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The history of Islamic banking in Pakistan parallels the global rise of Islamic banking. An essential part of State Bank of Pakistan (SBP) strategic vision has continued to be advancing Islamic finance as a competitive and robust part of the financial system through supportive legal, regulatory, and supervisory frameworks. Under Islamic banking, there are many products which are Shariah compliant such as current accounts, saving accounts, auto finance, fixed deposits etc. Car Ijarah - a car financing mode which stipulates that the Bank would buy the automobile and rent it to the consumer for an agreed-upon time--usually between one and five years--after the contract is signed, the car will either be given to the customer or sold for a reasonable amount at the end of the Ijarah period. This study defines how Islamic banking product Car Ijarah affects the growth, profitability and promotion of Islamic banking division of one of the reputed private banks of Pakistan Bank Al Habib Limited. Special customers of Islamic Banking who are well aware of Car Ijarah were selected as a sample to fill an online survey questionnaire along with the Head of auto finance Department to collect required data. Also, the data is gathered from previous research journals and annual reports of different Islamic banks. The results from the analysis confirmed that the product of Car Ijarah has proven to be an innovative and effective product and it positively effects growth of Islamic banking. [ABSTRACT FROM AUTHOR]

The metaverse is a virtual world that exists alongside the actual world. While the actual world refers to the real, physical world, the metaverse is a digital world that is accessed through technology. Evidently, several international brands have integrated their businesses with the virtual metaverse providing business opportunities. However, there are currently several gaps in the sector of Shariah finance that need to be addressed in order to take full advantage of the potential of the metaverse. For instance, rare studies enlighten the concept of Ijarah, a substitute for conventional leasing in the metaverse virtual world. Undoubtedly, the metaverse has the potential to revolutionize the Shariah finance industry by providing new opportunities for financial inclusion and innovation. Therefore, for the readiness of Islamic finance institutions, this study is an attempt to explore the possibility of executing Shariah principles that could be utilized in the metaverse. More specifically, this study is an endeavor to explore and discuss how Shariah-based leasing i.e., Ijarah integrates with the recent metaverse technologies. Additionally, this study also discusses the metaverse evolution and its integration into international business brands, the metaverse virtual assets ownership, the metaverse virtual leasing, non-fungible tokens (NFTs), and virtual real estate in the metaverse. Indeed, this study is a novel addition to the Shariah finance literature, which helps policymakers to generate new strategies that guide the execution of Ijarah contracts in the virtual universe of the metaverse.

Islamic banking industry is apart from conventional banking but still it has rivalry with conventional banking as both serve the same set of customers. Islamic banks are way behind conventional competitors in terms of innovation and product development. The innovation of Islamic banking and finance sector is dependent on hybrid contracts. The customer needs have become complicated. It requires the Islamic banks to introduce new products. But, Islamic banks cannot evolve without indulging into hybrid contracts. The standing of early Islamic jurists and scholars have made hybrid contracts somewhat contradictory as they have differences of opinion. Their opinion is based on the four Hadiths prohibiting four types of hybrid contracts, but some scholars have applied it to all other hybrid contracts. It has caused a major setback to the progress and development of Islamic finance industry. The apprehension of induction of prohibited elements like riba, maysir, and gharar has virtually paralyzed this sector. Last few decades have observed a progress as contemporary fuqha have stepped forward to reinterpret the Shariah instructions to develop Islamic banking. This study has researched the scope and potential of hybrid contracts for product development. The work of famous scholars has been consulted to understand the contradiction. Prominent contemporary scholars were consulted to get their profound opinion. It is concluded that the hadiths addressing trade contracts can be reinterpreted through mutual Fiqhi consensus. New products developed through hybrid contracts should be free from clearly prohibited elements and it should not contradict with clear shariah instructions. The use of hilah (trick) to turn the haram into halal is a sin and hybrid contracts should not be used to gain riba. The focus of hybrid contract based products should be on profiting from trade rather than riba. [ABSTRACT FROM AUTHOR]

