Download - Islamic Finance Terms
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Adadiyyah أعدادية
(pl. adadiyyat) Countables i.e. things which are measured in individual units
rather than by volume, weight, or length. An example of `adadiyyat are eggs
which are customarily purchased in unit, (half dozen, dozen, etc.) rather than by
weight.
Adl عدل
Adl is a general term which conveys the meanings of justice, equity and
fairness. In rahn transactions, the person whom both the pledger and the one for
whom the pledge is being made agree upon the custodian of the collateral.
Afw عفو
Afw is a Qur'anic term meaning surplus wealth.
Amil عامل
One who performs a task, an agent. One who deserves compensation for some
task which he does, such as the mudarib in a mudarabah contract or a zakat
collector.
Aqar عقار
Real estate, Immovable property such as land, buildings, trees and so forth.
Aqd عقد Aqd is a central term in Islamic financial Fiqh which essentially means
"contract."
Araya عرايا
(sing. Ariyyah) The term refers to palm trees which have been set aside by their
owner for the needy, for a fixed period of time such as a year, so that they may
feed themselves with its fruit. The case of araya is mentioned in the Hadeeth as
an exception to the Prophetic prohibition of the muzabanah sale. That is, while
he had forbade the people of Madinah from selling fruit on the tree for dried
fruit--ostensibly because of the gharar inherent in such a transaction--the
Prophet provided a dispensation in the case of `araya, allowing the poor who
possessed dried dates to sell them to tree owners for access to the fruit on
certain fruit trees for a year.
Ard أرض Land
O you who believe! Fulfill your
obligations (Holy Quraan)
A
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Arbun أربون Earnest money/Down payment; a non-refundable deposit paid by the client
(buyer) to the seller upon concluding a contract of sale, with the provision that
the contract will be completed during the prescribed period.
Arif عارف
An expert who is consulted in situations which require an impartial, informed
decision, such as the appraisal of property.
Ariya عرية
A contract in which one party loans another the use of some item for an
indefinite period of time. Ariyah is generally used to refer to the neighborly
lending of small articles
Asabah عصبة
The male relatives to whom one is related through another male only, e. g. one's
father, paternal uncles, brothers and sons.
Aayn عين
Ayn is term used by the classical Fuqaha' to refer to currency or ready money.
The term `ayn refers to gold, silver, coins, notes and any other form of ready
cash. `Ayn is often contrasted with dayn.
Ainah عينة
A sale in which a purchaser buys merchandise from a seller for a stipulated
price on a deferred payment basis and then sells the same merchandise back to
the original seller for a price lower than the original purchase price.
Abu Hanifah ابو حنيفة Al-Nu`man bin Thabit, pre-eminent 2nd/8th century Faqih of `Iraq after whom
the Hanifi maslak is named.
Ahmad bin Hanbal أحمد بن حنبل
Ahmad bin Hanbal, 2nd/8th century pre-eminent Faqih and Hadeeth specialist
after whom the Hanbali maslak is named.
Ajr أجر Generally ajr means compensation or wage. In an ijarah contract, the ajr is the
price paid by the hirer to the hired party in exchange for the services which the
latter renders.
Akl al-suht أكل السحت Unlawful acquisition of wealth
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Al-ajir al-khas اآلجر الخاص A hired-worker who is contracted to perform a specific task in a specific amount
of time by one party, such as a cook or a servant
Al-ajir almushtarak اآلجر المشترك
A worker, such as a tailor, who offers his services to many and thus may be
contracted by several clients at once
Al-ajr al-mithl األجر المثل The prevailing rate; the price which is normally paid for a given service.
Al-akl bi lbatil األكل بالباطل Unlawful acquisition of wealth.
Al-amin al- `amm األمين العام
One who has been entrusted with the property of another for a reason other than
safe-keeping (wadi`ah), such as a tenant who rents an apartment or the mudarib
in the mudarabah contract.
Al-amin alkhas األمين الخاص One who has been entrusted with the property of another and is responsible for
it, as is the case in the wadi`ah (safe-keeping) transaction.
