Government College Women University, Faisalabad

⚫ Course Title: Islamic financial system

⚫ Course Code: BBA-624
⚫ Instructor Name: Aysha Noureen
⚫ Class & Section: BBA 8th (A&B)
⚫ Chapter Name: Islamic investment fund
⚫ Lecture No: 12
LEARNING OUTCOMES

After studying this chapter students will be able

to explain:
1. Waqf, management of waqf, conditions of waqf, types of
waqf

2. Bait-ul-mal, history of bait-ul-mal

3. Realistic evaluation of Islamic bank of Pakistan

 WAQF – INTRODUCTION
⚫Waqf, in Arabic language, means hold, confinement or
prohibition.
⚫The word waqf is used in Islam in the meaning of
holding certain property and preserving it for the
confined benefit of certain philanthropy and
prohibiting any use or disposition of it outside that
specific objective.
⚫ In the history of Islam, the first religious waqf is the
mosque of Quba’ in Madinah, a city 400 kilometer
north of Makkah, which was built upon the arrival of
the Prophet Muhammad in 622.
 DEFINITION OF WAQF
⚫According to Waqf act 1954 sec
3(i):
“Waqf Means the permanent dedication
by a person professing islam of any
movable and immovable property for
any purpose recognized by muslim
law as pious, religious or charitable.”
 MANAGEMENT OF WAQF

⚫The waqf manager is usually called

“MUTAWALLI” and his\her responsibility is
to administer the waqf property to the best
interest of the beneficiaries.
⚫The person who creates waqf is called Wqaif.
 CONDITIONS OF WAQIF

1. Waqif may be male or female

2. Waqif must be sound mind.
3. Waqif must be the owner of the
property.
4. Waqif must be the age of the maturity.
 CONDITIONS OF MUTAWALLI

1. MUTAWALLI must be sound mind.

2. MUTAWALLI must be the age of the
maturity.
3. MUTAWALLI must be a muslim
 OWNERSHIP OF WAQF

⚫From legal point of view, the ownership of waqf

property lies outside the person who created the waqf.
⚫Some Muslim jurists argue that the right of ownership
of waqf belongs to Allah.
⚫ Others believe that it belongs to the beneficiaries
although their ownership is not complete in the sense
that they are not permitted to dispose of the property
or use it in a way different from what was decreed by
the founder of waqf.
 CHARACTERISTICS OF WAQF
1. perpetuity:
It means that once a property, often a real estate, is
dedicated as waqf it remains waqf for ever.
2. Permanence of stipulations of waqf founder:
Since waqf is a voluntary act of benevolence,
conditions specified by the founder must be fulfilled
to their letter as long as they do not contradict or
violate any of the Shariah rulings.
 LEGAL CONDITIONS OF WAQF
⚫ The property must be a real estate or a thing which has some
meaning of perpetuity.
⚫ The property should be given on a permanent basis. Some
jurists approve temporary waqf only in the case of family waqf.
⚫ The waqf founder should be legally fit and apt to take such an
action,
⚫ The purpose of the waqf must, in the ultimate analysis be an
act of charity from both points of view of Shariah and of the
founder.
⚫ Finally, beneficiaries, person(s) or purpose(s), must be alive
and legitimate. Waqf on the dead is not permissible.
 TYPES OF WAQF
⚫Waqf Zhurri
A type of WAQF in which a person designates oneself
or some specified individuals as the beneficiaries of
the endowment's revenues or proceeds.
⚫Waqf al-Sabil
A type of waqf which is established to serve the
general public. Examples of waqf al-sabil include
construction of a masjid, school, hospital, residential
building, etc.
 Continue..
⚫ Waqf al-Awaridh
A type of waqf in which the yield is held in reserve so that it can
be used at times of emergency or unexpected events that
negatively influence the livelihood and well-being of a
community of people.
⚫ WAQF AHLI
A type of waqf (endowment) in which a person (waqf initiator)
designates oneself or some specified individuals as the
beneficiaries of the endowment's revenues or proceeds.
⚫ Waqf khayri:
The proceeds of waqf are earmarked to charity and
philanthropy. Examples of beneficiaries include the poor and the
needy.
 BAIT-UL-MAL
⚫ Bait-ul-mal is an Arabic term that is
translated as "House of money“ or "House
of Wealth.“
⚫ “Bait-ul-Mal” means the welfare fund .
⚫ The Bait-ul-Mal shall be administered by
the Board.
 HISTORY OF BAIT UL MAAL
⚫ Bait ul maal was developed as a financial institution in the
Islamic states, this financial institution used to administer the
taxes.
⚫ The bait ul maal was established in the era of the Islamic
caliphate.
⚫ It was formed as the royal reserves for sultans and caliphs;
another purpose of bait ul maal was to manage personal
finances and the expenditures of the government.
⚫ Moreover, the bait ul maal was used to manage the
distributions of zakat for the public works.
Continue..
⚫During the reign of Hazrat Muhammad (SAW) a
permanent bait ul maal was not established
⚫During the caliphate of Hazrat Abu Bakr bait ul maal
was also not kept as there was no prominent need for
the reserves to be kept
⚫Hazrat Umar established a permanent bait ul maal
after consulting with his companions
The Bait-ul-Mal shall be financed from the
following sources
⚫Transfer of receipts from tax levied for this purpose.
⚫Grants from the Federal Government, Provincial
Governments, local authorities, national organizations
and international agencies.
⚫voluntary donations, including sudqat and atiyyat by
individuals, societies, bodies, institutions or
organizations.
The moneys in the Bait-ul-Mal shall be utilized
for the following purposes namely
⚫To provide financial assistance to destitute and needy
widows, orphans, invalid, infirm and other needy persons;
⚫to provide residential accommodation and necessary
facilities to the persons specified.
⚫ to provide for free medical treatment for indigent sick
persons and to set up free hospitals, poor houses and
rehabilitation centers and to give financial aid to
charitable institutions, including industrial homes and
other educational institutions established specially for
poor and needy.
 REALISTIC EVALUATION OF
ISLAMIC BANKING IN PAKISTAN
⚫ Islamic banking has become today an undeniable reality.
⚫ The number of islamic banks and the financial institution is
ever increasing in Pakistan.
⚫ New islamic banks with huge amount of capital are being
established. Conventional banks are opening Islamic windows
or Islamic subsidiaries for the operation of islamic banking.
⚫ It seems that the size of Islamic banking will be at least
multiplied during the next decade and the operation of islamic
banks are expected to cover a large area of financial transaction
of Pakistan.
 REFERENCE
⚫Islamic finance by Mufti Muhammad taqi Usmani
⚫Book source:
https://drive.google.com/file/d/1m25I83QwgpHFCjuqD
Ev7cQnN_9-4y74D/view?usp=sharing
• https://en.wikipedia.org/wiki/Pakistan_Bait-ul-M
al
• https://www.minhaj.org/english/tid/3731/Bait-ul-
Maal.html
• https://www.lawctopus.com/academike/concept-
waqf-muslim-law/
 Thank You Respected Students
Best of Luck for the Learning Process