Thursday, 3 March, 6:00 PM

Course event

‘Acceptance’ must be communicated. However, there are exceptions to this rule. Explain
those exceptions with relevant examples.

Zakat also has social and political value. The practice of giving Zakat
encourages social responsibility among the rich and wealthy. If Zakat is
collected and distributed sincerely there will be enough money and wealth
circulating in the society to make sure that a certain dignified life is lived by
all.

Economists, government policymakers and other authorities outside the

Muslim world see Zakat only as a religious giving and overlooks its
potential for making a financial contribution to the development of the
economy. The international edition of The Guardian has pointed out the
important role of Zakat in social welfare in one of its June editions in 2017.
This leading newspaper has highlighted the ways Zakat can contribute to
the long-term sustainable development in various communities, countries
and around the world if Zakat agencies could function together and more
efficiently. This actually proves that Zakat is still significant in the modern
world and it cannot be treated only as a religious belief or practice.
Patentience farudheeee

Islam also preaches to be patient at the time of pain, distress or sufferings.

So Islam asks the unprivileged ones to patiently deal with the harsh time of
life and make attempts to improve one’s situation because the Almighty
helps only those who put in an effort to help themselves. When Islam is
commanding the rich to give Zakat and let the poor live a certain dignified
life it also demands the poor to be hardworking and put effort to use the
money in a productive way and improve their lives.

My view

Economists, government policymakers and other authorities outside the

Muslim world see Zakat only as a religious giving and overlooks its
potential for making a financial contribution to the development of the
economy. The international edition of The Guardian has pointed out the
important role of Zakat in social welfare in one of its June editions in 2017.
This leading newspaper has highlighted the ways Zakat can contribute to
the long-term sustainable development in various communities, countries
and around the world if Zakat agencies could function together and more
efficiently. This actually proves that Zakat is still significant in the modern
world and it cannot be treated only as a religious belief or practice.

Zakat authorities and development organisations have enormous potential to work

together to formalise these funds for sustainable development by:

 Raising awareness and increasing understanding among zakat organisations of the

importance of the SDGs and how they are relevant.
 Supporting zakat institutions to create incentives for people to contribute through formal
channels, including financial inclusion programmes that use new technologies.
 Building on the development experience, learning and networks that Islamic
organisations offer, including Islamic principles regarding financial inclusion and social
solidarity.
 Identifying alternative sources of funding to fill the SDGs financing gap; looking beyond
governments and traditional donors to find ways for Islamic finance to support good
investments, society and the environment.

The Guardian has pointed out a deep link between SDG’s (sustainable
development goals)  and Zakat. The SDG’s is concerned with eradicating
poverty and hunger, improving health, ensuring education for all, ensuring
access to safe water, alleviating discrimination from the society and
protecting the environment.

The concept of Islam expresses almost the same developmental views.

Islam talks about the protection of faith, human lives, individual wealth etc.
Islam also talks about ensuring equal rights for everyone within the family
and society, removing poverty, helping others in hunger, distress, sickness
etc. Among all the duties that are made compulsory for Muslims; giving
Zakat is one of the most important one and the fourth pillar of Islam.
Muslims are bound to give Zakat for the well being of the unfortunate
population and to carry out social responsibility.

Peace in the society or peace in one’s personal life cannot be attained

when there is a lot of chaos and restlessness all around us in the form of
lamentations, cries, pain, and agony of the helpless people. We need to
reduce human sufferings and reduce the pain of the grieving hearts at first
in order to restore peace in the society. Islam deeply understands this and
therefore it has always encouraged its followers to give to Zakat.
https://www.transparenthands.org/zakat-a-way-to-purify-yourself-and-your-wealth/

Importance of Zakat

ECONOMIC AND SOCIAL IMPORTANCE OF ZAKAT

The following facts reflect the Social and Economic Importance of Zakat.

Purification of the soul

Zakat purifies the soul of contributor from the evils of miser ness. It makes them humble
and God-fearing. It also creates wealth discouraging love among people.

Healthy growth of the community

Zakat leads to the healthy growth of the economy and the community. It uplifts the less
fortunate members of the society.

Narrow Down the Economic Inequalities

Zakat narrows down the economics inequalities in the community to the minimum
possible limit. The rich may not grow richer ant he poor poorer.

Wider circulation of wealth

Zakat increases the speedy circulation of wealth. It discourages hoarding and provides
an automatic mechanism for the flow of wealth from rich to the poor thus, it widens the
circulation of wealth among the community.

Main Source of Income

Zakat occupies a central position in the financial structure of a Muslim state, because it
contributes too much towards national treasury and it provides sufficient fund to Govt.