Al-amwal alribawiyah األموال الربوية The six kinds of substances (gold, silver, dates, wheat, salt and barley) which,
when exchanged in kind, must be exchanged in equal measure and with
immediate transfer of possession. If these conditions are not met, then the
exchange is considered to be riba.
Al-Shafi`i الشافعي Muhammad bin Idris, late 2nd/8th century pre-eminent Faqih after whom the
Shafi`I madhhab is named.
Amanah أمانة Honesty, trustworthiness and loyalty. Amanah is a widely applied term in Fiqh
which is used to refer generally to anything in the safe-keeping of another which
must be guarded and preserved.
Ayah آية Sign, the term refers to a passage from the Holy Qur'an.
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Ajr al-mithl / Ajrul Mithl اجر المثل Reasonable wages; wages to which a person would be entitled under normal
circumstances or customary in the community.
Fard al Kifayah فرض الكفاية Socially obligatory duties. Literally, a collective duty of Muslims, the discharge
of which by some of them absolves the rest of its performance, such as funeral
prayers. Technically it covers such functions which the community fails to or
cannot perform and hence are taken over by the state, such as the provision of
utilities, building of roads, bridges and canals etc.
Al-Aamilu-Alaz-Zakah عامل الزكوة
Zakah collector.
Alim عالم
An Islamic religious scholar. Plural: Ulamaa.
Al-Mofaviza المفاوضة General Partnership (one of the types of partnership under Musharakah)
Al-sharikah dhat al-mas uliyah al-mahdudah الشركة ذات المسئو لية المحدودة The name for a private limited company in Egyptian law
Al-wakala al mutlaqa الوكالة المطلقة Resale of goods with a discount on the original stated cost. Absolute power of
attorney.
Amwal اموال Wealth; in business context wealth that is contributed as capital in a partnership;
(pl. of mal)
Aqd ghayr Azim عقدغيرعازم
A contract that is terminable at the will of the parties, like partnership.
Aqd Sahih عقد صحيح
A legal contract
Aqd عقد
Agreement, contract.
Ard / Ardh عرض
land; property that includes goods, slaves and even real estate; according to
most jurists land is not eligible for entitlement to profit as compared to other
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things that are: wealth, labor, credit-worthiness qiyas (analogy); a principle of
law; principal amount in a debt; see A’s al-mal.
Athmaan mutlaqah الثمن المطلق
Absolute currencies; the term is usually applied to dinars and dirhams
Batil باطل Void, invalid. Said of a transaction, a contract which governs a transaction or an
element in such a contract when they are null and void. opp. Sahih.
Bay بيع Sale; an agreement between two parties (the seller and the buyer) to the effect
that the ownership of the sale item is transferred from the seller to the buyer in
exchange for a price
Bay ajil بيع آجل
Delayed-for-immediate sale. A type of sale in which the sale price is paid
immediately and delivery of the sale item is delayed.
Bay al-inah بيع العينة
A prohibited type of sale in which one sells an item on credit then buys it back
for a lesser price.
Bay al-kali بيع الكالي
Sale of a debt for a debt, it is a type of sale which the Prophet is reported to
have prohibited. The Fuqaha' use this term to describe several different types of
debt-for-debt exchanges. The most well-known of these is the exchange in
which a lender extends his debtor's debt repayment period in return for an
increase on the principal i. e. interest. The term kali' is a synonym for debt.
Bay almu'ajjal بيع المؤجل
Deferred payment sale, credit sale; a sale in which payment is delayed and
delivery of the contracted goods is immediate.
Bay al-salam بيع السلم
Deferred delivery sale; a type of sale in which the sale price is paid immediately
and delivery of a specified sale item is deferred for a stipulated period.
B
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Bay bithaman ajil بيع بالثمن اآلجل
Deferred payment sale, Some Islamic banks carry out a transaction of this name
in which goods are requested by a client, purchased by the bank and then sold to
the client at an agreed upon price which includes the bank's mark-up profit.
Often the client is offered the option of paying in installments. This is
essentially identical to the murabahah financing used throughout the Islamic
banking sector.