Ijarah mawsufah fi al-dhimmah (hereinafter referred to as IMAD), also known as forward ijarah¸ is an Islamic financial product that involves the sale of an identified asset currently being produced or constructed for a future delivery such as a property, office, factory, and so forth. In the classical fiqh literature, it has been discussed under the general purview of leasing and forward sale contracts. However, in the context of modern Islamic finance practice Islamic banks and financial institutions have upheld its usage as an independent financial instrument. The contemporary scholars claim that except for Hanafi, other key fiqh schools consider IMAD as an Islamic financial product. The study is an attempt to prove that such a claim is merely based on assumption. Besides, it is motivated by lack of holistic study of Hanafi’s original reference books. The methodology chosen for this study is content analysis of the relevant published literatures. The study finds that no classical scholars including those of Hanafi school of thought were in disagreement so far over the IMAD to consider it as an independent and standalone Islamic finance product. The study aims at reconciling scholars’ different views on the issue of IMAD for its wider acceptance.

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Contrary to its conventional counterpart, which uses interest-based methods of financing, Islamic banks commonly use sale, lease, or partnership modes of financing. The murābaḥah (cost-plus sale) and ijārah muntahiyah bi-t-tamlīk (lease-to-own) products achieve similar end-results, where both products are used as Islamic financial mechanisms for Islamic banks to achieve profits on financed assets, and where the client benefits from the financed asset—leading the client to ultimately own the asset at the end of the financing tenor without limitations (whether releasing the asset as a collateral for a murābaḥah or transferring the title deed to the client at the end of an ' ijārah muntahiyah bi-t-tamlīk ' contract). Using a qualitative methodology, this article investigates how Islamic banks choose between using murābaḥah or ijārah muntahiyah bi-t-tamlīk when financing a customer. This article includes empirical work by analysing primary and secondary data pertaining to three Islamic banks in the Kingdom of Bahrain. [ABSTRACT FROM AUTHOR]

This research aims to identify the impact of financing contracts on the risks confronted by Islamic banks measured by Non-Performing Financing (NPF). The data indicate that the value of NPF tends to annually increase along with a value close to the maximum limit set by Bank Indonesia (BI). The data of this study utilized secondary data in the form of monthly time series data in the period of January 2014 to December 2017 and cross-section data from the two types of Islamic Banking (Bank Usaha Syariah and Unit Usaha Syariah). The result indicates that the financing scheme which is based on the empirical scheme of profit-sharing schemes is proven to increase financing risk.

Islamic banking is the system where interest is prohibited, gambling is banned, gharar is forbidden, where everything is upheld by tangible assets, where investors have lower risk. All rules and regulations of the banking system are governed by Shariah Rules, providing collective impartiality and fairness, while gratifying the financial requirements of the community and maintaining high principles of moral values, simplicity and wisdom of accountability. This study focuses on the difference between Ijarah and Conventional leasing which is done through descriptive analysis, Quran and Hadith is used for Shariah guidelines and in-depth interviews by customers of banks who leased any asset are used for customer's perception. The findings of the study show that Ijarah is permissible by Islam but there is a need to create awareness in society regarding Islamic banking practices. This paper will help investors understand the difference in light of available literature, Quran & Hadith and the perception of customer will help policy makers understand the need to highlight the difference between these two. [ABSTRACT FROM AUTHOR]

Ijarah mawsufah fi al-dhimmah (hereinafter referred to as IMAD), also known as forward ijarah¸ is an Islamic financial product that involves the sale of an identified asset currently being produced or constructed for a future delivery such as a property, office, factory, and so forth. In the classical fiqh literature, it has been discussed under the general purview of leasing and forward sale contracts. However, in the context of modern Islamic finance practice Islamic banks and financial institutions have upheld its usage as an independent financial instrument. The contemporary scholars claim that except for Hanafi, other key fiqh schools consider IMAD as an Islamic financial product. The study is an attempt to prove that such a claim is merely based on assumption. Besides, it is motivated by lack of holistic study of Hanafi's original reference books. The methodology chosen for this study is content analysis of the relevant published literatures. The study finds that no classical scholars including those of Hanafi school of thought were in disagreement so far over the IMAD to consider it as an independent and standalone Islamic finance product. The study aims at reconciling scholars' different views on the issue of IMAD for its wider acceptance. [ABSTRACT FROM AUTHOR]

