Q. What are the Islamic modes of nancing. De ne.

1. Mudarabah:

• De nition: Mudarabah is a nancial partnership where one party provides the

capital (Rab ul Mal), and the other contributes expertise or labor (Mudarib). Pro ts are
shared, but losses are borne by the capital provider.

• Example: Imagine person A provides ₹50,000, and person B manages a

business project. Pro ts generated, say ₹10,000, are shared based on a pre-agreed ratio
(e.g., 70% for A and 30% for B).

2. Musharakha:

• De nition: Musharakha is a joint venture where partners contribute capital,

share pro ts, and are equally liable for losses. It encourages mutual cooperation and risk-
sharing.

• Example: A and B jointly invest ₹100,000 in a real estate venture. If the

property appreciates, pro ts are shared equally. However, if there’s a loss, both A and B
bear it equally.

3. Murabaha:

• De nition: Murabaha is a cost-plus nancing arrangement where the seller

discloses the cost and markup to the buyer. It’s commonly used in Islamic banking for
asset or commodity purchases.

• Example: Person A wants to buy a car. Instead of taking a traditional loan, A

and the bank agree on the cost plus a mutually agreed-upon pro t margin. A then pays the
total amount in installments.

4. Ijara & Ijara wa Iqtiba:

• Ijara: Ijara is a leasing arrangement where the lessor (owner) leases an

asset to the lessee (user) for a speci c period in exchange for periodic payments.

• Ijara wa Iqtiba: It’s a speci c type of lease where the lessee has the option to
purchase the leased asset at the end of the lease term.

• Example: A company leases machinery (Ijara) for a xed monthly payment. If

it’s Ijara wa Iqtiba, the company might have the option to buy the machinery at the end of
the lease.

5. Sukuk:• De nition: Sukuk are Islamic nancial instruments, similar to bonds,

representing ownership in a tangible asset. Investors receive a share of the pro ts
generated by the asset.

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 • Example: A government issues Sukuk to fund a construction project.
Investors buy Sukuk, becoming partial owners of the project. As the project generates
revenue, investors receive a share of the pro ts.

Q. Islamic Banking System. De ne.

De nition: Islamic banking is a nancial system that operates in accordance with Islamic
principles (Shariah), avoiding interest (riba) and adhering to ethical and socially
responsible practices.

Objective of Islamic Banking: The primary objective is to provide nancial services in a

manner consistent with Islamic ethics, promoting social justice, risk-sharing, and economic
development while avoiding exploitative practices.

Characteristics:

1. Prohibition of Interest (Riba): Islamic banks don’t charge or pay interest, as it goes
against Shariah principles.

2. Risk and Pro t Sharing: Islamic nance encourages risk-sharing between the bank
and its customers. Modes like Mudarabah and Musharakha exemplify this concept.

3. Asset-Backed Financing: Transactions should be backed by tangible assets or

services, ensuring real economic activity.

4. Avoidance of Uncertainty (Gharar) and Speculation (Maisir): Islamic nance

discourages excessive uncertainty and speculative activities.

Key Principles of Islamic Banking:

1. Prohibition of Pre-determined loan.

2. Pro t & Loss sharing. (Heart of Islamic nance system).

3. Making money out of money is unacceptable.

4. Prohibition of Speculating behaviour. (Gharrar)

5. Sanctity of Contracts.

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Islamic Banking vs. Conventional Banking:

1. Basis of Pro t:

• Islamic Banking: Earns pro ts through ethical and Shariah-compliant

activities, such as pro t-sharing arrangements (Mudarabah, Musharakha) and asset-
backed transactions.

• Conventional Banking: Primarily relies on interest-based income, charging

borrowers interest on loans and paying depositors interest.

2. Interest (Riba):

• Islamic Banking: Prohibits charging or paying interest (riba) as it is

considered exploitative and against Shariah principles.

• Conventional Banking: Central to the system, where interest is a key

component for revenue generation.