Fair Distribution of Wealth

Zakat meets an important purpose for spreading and distributing wealth that becomes
just and equitable. It guarantees that income is not centralized rather it moves very
rapidly among different groups of society.

Minimizes Unemployment

Zakat is a very vital instrument for removing unemployment .the money received by the
people can be used and poor can start a business.

Economic Stability

The problem of instability does not take place in an Islamic economy due to the
mechanism of Zakat. Zakat promotes the velocity of circulation of money due to which
AD for goods and services rises. This determines the level of investment, income and
unemployment on stable footing.

Self-reliance

Zakat eliminates poverty and diversity from the society. It brings amount
prosperity .people can take care of each other and in such a way Zakat enables an
economy to be self-reliant.

Capital accumulation
By Zakat, people can use their liquid assets to promote capital formation in the country.
They invest their assets due to which growth rate of the economy goes up and the
country gets prosperity.

Mobilization of resources

Such individuals who get income in the shape of Zakat are in a position to utilize the
available resources . In this way, the maximum use of resources becomes possible.

Social security

Zakat fund not only covers the poor and the disabled, but it also provides social security
to unemployed individuals.

Social welfare

Hospitals, schools and handicrafts centers for the poor can be constructed by making
use of Zakat fund. This promotes social welfare in the country.

Anti-social activities

Zakat is paid obviously from rizq-e-halal. thus, the Muslims who pay Zakat refrain
themselves from anti-social activities like hoarding, smuggling etc.

Control of crimes

The major cause of crimes particularly theft is due to the poverty of people. The problem
of poverty can be easily over come by Zakat. In such a way, the crime rate can be
controlled.

Importance of Zakat for Wealth Production

Higher Liquid Assets

Zakat discourages hoarding and people can make use of their liquid assets to promote
saving, investment and capital formation in the country. They invest in various sectors of
the economy as a  result of aggregate production in the economy goes up.

Higher Velocity of Circulation of Money

Zakat promotes the velocity of circulation of money due to which aggregate demand for
goods and services increases. It increases the level of investment, income, and
employment
Higher Capital Formation

Zakat is paid on saving which remains accumulated for at least one year. Therefore it
brings down the absolute amount of saving with a person .to maintain his consumption
standard, he gets stimulus to increase the level of saving. hence, marginal saving goes
up which can be used to make additions to the existing capital stock of the country. This
will certainly promote the production level in the economy.

Higher Efficiency

Since Zakat increases the aggregate demand for consumer goods, consumption
function of the community in a macro sense may shift upward. the economy would
become more efficient.

Importance of Zakat for Distribution of Wealth

Automatic and Fair Distribution

Since 2.5% of the wealth of the rich is transferred to the poor every year in the form of
Zakat. It means the whole wealth of the rich is transferred to the poor section of the
community in the forty years. This provides an automatic mechanism for the flow of
wealth from the rich to the poor, due to which wealth is fairly distributed among different
sections of the society.

Better Allocation of Resources

Transfer of money from the rich to the poor in the form of Zakat would mean that
demand for basic necessities of life will increase. This will encourage their production.
Scarce resources would be drifted away from the production of luxuries to that of
necessities. This is a better allocation and distribution of scarce resources.

Social Welfare

The construction of social welfare institutes with the Zakat fund ensures distributive
justice in the economy.

Better Living Standard

Zakat provides a better quality of life to the poor through the process of re-distribution of
income.

Wider Circulation of Wealth

Zakat curtails the ratio of wealth concentration in a few hands.

