Main Prohibitions and Business Ethics in Islamic Economics and Finance

 Basic Prohibitions
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Riba (interest) Gharar (uncertainty) Maisir (gambling) Justice & fair dealing Mutual cooperation Free marketing & fair pricing

 Business Ethics and Norms
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Islamic Finance, Dr. Waheed Akhter, COMSATS, Lahore 1

COMSATS. Waheed Akhter. Dr. Surah al-Nisa (161). Surah al-Baqra (275-281)  Riba in ahadith  Riba in loans/debt – Riba an-nasiha  Sale/purchase on cash or credit  Loaning and Leasing Islamic Finance.Prohibition of Riba (interest)  Common myths about Riba  Riba in Quran & Sunnah  Surah al-Rum (39). Surah al-e- Imran (130). Lahore 2 .

Lahore 3 . COMSATS.  Riba in exchange transacts–Riba al-Fadl  Illah (unit of value and edibility)  When both excess & delay r allowed  When both excess & delay r not allowed  When excess allowed but delay not allowed  Riba in other religions Islamic Finance. Dr. Waheed Akhter.Prohibition of Riba (contd.)  Shari’at Appellate Bench (SAB) historical judgment on riba.

Dr. Idlers. COMSATS.Rationale behind prohibition of Riba  Socio-economic & distributive justice  Inter-generational equity  Economic instability  Removal of injustice from society  Creation of Parasites. Lahore 4 . Waheed Akhter. blood suckers in the society  Low level of savings  Heavy Budgetary deficits Islamic Finance.

Lahore 5 .Rationale behind prohibition of Riba (contd. COMSATS. Dr. Labor) Islamic Finance.)  High debt servicing  Inflation along with recession  High un-employment  Control of Capitalistic countries over poor countries through debt  Cause of financial crisis Riba and other factors (Land. Waheed Akhter.

COMSATS. Sale of object which is not present or whose quality is not known Two sales in one Down payment sale (Arbun) “Pebble”. Lahore 6 . Refers to the uncertainty or hazard caused by lack of  Prohibition of Gharar (uncertainty)      clarity regarding subject matter or price in sale contract. touch and toss sales Suspended (Mu’allaq) sale Future sale Islamic Finance. Dr. Waheed Akhter.

Waheed Akhter. Selling goods on the basis of false description Selling known/unknown goods against unknown price Selling without allowing buyer to examine the goods Islamic Finance. Gharar includes Ignorance about genus. COMSATS. Prohibition of Gharar (contd.g.)       attributes. Making the contract too complex to clearly define benefits/liabilities of the parties. species. quantity or Specific identity of product. I ll sell when it rains. time of payment or sale of nonexistent objects Selling of goods seller is unable to deliver Conditional sale e. Lahore 7 . Dr.

Dr.Prohibition of Maisir / Qimar (games of chance)  Maisir – acquisition of wealth by chance whether or not it        deprives the others right In Quran (2: 219. 5:90-91) A form of gharar as person is ignorant of the result. Waheed Akhter. Lottery with coupons / lottery schemes Bank schemes/ prize bonds Insurance schemes Games of chance or speculation Advantage at the loss of others Islamic Finance. Lahore 8 . COMSATS.

Dr.Business Ethics & Norms  Justice and fair pricing     Honesty & gentleness Prohibition of Najash (bid without intent to buy) Prohibition of Khalabah (misleading marketing) Disclosure. COMSATS. Waheed Akhter. Lahore 9 . transparency & facilitating inspection  Fulfilling the covenants & paying liabilities  Mutual cooperation & removal of hardship  Free marketing and fair pricing  Freedom from dharar (detriment) Islamic Finance.