Poverty and inequality are global phenomena that have increased in recent times. The condition of poverty is alarming at global level as it was reported that some 57million children were out of school. Hence Ahmad and Hassan (2015) posit that half of this number was in Sub-Saharan Africa (SSA). With Nigeria as the largest nation in Africa thus it has the highest figure of these out of school children. Poverty indicates lack of income and necessary ways to achieve a standard of living. Islamic finance plays critical role in reducing the level of poverty and inequality through the profit and loss sharing among investors. Therefore, this study explores alternative way to reduce poverty and inequality from Islamic perspective in Nigeria. This would contribute to the economic development of the country. The method adopted is to review previous literature on the impacts of various Islamic financial instruments in addressing the menace of poverty and economic inequality. The study concludes that profit and loss products of Musharakah and Mudarabah, and cost based products which include Murabaha, Ijarah, Sukuk contribute to poverty reduction and promote economic activities. It thus recommends the adoption of these products in Nigeria to address the prevailing infrastructural deficit and promote economic development. [ABSTRACT FROM AUTHOR]

The role of farmers is indispensable for the accomplishment of various human needs. Among these, food is the most significant and crucial one for the survival of human society. But instead of this great importance, farming community always faces financial problems to fulfil their agricultural requirements, both for crop and non-crop activities. The Pakistani farmers face harsh economic realities. Avoiding interest at all costs, as advised in Islam, they do not want to secure any such financing facility whether formal or informal. Being a complete code of life, Islam suggests alternate ways through the application of various modes of Islamic finance. Among these Ijdrah (leasing) is one. The present work discusses the theoretical background of this mode, made available in the scholarly contribution of classical and contemporary Muslim jurists, followed by a viable model proposed for the provision of financing to the lower and middle class farmers. The empirical results make obvious that Ijdrah can be effectively used for the development of agricultural sector, particularly its sub-sector of local farming that exists in rural areas of the Country. However, the basic principles, rules and regulations of the transaction, envisaged by Islamic finance, need to be adhered to in order to achieve the intended and anticipated objectives. [ABSTRACT FROM AUTHOR]

The concept of Islamic banking is not new but the field of Islamic banking has not grown as fast as other financial service providers of Pakistan. This is because of lack of understanding of terms and operations of Islamic banks. Therefore this study has revealed the understanding and awareness of people of Hyderabad regarding Islamic banking, its operations, and products. This research is found very crucial keeping in view the importance and competition that prevails in the financial sector of Pakistan. Islamic banking is one of the important pillars of financial sector of Pakistan which is growing side by side and competing with conventional banks, insurance companies and mutual funds. The findings of this study are very much helpful to enhance the awareness and understanding of people regarding interest free products and services offered by Islamic banks. This research has been proved beneficial to the key officials of Islamic banks to improve their planning and understanding the need of advertisements and promotional campaigns about their products and services. The sample of this study is based on 120 people, which includes Business class, salaried class, and the key officials working in different banks operating in Hyderabad. The findings of this research suggests that the growth and development of Islamic banking industry is hugely dependent on awareness and understanding among the people, further in this study it has been identified that the slow growth in Islamic banking industry is due to lack information regarding products and operations of Islamic banks among the people, less attractive products and services, low profits rates and people are less familiar and reluctant to avail services by this financial sector. [ABSTRACT FROM AUTHOR]