https://businessfinancearticles.org/importance-of-zakat

Zakat al-Mal
Social Finance

Zakat al-Mal Definition 

The word zakat means “purity, development, blessings and praise” but in
practice it refers to alms - money or food that is given to the poor [1]. Zakat al-
mal (or zakah al maal) can be defined as the obligation upon every Muslim
man and woman having certain amount of wealth kept for a (lunar) year, to
pay a certain amount to deserving people. Zakat is therefore the amount to be
paid (obligation) calculated upon the savings (nisab) held for a year and to be
paid to the needy people whether in monetary terms or in the form of
commodities. Zakat al-mal was declared compulsory for Muslims in 622CE
[2].
Zakat al-Mal: Overview
Zakat al-mal is applicable on all the financial belongings such as currency,
gold, silver, property and vehicles too if these are either held with the
intentions of trading or savings i.e. zakat is not applicable over things that are
necessities of life. It can be illustrated with an example that a person does not
have to pay zakat on the value of house where he/she has resided and uses
for accommodation. However if a house is bought with the intentions of profits
anticipating appreciations in the value of house, zakat will be applicable in
such case. The primary difference between zakat and charity is that it is
obligatory for Muslims to pay zakat if they have the specified level of savings,
that is, "nisab" (equals to 85gms of gold 600gms of silver or equivalent
currency) for a period of one year [1].
Zakat al-Mal in the Quran and Hadith
The system of zakat al-mal is well established in a number of Muslim
countries such as Malaysia, Saudi Arabia and Pakistan. There are almost
39,000 Local Zakat Committees and around 250,000 people voluntarily
working for zakat collection in Pakistan [3]. Zakat is deducted from bank
accounts of the customers annually in Pakistan unless they present the
certificate for exemption. The circulation of wealth, brotherhood, discouraging
begging and promoting self-respect are some of key blessings of zakat al-mal
system. The order for zakat has been given on more than eighty different
occasions in Holy Quran such as “My mercy encompasses all things, but I will
specify it for the righteous who give Zakat” (7:156). Hazrat Abu Darda (R.A)
narrates the Prophet Muhammad  said: “The one who pays Zakat on his
wealth, has purified his wealth”. Therefore the significant of zakat al-mal is
evident from the sayings of Holy Prophet  and the messages of the Holy
Quran. First Caliph Hazrat Abu Bakar (R.A) also fought against the people
who refused to give zakat.  
Who is entitled to receive zakat proceeds?
Not everyone is entitled to receive the proceeds of zakat. The general
assumption is that if a person qualifies to pay zakat, he/she is not entitled to
receive it. According to the Holy Quran (9:60, 17:26), eight types of people
can receive zakat money:
1. Miskin: the very poor, that is, people who do not have money for food,
clothing and shelter.
2. Fuqara: those people whose wealth is below the nisab level.
3. Aamileen: the zakat collectors. That is, the officials that collect zakat can be
paid from the zakat fund.
4. Muallafatul Quloob: the poor who need zakat to strengthen their hearts.
5. Ar-Riqaab: zakat funds can be used to free slaves.
6. Ibnus-Sabeel: a traveller who is stranded can benefit from zakat
7. Al Ghaarimeen: people whose debt is greater than their assets, so if the
debt was paid off, their remaining wealth would be below the nisab level.
8. Fi Sabeelillah: those people that are on the path of Allah and are in need
(e.g. people on Hajj or those seeking knowledge).
Zakat proceeds cannot be given to your husband/wife or your own: parents;
grandparents; and children. A person's brothers or sisters are eligible to
receive zakat. The Prophet said: "Giving alms (Zakat and others) to needy
people is rewarded as alms only but giving them to a needy relative is
rewarded both as alms and as a treatment that strengthens kinship" (Al
Nasai..).
Conclusion
Zakat al-mal is one of the key pillars of Islam. It is the only pillar that deals
with finance and plays a substantial role in balancing the uneven distribution
of wealth to some extent. The system of zakat al-mal can therefore be
regarded as the ideal system to regulate the distribution of wealth as the
percentage of 2.5% of zakat is lower than the taxation rates of almost all the
countries of the world.
References
[1] Atia, M. (2011) Islamic Approaches to Development: A case study of
Zakat, Saqda and Qurd al Hassan in Contemporary Egypt. 8th International
Conference on Islamic Economics and Finance. [ONLINE], Available
at: http://conference.qfis.edu.qa/app/media/292 [Accessed: 25 Novemeber 2014]
[2] Hassan, S. (2010) Zakat. International Encyclopedia of Civil Society.
[ONLINE], Available at: http://link.springer.com/referenceworkentry/10.1007/978-0-
387-93996-4_122#page-1 [Accessed 26 November 2014]
[3] Shirazi, N. (1996) TARGETING, COVERAGE AND CONTRIBUTION OF
ZAKAT TO HOUSEHOLDS’ INCOME: THE CASE OF PAKISTAN. Journal of
Ecnonmic Cooperation Among Islamic Countries. [ONLINE], Available
at: http://www.sesric.org/files/article/55.pdf [Accessed: 26 Nov 2014]
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،ި‫މީސްތަކުންނޭވެ! ތިޔަބައިމީހުން ހޯދިތަކެތީގެ ތެރެއިން ރަނގަޅު ތަކެތިން ތިޔަބައިމީހުން ހޭދަކުރާށެވެ! އަދ‬

