Islamic Banking Terms Glossary

	Terms	Definition
1	Al-bai`	Sale contract
2	Al-ijarah thumma al-bai (AITAB)	Lease contract followed by ownership of asset through a sale contract
3	Bai` `inah	Sale contract followed by repurchase by the seller at a different price
4	Bai` dayn	Sale of debt
5	Bai` bithaman ajil (BBA)	Sale contract based on deferred/installment payment at certain price
6	Bai` salam	Sale contract based on order of certain asset with certain specifications. Full payment is made in cash at the time of conclusion of the contract whereas the delivery of the asset is deferred to a specified time
7	Faraid	The knowledge or rules on estate distribution according to Islamic principles
8	Fiqh muamalat	A discipline of knowledge that discusses the rules relating to human affairs
9	Gharamah	Fine/penalty
10	Gharar	Uncertainty
11	Hibah	Gift
12	Ibra’	Rebate/waiver of partial or total claim against certain right or debt
13	Ijarah	Lease or service contract that involves benefit/ usufruct of certain asset or work for an agreed payment or commission within an agreed period
14	Istisna`	Sale contract by way of order for certain product with certain specifications and certain mode of delivery and payment (either in cash or deferred)
15	`Iwad	Consideration
16	Kafalah	Guarantee
17	Maysir	Gambling
18	Mudarabah	Profit sharing contract
19	Muqasah	Offsetting
20	Murabahah	Sale contract with a disclosure of the asset cost price and profit margin to the buyer
21	Musawamah	Sale contract without the disclosure of the asset cost price and profit margin to the buyer
22	Musyarakah	Profit and loss sharing
23	Musyarakah mutanaqisah	A contract of partnership that allows one (or more) partner(s) to give a right to gradually own his share of the asset to the remaining partners based on agreed terms
24	Qard	Loan contract
25	Rahn	Pledge/charge
26	Sukuk	Refers to certificates of equal value which evidence undivided ownership or investment in the assets using Shariah principles and concepts endorsed by the Shariah Advisory Council.
27	Ta`widh	Compensation
28	Tabarru’	Voluntary donation/contribution
29	Takaful	A scheme which is based on the spirit of cooperation and helping each other by providing financial assistance to participants when needed and all participants mutually agree to give contribution for the said purpose
30	Tawarruq/commodity murabahah	Purchasing an asset with deferred price, either on the basis of musawamah (refer no.21) or murabahah (refer no. 20), then selling it to a third party to obtain cash
31	Ujrah	Commission
32	Wa’d	Promise
33	Wadi`ah	Safe keeping contract in which a party entrusted his property to another party for safe keeping and to be returned upon request
34	Wakalah	Agency contract
35	Wakaf	A form of endowment by an owner of a property for public benefit and wellbeing which is allowed by Shariah

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