Purpose This paper aims to analyze the legal interpretation of three Islamic financing products considered for approval by US authorities, from the United Bank of Kuwait and Guidance Residential, even though the USA has not enacted any Shari’ah legislation in relation to the Islamic law of transactions (fiqh mu’amalat).Design/methodology/approach This paper primarily adopted qualitative document and content analysis, supported by quantitative numerical analysis, in reviewing legal interpretive letters from the US Office of the Comptroller of Currency and National Administrator of Banks (OCC) and the US Department of Revenue.Findings The research found that in assessing economic substance over legal form, each of the three products involved risk-free transactions and interest.Research limitations/implications The research had access to published OCC, Department of Revenue and US Patent Office material that fully disclosed the mechanics of each of the selected products.Practical implications The implication for the Islamic financial institutions involves Shari’ah compliance risk. When tested against the Islamic normative theory of lawful profit, it confirms that the products are non-compliant.Social implications The social implication is customer awareness of Shari’ah non-compliance in the USA and the impact for other jurisdictions carrying the same products.Originality/value The significance of this research for Islamic banking product design and development is that it enhances the ability to block the legal means to an unlawful outcome (sadd al-dhara’i), thereby avoiding harm (al-darar) attributed to usury (riba), and upholding what is in the public interest (maslahah), to fulfil one of the objectives of the Shari’ah (maqasid al-Shari’ah), which is to protect wealth (hafiz al-mal). [ABSTRACT FROM AUTHOR]

For most scholars, the concept of selling short, where financial assets are sold without prior possession or ownership, transgresses Islamic principles. However, the Sharīah Advisory Council of the Securities Commission of Malaysia (SAC) went against the majority by permitting short selling in 2006. Conventional finance points out that short selling increases liquidity, facilitates price discovery, and enables informational efficiency. Muslim scholars are facing a dilemma: on the one hand, Sharīah principles dictate that Islamic capital market transactions and instruments should remain devoid of elements of ambiguity and prohibited characteristics, but on the other hand, the Sharīah also demands that the transactions be of social utility to the participating parties. It appears that the SAC allows regulated short selling on the basis of ijārah with istisān. This article strives to highlight the jurisprudential issues regarding short selling and contribute to an Islamic angle on the ethical implications affecting this phenomenon. [ABSTRACT FROM AUTHOR]

Microfinance has been identified as an important policy instrument that allows greater financial and social independence for poor and destitute by facilitating access to financial services for rural class. Microfinance institutions (MFIs) have mostly high concentration on providing self financing that generally is for women beneficiaries and aim at alleviation of poverty in all its forms. The principle purpose of microfinance institutions is to be social performing by reducing poverty. However, they have to reconcile this objective with financial performance by trying to be profitable and sustainable. The research paper is based on qualitative research. The researcher chose Pakistan and studied its agriculture financial sector, identified problems with present financial system developed a financial model based on Musharakh and Ijarah for farmers particularly and for sustainable development of rural in general where bank will provide all the assistance that includes technical as well as other assistance. It will provide credible alternative which allows poor population to have access to basic financial services at low cost. [ABSTRACT FROM AUTHOR]

Purpose Islamic financing is based on the ideology of Islam, proposing a different economic system than capitalism. The essence of Islamic financing lies in trading of goods, provision of services and/or investment under profit and loss sharing. This study aims to examine legal forms and economic substance of the contracts used by the Islamic financial industry.Design/methodology/approach To conclude on the objectives of the study, five most widely used contracts (modes/products), including Murabaha, Ijarah, Diminishing Musharaka, Sukuk and Mudaraba (deposits), were selected to test against the theory of the Islamic financial system.Findings It is found in the process that legally (legal form) contracts/products are in line with theory; however, economic substance is not very different from conventional counter parts.Practical implications Through application of alternative calculation measures/methods and proper training of human resources, Islamic financial institutions can shift economic substance of contracts in line with the theory of Islamic finance.Originality/value Islamic finance is an emerging area, and reasonably good amount of literature is available; however, perhaps, this is the only piece of work focusing on calculation methods, contributing in economic substance of contracts, being used in modern Islamic finance in addition to legal form as per essence of Islamic financial system. [ABSTRACT FROM AUTHOR]