ަ‫ ދެރ‬،ި‫ އެއިން ހޭދަކުރުމަށްޓަކައ‬،ި‫ އަދ‬.ެ‫ތިޔަބައިމީހުންނަށްޓަކައި ބިމުން ތިމަންރަސްކަލާނގެ ނެރެދެއްވި ތަކެތިންވެސް މެއެވ‬
ެ‫ ނުކުރާށެވެ! ތިޔަބައިމީހުން (އެފަދަ ތަކެތީގައި ހިފާންޖެހޭ މީހުން ކަމުގައިވާނަމަ) އެ ތަކެއްޗާމެދު ނުރުހުންވ‬ ‫قصد‬ ި‫ތަކެތ‬
 ‫ލޯމަރައިގެން ނޫނީ އެ ތަކެތީގައި ތިޔަބައިމީހުންވެސް ނުހިފާނޫއެވެ‪ .‬ހަމަކަށަވަރުން‪ ،‬هَّللا އީ‪ ،‬ފުދިވޮޑިގެންވާ‪،‬‬
‫ގިނަގިނައިން‪ ‬حمد‪  ‬ލިބިވޮޑިގެންވާ ރަސްކަލާނގެކަން ތިޔަބައިމީހުން ދަންނާށެވެ!‪”.‬މިއާޔަތުގެ ތަފްސީރުގައި އިމާމް ބަޣަވީ‬
‫ރަޙިމަހުﷲ ވިދާޅުވެފައިވެއެވެ‪ ”.‬މިއާޔަތުން ދޭހަވާ ގޮތުގައި އިންސާނާ ހޯދާ މުދަލުން ޒަކާތް ނެރުމަކީ ކޮންމެ އިންސާނެއްގެ މައްޗަށް‬
‫ވާޖިބުވެގެންވާ ކަމެކެވެ‪ .‬މީގެ ތެރޭގައި ފައިސާ އިންނާއި ވިޔަފާރި މުދަލުން އަދި ނަޢަމް ޞޫފިން ނެގޭ ޒަކާތްވެސް ހިމެނިގެންވެއެވެ‪.‬‬
‫(އައްތަފްސީރުލް ކަބީރު ލިއްރާޒީ ‪   .2.)4/669‬ހަނގުރާމާއިގެ ޣަނީމާގެ ގޮތުގައި ލިބޭ ތަކެތި‪ ،‬އަދި ބިމުގައިވާ މަޢާދިނާއި ރިކާޒް‬
‫(ފޮރުވުމަށްޓަކައި ބިމުއަޑީގައި ވަޅުލާފައި ހުންނަތަކެތި)‪ ،‬ގެ ފަސްކުޅައެއް ބައި‪ .‬ސޫރަތުލް އަންފާލުގެ ‪ 41‬ވަނަ އާޔަތުގައި މާތް ﷲ‬
‫ވަހީ ކުރައްވާފައިވެއެވެ‪.‬‬
‫يل‪ِ ‬إن‪ُ  ‬كنتُ ْم‪ ‬آ َمن‬ ‫ُول‪َ  ‬ولِ ِذي‪ْ  ‬القُرْ‌بَ ٰى‪َ  ‬و ْاليَتَا َم ٰى‪َ  ‬و ْال َم َسا ِك ِ‬
‫ين‪َ  ‬واب ِْن‪ ‬ال َّسبِ ِ‬ ‫( َوا ْعلَ ُمواَأنَّ َما‪َ  ‬غنِ ْمتُم‪ِّ  ‬من‪َ  ‬ش ْي ٍء‪ ‬فََأ َّن‪ ‬لِلَّـ ِه‪ُ  ‬خ ُم َسهُ‪َ  ‬ولِل َّ‌رس ِ‬
‫انۗ‪َ   ‬واللَّـهُ‪َ  ‬علَ ٰى‪ُ  ‬كلِّ ‪َ  ‬ش ْي ٍء‪ ‬قَ ِدي ٌر‌) މާނައަކީ‪” :‬‬ ‫ان‪ ‬يَوْ َم‪ْ  ‬التَقَى‪ْ  ‬ال َج ْم َع ِ‬
‫تُم‪ ‬بِاللَّـ ِه َو َما‪َ ‬أنز َْلنَا‪َ  ‬علَ ٰى‪َ  ‬ع ْب ِدنَا‪ ‬يَوْ َم‪ْ  ‬الفُرْ‌قَ ِ‬
‫ތިޔަބައިމީހުން ދަންނާށެވެ! ތިޔަބައިމީހުން‪ ‬غنيمة‪ ‬ކުޅަ މުދަލެއްގެ ފަސްބައިކުޅަ އެއްބައިވަނީ‪ ‬هَّللا ‪ ‬އަށާއި‪(  ،‬އެކަލާނގެ) ރަސޫލާ‬
‫ނނަށާއި‪ ،‬ދަތުރުވެރިންނަށެވެ‪.‬‬
‫ނނަށާއި‪ ،‬مسكين‪ް  ‬‬
‫އާއަށާއި‪( ،‬އެކަލޭގެފާނުގެ) ގާތްތިމާގެ މީހުންނަށާއި‪ ،‬يتيم‪ް  ‬‬
‫(އެއީ)‪ ‬هَّللا ‪ ‬އަށާއި‪ ،‬حق‪ ‬އާއި‪،‬باطل‪ ‬ވަކިވުމުގެ ދުވަހު‪ ،‬ދެ‪ ‬لشكر‪  ‬ބައްދަލުވީ ދުވަހު‪ ،‬ތިމަންރަސްކަލާނގެ އަޅާގެ މައްޗަށް‬
‫ބާވައިލެއްވި ތަކެއްޗަށް‪ ،‬ތިޔަބައިމީހުން‪ ‬إيمان‪ ‬ވާ ކަމުގައިވާނަމައެވެ‪.‬‬

