting a loan of Rs. 25000. Mr. Ahmad accepted and paid him loan on 1 st may 2013
that is repayable exactly after one year on 30th April 2014.

On 1st April 2014, Mr. Ali get to know that he will not be able to pay back the debt at the end of this
month to Mr. Ahmad, therefore he contacted with his brother Mr. Tayyab to help him and assume his
liability to pay back debt to Mr. Ahmad. As Mr. Tayyab and Mr. Ahmad (creditor) accepted this there
will be a transfer of debt (liability to pay Rs. 25000) from the Mr. Ali (original debtor) to Mr. Tayyab
(now debtor) with the mutual agreement among all three parties (Mr. Ahmad, Mr. Ali, Mr. Tayyab) and
Hawalah contract will came into existence.

If any one of above three parties do not show consent for this, then the contract of Hawalah contract will
not come into existence and so, it will not be enforced.

Hadith: According to Riwayat Ahmad, Prophet Muhammad S.A.W. W. said: “Whom of you (the debt is
transferred to a rich person) to settle the debt, please just accept the offer”.