The purpose of the study is to review the current state of Islamic banking in Morocco, and to investigate the factors that influence the adoption of Islamic banking services in the country. Accordingly, a survey was conducted covering 400 respondents from most of the Moroccan regions, and data analysis was based on linear regression. The findings revealed that the main factors that influence the decision of the Moroccan customers to adopt Islamic banking services are relative advantage, compatibility and social influence. Furthermore, the findings revealed that the progress of Islamic banking in Morocco is faced by multiple legal and regulatory challenges. [ABSTRACT FROM AUTHOR]

Ijārah-based financing is currently generating greater interest among industry players and policy makers due to its minimal risk exposure. Being assetbacked it has a lesser risk overload, no default risk and better profits and now offers a viable alternative to controversial debt-based financing instruments. This paper attempts to highlight the benefits of applying the objectives (maqāid) of ijārah contract and how a diligent compliance to its maqasid can help manage Shari'ah and business risks. It is also hypothesised in this study that a sincere compliance tov the Shari'ah's objectives in financial transaction (maqāid al-mucāmalāt) would reduce risks in the Islamic banking industry. Current applications of ijārah-based instruments by Islamic banks in Malaysia are analysed to show the gaps between its theoretical presumptions and the actual applications on the ground. Some unresolved Shari'ah issues relating to the implementation of al-ijārah thumma al- bayc (AITAB) (a contract of leasing ending with a sale) as well as issues regarding ukūk al-ijārah (leasing bond) are discussed in order to provide evidence for such dissonances. The study recommends constructive measures to be undertaken by policy makers to resolve the governance and legal problems with regard to the implementation of AITAB and ?ukūk al- ijārah. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to identify and compare the characteristics and rulings of Ijarah contract, the contract of 'inah and sukuk ijarah. The identification of their characteristics and rulings is a necessity to determine whether these contracts are similar to, or different from one another, and the extent of their compliance with the shariah. Furthermore, if the characteristics of these contracts could be ascertained, the rulings could be extended to the actual contracts in practice. This study analyses the characteristics and rulings of ijarah and 'inah contracts based on views of Hanafis, Malikis, Shafi'is and Hanbalis. The findings are then compared with the characteristics of sukuk ijarah as standardized by AAOIFI. The analysis is also focused on the terms and conditions of SenaiDesaru Express Berhad (SDEB) as an example of sukuk ijarah practice. The result suggests that sukuk ijarah as defined by AAOIFI has some differences from the original ijarah contract. Sukuk ijarah also has a few characteristics of ijarah contract. To certain extent, Sukuk ijarah has similarities with the 'inah contract. This study suggests that the terms represented in a particular contract may not truly represent the real characteristics of an original shariah contract. A particular contract may contain characteristics belong to different form of contracts. It may even be undesirably similar to the characteristics of the controversial contract of 'inah. [ABSTRACT FROM AUTHOR]

Islamic finance is a set of financial institutions representing a connected financial architecture that works based on prescribed Shari'ah principles. Growth in the industry has been stellar, but, certain principles, the strategic direction and the practices do not warrant celebration yet. This paper while noting the impressive performance of Islamic mutual funds in Pakistan, strives to a) discuss the theoretical problems in screening principles followed in investment policy, b) identifies the problematic and less ideal investment alternatives used in practice, and c) highlights the anomalies in income purification methodology. The paper argues that the vision of leading the establishment of an egalitarian and balanced financial system has taken a backseat and increasingly innovative financial engineering seems to have blurred the distinctive identity of Islamic financial system. The paper concludes with the recommendation that in the short term, Shariah regulators must comprehensively train themselves in prevalent financial reporting standards and understand their implications. In the medium to long term, centralized Shariah board and revised financial reporting standards must be structured taking into account special needs of auditing the fulfillment of Islamic principles in practice. [ABSTRACT FROM AUTHOR]

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