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‫‪Zakat al-Mal‬‬

‫‪Zakat on Gold‬‬
Bai Bithaman Ajil

Wadiah

Comments on Pakistan Supreme Court Judgement on Riba & Tabung Haji

Rise & Fall of Societies

The Role of the Human Being

Talfiq

East Cameron Partners’ Sukuk

AAOIFI Standards

Islamic Derivatives: Paradox or Panacea?

Islamic risk management: types, trends & issues

Koç Foundation

Islamic Banking Services in Malaysia

Tawarruq

Integrating Money in Capital Theory

Qard-ul-Hassan

Mosa’qaat Contract in Islamic Finance

Direct Investment and Islamic Syndication

Mudharabah Transactions

Properties of Money in Islamic and Conventional Settings and the Effect on Society

Interest (Riba) in Islam

The Problem with Interest

Classification of Islamic Modes of Contract

Capitalist vs Islamic Economic System

Islamic Banking Can Save Capitalism (Part 1)

Islamic Banking Can Save Capitalism (Part 2)

The Role of the Central Bank in Islamic Banking

Sukuk and Tawarruq Contracts in Islamic Finance

Hammoudi puts the problem this way:

Mudharabah

Direct Investment and Islamic Syndication

Salam Contract in Islamic Finance

The Jo’aalah Contract in Islamic Finance

Divine Rules

Hire-Purchase (Leasing) in Islamic Finance

Civil Partnership in Islamic Finance

Example of the Harmful Effect of an Interest-Based Economy (United States)

Mozara’ah Contract in Islamic Finance

Musharakah

Going Back to the Basics with Islamic Finance

Istisna’a Contract in Islamic Finance

The Money Value of Time

Society and Cooperation in Islam: Incentives and Consequences

Collateral in Islamic Finance

Speculation, Uncertainty, Interest, and Unemployment

Conventional Bank as Loan House vs Islamic Bank as Finance House

Islamic Bank as Finance House

Islamic Money and Banking: Integrating Money in Capital Theory

IRR (Internal Rate of Return) and Investment Project Appraisal

How Islamic banking narrows the gap between the rich and poor

A Legal Perspective Towards Islamic Finance

Money and Capital Reconsidered

Speculation and on Demand for Money in an Islamic Economy

Supply of Money Unidentified

Extended Model

Introduction to Islamic Economic System

The importance of the economic goals

The real nature of wealth and property

Difference between Islam, Capitalism and Socialism

Factors of Productions in Islam: Capitalist View

Factors of Production: The Socialist View

Factors of Production: The Islamic View

Islamic Economic Theory

Socialism and Islam

Islam and Capitalism

Distribution of Wealth in Islam

Riba in the Qur’an

Riba in Hadith

Types of Riba

Riba An Nasiyah - Explained

Riba Al Fadl - Explained

Commercial Interest and Usury

Simple and Compound Interest

Islamic Contracts

Sale (Bai)

Valid Sale in Islamic Finance

Five Khiyars

Definition and classification of Musharakah

Rules & Conditions of Shirkat-ul-Aqd

The basic rules of Musharakah

Issues Relating to Musharakah

Uses of Musharakah and Mudarabah

Types of Mudarabah

Basic mistakes in Murabahah Financing

Istijrar

Ijarah wa-iqtina

Features of a Conventional Bank

The Role of Islamic Banks

Musharakah in Bank Deposits

Import Financing

Export Financing

The Principle of Limited Liability

Islamic REITs

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