3. Risk and Reward Sharing:

• Islamic Banking: Encourages risk and pro t-sharing partnerships, aligning

the interests of the bank and the customer.

• Conventional Banking: Typically involves a creditor-debtor relationship,

where the bank earns interest regardless of the success or failure of the borrower’s
ventures.

4. Asset-Backed Financing:

• Islamic Banking: Emphasizes transactions backed by tangible assets,

ensuring a real economic basis for nancial dealings.

• Conventional Banking: Often relies on debt-based nancing without the

same level of emphasis on underlying assets.

5. Ethical Considerations:

• Islamic Banking: Avoids investments in sectors deemed unethical according

to Shariah principles, such as gambling, alcohol, and certain speculative activities.

• Conventional Banking: May engage in a wide range of industries, including

those considered socially or ethically questionable.

Prevailing modes of transactions during prophetic era:

During the era of Prophet Muhammad (PBUH), several modes of transactions were
practiced, guided by Islamic principles. Here are explanations of some prevalent modes:

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1. Shirkah (Partnership):

• De nition: Shirkah involves a partnership between two or more parties,

sharing capital, pro t, and loss.

• Example: If two individuals jointly invest in a business venture, share pro ts,
and bear losses, it is considered Shirkah.

2. Al Qard Hasan (Benevolent Loan):

• De nition: Al Qard Hasan is an interest-free and benevolent loan given for

charitable or goodwill purposes.

• Example: A person lends money to a friend in need without expecting any

interest or gain, purely for the sake of helping.

3. Salam (Advance Payment):

• De nition: Salam is a contract where a buyer pays in advance for goods to

be delivered in the future.

• Example: A farmer sells a portion of his crop in advance to a buyer who pays
upfront. The buyer receives the goods at a later agreed-upon date.

4. Sarf (Currency Exchange):

• De nition: Sarf involves the exchange of one currency for another, ensuring
a fair and equal exchange.

• Example: If a person exchanges 100 units of Currency A for 150 units of

Currency B, it should be done at a fair rate without any unjust enrichment.

5. Ijarah (Leasing):

• De nition: Ijarah is a lease agreement where one party provides the use of
an asset or service to another in exchange for periodic payments.

• Example: A person leases a piece of land to another for agricultural

purposes, with the lessee paying regular rent.

6. Bay’ (Sale):

• De nition: Bay’ refers to the sale of goods or services, and it emphasizes

transparency, fairness, and mutual agreement.

• Example: A seller sells a piece of jewelry to a buyer at an agreed-upon price,

ensuring both parties are satis ed with the transaction.

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 The modes of transactions during the time of Prophet Muhammad (PBUH) and the modes
of Islamic nancing discussed earlier share similarities, but they serve distinct purposes
and contexts within the broader framework of Islamic economic principles. Let’s highlight
the differences:

1. Modes of Transactions during Prophet Muhammad’s Era:

• Context: These were diverse modes of transactions applied in various

aspects of daily life, including trade, charity, and interpersonal dealings.

• Examples: Shirkah (partnership), Al Qard Hasan (benevolent loan), Salam

(advance payment), Sarf (currency exchange), Ijarah (leasing), and Bay’ (sale).

• Usage: Applied in both commercial and non-commercial transactions,

accommodating a range of social and economic interactions.

2. Modes of Islamic Financing:

• Context: Primarily designed for nancial and commercial transactions within

a modern economic context, often involving banking and investment activities.

• Examples: Mudarabah (pro t-sharing), Musharakah (partnership), Murabaha

(cost-plus nancing), Ijara (leasing), Sukuk (Islamic bonds).

• Usage: Mainly applied in the contemporary nancial industry, providing

Shariah-compliant alternatives to conventional banking and investment products.

In Islamic nance, Riba (usury or interest) is strictly prohibited. There are two main types
of Riba as identi ed in Islamic jurisprudence:

1. Riba al-Fadl (Excess in Kind):

• De nition: It refers to the prohibited excess or inequality in the exchange of

homogeneous goods of the same type, weight, and quality.

