Islamic Banking 101


Islamic Banking is all about the execution of contracts.

The public uses the words “Islamic Banking Concepts” and “Islamic Banking Contracts” interchangeably. Sometimes you see people saying “the Concept of Mudharaba” or the “Islamic Concept of Diminishing Musyarakah”. Other times, people say “Mudharaba Contract”. So is there a difference?

Personally, I use “Contracts” to describe a particular Islamic product. Conceptually, I will be able to understand and explain the structure but more importantly for me, what are the contracts involved in that particular concept in Islamic Banking that makes it valid. As I deal mostly in the documents pertaining a product, it is naturally seen as a contractual arrangement for me, rather than a broad concept.

I am building the list of Islamic Contracts that I am most familiar with. Do have a read and suggest a contract.


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