Bayatan fi bay بيعتان في بيع
Two sales in one, a type of transaction which was explicitly prohibited by the
Prophet. The meaning of the expression "two sales in one" is explained by the
fuqaha' in various ways. Also called "safaqatan fi safaqah.
Bayt al-mal بيت المال
The treasury of the Muslim Community; historically, the bayt al-mal as an
institution was developed by the early Caliphs but which soon fell into
disrepair. The funds contained in the bayt al-mal were meant to be spent on the
needs o the Ummah e. g. supporting the needy.
Badal بدل
Substitute; substitute compensation.
Bai al Dayn bi addayn بيع الدين بالدين The exchange of a debt for a debt (prohibited based on a tradition and
unanimously by the jurists based on ijma).
Baligh بالغ
Mature person; person who has attained puberty, the outward sign of majority
and discretion, in the absence of which jurists determines different ages for the
presumption of puberty.
Buda’ah بضائع Goods given to another for trading without giving wages or sharing profits (like
a shopkeeper leaving his shop with another shopkeeper during his absence).
Daif ضعيف
Weak, Said of a hadith which whose transmission is defective so that its
authenticity is in question.
D
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Daman ضمان
Responsibility for financial coverage in the case of destruction or damage.
Daman al-mal ضمان المال
Liability for the debts of the partnership; the usual form of liability underlying
all partnerships, especially one formed based on wealth.
Daman al-talaf ضمان التلف
Liability for damaging or destroying property accepted by the partnership for
value-added work.
Daman al-thaman ضمان الثمن
Liability underlying a partnership formed on the basis of credit-worthiness
where each partner is liable, jointly and severally, for paying the prince of goods
bought on credit.
Dayn دين Debt; some form of wealth which one is required to pay back to another.
Dhimmah ذمة Dhimmah is a basic term in fiqh al-mu`amalat which roughly corresponds to the
concept of liability. A debt is said to be "established in someone's dhimmah" if
he is in debt to someone else. The Fuqaha' also speak about a person's dhimmah
"being occupied" and "being cleared." The concept of dhimmah may be likened
to a virtual liability container which it may be said that every responsible person
has. These containers, it may be imagined, are constantly being filled with
rights and obligations--such as the obligation to repay someone.
Dinar دينار
A gold coin used by Muslims throughout Islamic history. The standard mass of
the dinar which is referred to in Fiqh is mithqal (app. 4.25 grams.)
Diyah دية
The compensation paid by one who commits manslaughter or unintentional
homicide to the relatives of the deceased.
Faqih فقيه
Muslim jurist; A Muslim who is an expert in Fiqh; a Muslim who is
knowledgeable of the rules of the Shariah and knows how these rules are related
to the source texts upon which they are based.
F
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Faqir فقير
A poor person (pl. fuqara)
Faskh فسخ
Undoing, dissolving, cancellation. Faskh is a term used by the classical Fuqaha
to refer to the dissolution of a contract or agreement. It has been described as
the cancellation of a contract, such that affairs return to the state in which they
were before the closing of the contract, without any addition or subtraction.
Many of the classical fuqaha' apply the term faskh to instances in which a
previously valid (sahih) contract is cancelled voluntarily by the contractual
parties--such as in iqalah, khiyar al-`ayb (option to return in case of a defect)
and khiyar al-shart (stipulated option of return)--and use the term infisakh for
cancellations which occur outside of the will of each of the contractual parties
such as the cancellation of a sale contract when the sale item is destroyed,
before the seller can hand it over to the purchaser or the dissolution of certain
partnerships upon the death of one of the participating parties.
Fatwa فتووٰی
(pl. fatawa) A formal response issued by an expert Faqih, called a mufti in
response to a question.
Fuduli فضولى
A party is described as "fuduli" whenever it transacts (e. g. sells, rents, etc.)
with someone else's property without the permission of the Shariah (e. g.
wakalah). Such is the case when a party does not own the property with which it
transacts and is not the wakil (authorized representative) or wali (guardian) of
the true owner. For example, if a person were to negotiate and "close" a deal
with a buyer in which he sold some machinery without the owner of the
machinery having made him his wakeel (authorized representative) the "seller"
would be described as fuduli.