• Example: If someone exchanges 100 grams of gold for 110 grams of gold,
where both items are of the same type and quality, the excess weight (10 grams)
constitutes Riba al-Fadl.

2. Riba al-Nasi’ah (Excess in Delay or Time):

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 • De nition: This type of Riba occurs when there is an excess or premium
charged for the delay in the repayment of a debt.

• Example: Charging additional money or interest for delaying the repayment

of a loan, even if the principal amount remains the same, is considered Riba al-Nasi’ah.

Islamic nance strictly prohibits both types of Riba to ensure fairness, justice, and ethical
conduct in nancial transactions. Surah Al-Baqarah (2:275):“Those who consume interest
cannot stand [on the Day of Resurrection] except as one stands who is being beaten by
Satan into insanity…”

Q. What is Islamic concept of Human Rights? How it’s different from Western
concept of Human Rights? Explain.

Islamic Human Rights and Western Human Rights share common ground in advocating
for the dignity and well-being of individuals, but they differ in their foundations, sources,
and certain emphases. Here’s a comparative analysis:

Islamic Human Rights:

1. Foundation:

• Basis: Rooted in Islamic teachings, primarily derived from the Quran and the
Sunnah (traditions of Prophet Muhammad PBUH).

• Objective: Emphasizes the ful llment of individual and collective rights in a

manner consistent with Islamic ethics and values.

2. Source of Authority:

• Ultimate Authority: Allah is considered the ultimate authority, and human

rights are seen as a divine trust to be protected and upheld.

3. Universal and Contextual:

• Universal Principles: Recognizes universal human rights but often

contextualizes them within Islamic legal and ethical frameworks.

• Cultural Sensitivity: Acknowledges cultural and contextual variations within

the broader framework of Islamic principles.

4. Equality and Justice:

• Equality: Stresses the equal worth of all individuals before Allah.

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 • Justice: Advocates for social justice, economic equity, and fairness in
addition to individual rights.

5. Balancing Rights:

• Individual vs. Collective: Emphasizes a balance between individual rights

and the well-being of the community.

Western Human Rights:

1. Foundation:

• Basis: Rooted in secular philosophies, Enlightenment values, and

international legal instruments like the Universal Declaration of Human Rights (UDHR).

• Objective: Focuses on individual freedoms and liberties as essential

components of human dignity.

2. Source of Authority:

• Secular Framework: Human rights are often viewed within a secular legal
and philosophical framework, not necessarily tied to religious beliefs.

3. Universal and Uniform:

• Universal Principles: Emphasizes universal human rights applicable across

cultures and religions.

• Uniform Standards: Advocates for consistent standards globally.

4. Emphasis on Individual Liberties:

• Individual Autonomy: Places a strong emphasis on individual autonomy,

personal freedoms, and liberties.

5. Legal Framework:

• International Law: Human rights in the Western context often rely on

international legal instruments and treaties for enforcement.

Common Ground:

• Both Islamic and Western human rights emphasize the inherent dignity and
worth of every individual.

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 • Both advocate against discrimination, injustice, and the abuse of human
dignity.

Q. Human Rights Under Islamic Law. De ne.

Islamic rights encompass a wide range of principles derived from Quranic teachings and
the Sunnah (traditions) of Prophet Muhammad (PBUH). Here are some fundamental
Islamic rights:

1. Right to Life (Haqq al-Hayah): Quran (Surah Al-Ma’idah 5:32): “And do not take
the life which Allah has forbidden, except in the course of justice…”

2. Right to Equality: “Prophet Muhammad (PBUH) said: “All mankind is from Adam
and Eve; an Arab has no superiority over a non-Arab nor a non-Arab has any superiority
over an Arab; also a white has no superiority over black nor a black has any superiority
over white, except by piety and good action.” (Prophet’s last sermon Khutba tul Wida Ninth
day of Dhul-Hijjah, 10 A.H. ( 623AD) in the Uranah valley of Mount Arafat in Mecca).

