Glossary of Islamic Banking Terms

  • Amanah: Trusteeship

  • Aqad : Contract, consisting of all tenets of a contract

  • Arbun : Down payment deposit to retain a right to transact (future date)
  • Al Ayn : Delivery of a Physical Asset
  • Bai Ad-Dayn : Sale of Debt

  • Bai Al Ma’Dum : Sale without Asset 
  • Bai Al Sarf : Exchange of Money for Money
  • Bai Bithaman Ajil / Bai Muajjal : Deferred Payment Sale, over a period of time
  • Bai Inah : 2-party Sale (for Cash)

  • Bai Salam : Trust Sale

  • Bai Wa Salaf : Exchange contract Contingent to a Qard
  • Dayn Lazim : Established Debt
  • Dhamanah : Guarantee
  • Fasakh : Dissolution
  • Fatwa : Edict, opinion or judgement based on religious sources scholarly discussion

  • Gharamah : Penalty

  • Gharar : Uncertainty, unmitigated risk

  • Hadith : Sayings of the Prophet as recorded

  • Halal : Permissable, Clean & Pure

  • Hamish Jiddiyyah : Security Deposit

  • Haram : Prohibited

  • Hibah : Gift

  • Hibah Ruqba : Conditional Hibah upon demise of a party

  • Hilah : Trick (contractum trinius)

  • Hiwalah : Remittance / Payment / Transfer
  • Hiwalah Al Dayn : Transfer of Debt Obligation
  • Intiha : Completion
  • Ibadah : Worship
  • Ibra’ : Rebate / Absolution

  • Ijab : Offer (tenets of a contract)
  • Ijarah Al Ashkhas : Employment Contract
  • Ijarah / Ijarah Tasghiliyyah: Rent (Operating Lease)

  • Ijarah Mausufah Fi Dhimmah : Forward Lease (Rent during construction with obligation / Financial Lease)

  • Ijarah Muntahiyah Bi Tamleek / Wa Iqtina : Rental with intention to own / gift at end of period (Financial Lease)

  • Ijarah Thumma Al Bai : Rent with eventual sale (Hire-purchase / Financial Lease)

  • Ijma‘ : Consensus of Muslim Jurist

  • Isqat Haq : Relinquishing of Rights (see also Tanazul)

  • Istijrar : Staggered sale (time-to-time sale), Supply Contract

  • Istina’a : Order to Construct (Under construction)
  • Iqalah : Mutual Cancellation
  • Jualah : Service Charge

  • Kafalah : Guarantee

  • Kafil : Guarantor

  • Khiyar Al Ayb : Defect Option
  • Khiyar Al Majlis : Session Option
  • Khiyar Al Shart : Conditional Option
  • Maisir : Unearned income, unfair income (part of gambling)

  • Ma’Qud Alaih : Subject Matter
  • Ma Ya’ul Ila Al Luzum : Debt to be Established in the future
  • Marhun : Pledged Collateral
  • Marhun Bih : Collateral to Fulfill Obligation
  • Mazhab : Views of Prominent Scholar or School of Thoughts

  • Muamalat : Man-to-Man transaction
  • Mua’wadat : Exchange contract
  • Mubarri’ : A person who grants Ibra’

  • Mudharabah : Profit Sharing. Commonly for investments. 

  • Mudharabah Muqayyadah : Profit Sharing with Restricted investments.

  • Mudharib : Entrepreneur, in a Mudharabah transaction

  • Mudharib Yudarib : Entrepreneur investing in another entrepreneur

  • Mudi’q : Safekeeping Depositor

  • Mukhalafah Al  Shurut : Breach in terms / conditions

  • Murabahah : Cost-plus sale (financing)
  • Murtahim : Pledgee
  • Muqassah : Set-Off

  • Musawamah : Simple Sale

  • Musataha : Sale and Lease Back to construct

  • Musyarakah : Partnership, Joint-venture

  • Musyarakah Mutanaqisah : Diminishing partnership

  • Muwakkil : Principal (as in Principal Person)

  • Nasi’ah : Delay (used in relationship in delay of payment of money)

  • Qabd Haqiqi : Physical Possession
  • Qabd Hukmi : Constructive Possession
  • Qabul : Acceptance (tenets of a contract)
  • Qardh : Loan

  • Qardhul Hassan : Benevolent Loan

  • Qimar : Gambling

  • Qiyas : Analogy to derive a decision

  • Rab Ul Maal : Capital providers, Fund owner
  • Rahin : Pledgor
  • Rahnu : Collateralised debt or pledge (pawn broking)

  • Riba’ : Usury (interest)

  • Salam : Order Sale

  • Sarf : Exchange (of foreign currency)

  • Shariah : Law (Islamic) literal definition – way, path

  • Shirkah : Partner

  • Sighah : Act of Offer and Acceptance

  • Sukuk : Certificates (Securitised Assets – objectives similar to bonds)

  • Sunnah : Actions of the Prophet as recorded

  • Ta’addi : Misconduct

  • Ta’widh : Compensation

  • Tahawwut : Hedging

  • Takaful : Mutual assistance

  • Takharuj : Relinquishing the Share of Profit or Inheritance

  • Takhliyah : Relinquishing Rights of Ownership

  • Tamkin : Enabling Rights of an Asset

  • Tanazul : Relinquishing or Waiver of Rights (see also Takharuj)

  • Taqsir : Negligence

  • Tawarruq Murabahah : Tripartite Cost-plus Sale

  • Tawliyah : Sale of Asset at Cost Price

  • Ujrah / Ujr’ : Compensation or Service Charge

  • Urbun : Earnest Money

  • Uruf Tijari : Customary Business Practice

  • Yad Amanah : With Trust (used with Wadiah)
  • Yad Dhamanah : With guarantee (used with Wadiah)

  • Waad : Promise

  • Waad Mulzim / Muwa’adah Mulzimah : Binding Promise
  • Wa’dan : Unilateral Promises
  • Wadi’q : Custodian

  • Wadiah : Safe Custody

  • Wakalah : Agency

  • Wakalah Bil Istihmar : Agency for Investment

  • Wakalah Bi Ujrah : Agency for Services

  • Waqaf : Benevolent Endowment (no human ownership)

  • Wasi : Nominee

  • Wassiyah / Wasiat : Will

  • Zakah / Zakat : Alms (Islamic form of tax)

Check out also the other comprehensive list of Islamic Banking terms from the following websites:

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2 thoughts on “Glossary of Islamic Banking Terms

  1. Dear,

    Its good to see the web page for Islamic Banking, Please tell me what we say بيع الرجا in English.

    I will be very thankful to you for your help,

    Thanks,
    Imtiyaz Ahmad
    India

  2. Pingback: Popular Islamic Finance Terms | Islamic Bankers : Resource Centre

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