Essence of Islamic Finance

Essence of Islamic Finance:

The underlying objectives of Islamic Finance:


  • Prohibition of involvement in haram or non-permissible transactions or economic activities such as alcohol, non-halal food, pork production, gaming/number forecasting, prostitution.
  • Elimination of Riba (literally means increase or addition) i.e. usury or rent on money in all forms and intents.
  • Prevention of excessive leveraging.
  • Strong direct linkages to productive economic activities
  • Avoidance of Maysir i.e. speculation or gambling and Gharar i.e. preventable uncertainty or ambiguity in transactions.
  • Deterrence of Zulm i.e. oppression and exploitation
  • Introduction of safety net mechanisms for the benefit of the poor and the less-have through Zakat (Tithe) or Islamic tax, Sadaqah (Alms), Waqaf (Trust) and Qard-e-Hasana (Benevolent loan).
  • Upholding universal Social, Moral and Ethical values with emphasis on Maslahah (public interest).
  • Achieving Adalah i.e. Justice and Musawah i.e. Fairness in the distribution of

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