3. Right to Personal Safety and Security:

4. Right to Freedom (Haqq al-Hurriyah): Islam emphasizes the freedom of belief,

expression, and worship, within the bounds of ethical and moral guidelines.

5. Right to Dignity (Haqq al-Karamah): Quran (Surah Al-Isra 17:70): “We have
certainly honored the children of Adam and carried them on the land and sea and provided
for them of the good things and preferred them over much of what We have created…”.

6. Right to Property (Haqq al-Mal):

7. Right to Justice (Haqq al-Adl): Quran (Surah An-Nisa 4:135): “O you who have
believed, be persistently standing rm in justice, witnesses for Allah, even if it be against
yourselves or parents and relatives.”

8. Right to Work and Fair Wages: Quran (Surah Al-Baqarah 2:267): “O you who
have believed, spend from the good things which you have earned and from that which
We have produced for you…”

9. Right to Education (Haqq al-Talim): Quran (Surah Ta-Ha 20:114): “And say, ‘My
Lord, increase me in knowledge.’”

10. Right to Privacy: Islam emphasizes the sanctity of privacy and discourages
unwarranted intrusion into personal matters.

11. Right to Marriage and Family Life (Haqq al-Zawaj): The right to marry and
establish a family is recognized, and family life is considered a cornerstone of a stable
society.

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12. Right to Choose a Spouse : Quran (Surah An-Nur 24:32)

13. Right to Maintenance (Nafaqah): Quran (Surah Al-Baqarah 2:233): “Mothers may
breastfeed their children two complete years for whoever wishes to complete the nursing
[period]. Upon the father is the mothers’ provision and their clothing according to what is
acceptable.”

14. Right to Religious Freedom (Haqq al-Din): Islam grants the right to practice
one’s religion freely, respecting the diversity of beliefs. Quran (Surah Al-Baqarah 2:256):
“There is no compulsion in religion…”

15. Right to Social Welfare (Haqq al-Kifayah):

16. Right to Inheritance: Quran (Surah An-Nisa 4:7-9): Speci es inheritance shares
for women and the importance of ensuring fair distribution.

17. Right to Respect and Protection: Quran (Surah An-Nisa 4:19): “O you who have
believed, it is not lawful for you to inherit women by compulsion…”

Q. Human Rights Under UDHR. Explain.

The Universal Declaration of Human Rights (UDHR) is a foundational international

document adopted by the United Nations General Assembly in 1948. It outlines a set of
fundamental human rights that are considered universal and inalienable. Some key rights
mentioned in the UDHR include:

1. Right to Equality (Article 1): All human beings are born free and equal in
dignity and rights.

2. Right to Life, Liberty, and Security of Person (Article 3): Everyone has
the right to life, liberty, and security of person.

3. Freedom from Slavery and Servitude (Article 4): No one shall be held in
slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.

4. Freedom from Torture and Degrading Treatment (Article 5): No one shall
be subjected to torture or to cruel, inhuman, or degrading treatment or punishment.

5. Right to Recognition as a Person before the Law (Article 6): Everyone

has the right to recognition everywhere as a person before the law.

6. Right to Equality before the Law (Article 7): All are equal before the law
and are entitled without any discrimination to equal protection of the law.

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 7. Right to Remedy by Competent Tribunal (Article 8): Everyone has the
right to an effective remedy by the competent national tribunals for acts violating the
fundamental rights granted by the constitution or by law.

8. Freedom from Arbitrary Detention (Article 9): No one shall be subjected

to arbitrary arrest, detention, or exile.

9. Right to Fair Public Hearing (Article 10): Everyone is entitled in full

equality to a fair and public hearing by an independent and impartial tribunal, in the
determination of their rights and obligations and of any criminal charge against them.

10. Right to Presumption of Innocence until Proven Guilty (Article 11):

Everyone charged with a penal offense has the right to be presumed innocent until proven
guilty according to law in a public trial at which they have had all the guarantees necessary
for their defense.

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