In a mudarabah contract the person who invests the capital.
collateral; technically, it means to pledge or lodge a real or corporeal property of material value as security for
a debt or pecuniary obligation so as to make it possible for the creditor to recover the debt, in case of non-payment, by selling the pledged property.
It is the ninth month of Islamic calendar, during which Muslims fast; it is also a time for reflection, intensive prayer and self-restraint.
Reinsurance based on Islamic principles. It is a mechanism used by direct insurance companies to protect their retained business by achieving geographic spread and obtaining protection, above certain threshold values, from larger, specialist reinsurance companies and pools.
Lit: increase or addition. Technically it denotes any increase or addition to capital obtained by the lender
as a condition of the loan. Any risk-free or 'guaranteed' rate of return on a loan or investment is riba. Riba, in all forms, is prohibited in Islam. Usually, riba and interest are used interchangeably.
- riba al-buyu
A sale transaction in which a commodity is exchanged for the same commodity but unequal in amount and the delivery of at least one commodity is postponed. To avoid riba al-buyu, the exchange of commodities from both sides should be equal and instant. Riba al-buyu was prohibited by the Prophet Muhammad to forestall riba (interest) from creeping into the economy from the back door.
- riba al-diyun
Usury of debt.
- riba al-fadl
Usury of trade. It is an alternative term for riba al-buyu.
- riba al-nasia
Increment on the principal of a loan payable by the borrower. It refers to the practice of lending money for any length of time on the understanding that the borrower would return to the lender at the end of this period the amount originally lent together with an increment in consideration of the lender having granted him time to pay. The increment was known as riba al-nasia. It was in vogue in Arabia in the days of the Prophet Muhammad.
Banking instrument of the early Muslim period. It was a payment order to draw money from the bank.