Fard فرض Obligatory, an act which is obligatory on Muslims
Fard Ain فرض العين An action, which is obligatory on every Muslim
Fasid فاسد
Vitiated; irregular; unenforceable; used in the sense of voidable in the positive
law, but a contract is voidable at the option of the parties, while the fasid
contract can become valid only if the offending condition is removed.
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Falas افالس
Bankcrupt
Fulus فلوس
(pl. of fals) copper coin
Fidyah فدية
Compensation for missing or wrongly practising necessary acts of worship.
Fidyah usually takes the form of donating money or foodstuff, or sacrificing an
animal.
Fuqaha فقهاء
(singular, faqih) Jurists who give opinion on various issues in the light of the
Quran and the Sunnah and who have thereby led to the development of Fiqh.
Gharar غرر
A quality said to exist in a contractual transaction when an essential element of
the transaction is indeterminate. The sale of an item which the seller does not
possess for example is a gharar sale. Contractual transactions which contain
gharar are batil i. e. void. Avoiding gharar in transactions is one of the essential
principles of Islamic finance.
Gharim غارم
(pl. gharimun) A debtor who does not possess the funds with which to repay his
debt. According to the Hanifi jurists, a gharim is one who whose funds, after
repayment of his debt, would not equal the nisab. The Shafi`i and Maliki jurists
divide the gharimun into two types: 1) those whose debts were incurred in their
own benefit and 2) those whose debts were incurred benefiting others. The
gharimun are one of the eight groups mentioned in the Qur’an as legitimate
recipients of zakah funds.
Ghasb غصب
The wrongful appropriation of property by force.
Gharim غارم
A person in debt; debtor unable to pay the debt from his wealth.
Ghasb غصب
Usurpation; abduction.
G
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Habal alhabalah حبل الحبلة
A type of sale practiced by the Arabs during the Jahiliyyah, in which the
essence of the agreement between the two transacting parties depended on a
pregnant she-camel giving birth to a female calf which would subsequently
become pregnant itself. The habal al-habalah transaction was prohibited by the
Prophet, according to several well-known reports, ostensibly because of the
extreme uncertainty in the essence of the contract, given that neither of the
contractual parties can be even remotely certain that a pregnant she-camel
would successfully give birth to a another she-camel, which would subsequently
mature and become pregnant itself.
Hadith حديث
(pl. ahadith) A successively transmitted report of an utterance, deed, affirmation
or characteristic of the Prophet Muhammad. The Ahadeeth are the source texts
by which the Sunnah is preserved.
Halal حالل
Permissible, lawful; said of a deed which is not prohibited by Allah, opp.
Haram.
Haqq حق
Truth, right, Al-Haqq is one of the names of Allah. In the Fiqh of financial
transactions, the term haqq signifies a right which a party possesses, for
example the creditors right to payment.
Haram حرام
Impermissible, unlawful, opp. Halal.
Hawalah حوالة
Debt transfer; a transaction in which debtor A transfers the obligation to repay
his debt, which is due to lender B, to a third party C, who generally is already in
debt to A. The result is that C now owes B and A is free from the burden of
repayment.
Hawl حول
The term hawl is used by the jurists to describe the amount of time which must
pass before a Muslim in possession of funds equaling or exceeding the
exemption limit (nisab) must pay Zakah on his wealth. In the case of cash, gold
and silver it is one Islamic year i.e. a lunar year of app. 354 days.
H
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Hibah هبة
Gift
Hisbah حسبة
Hisbah is a term used by the classical fuqaha', among them Ibn Taymiyyah, to
describe the function of regulating the market place which is to be carried out
by the Islamic authority (often called the muhtasib in this sense). Hisbah
includes taking whatever steps may be needed in order to maintain a fair and
orderly market place. Historically, various Islamic rulers have undertaken the
duty of hisbah by supervising activities ranging from the inspection of eateries
for sanitary conditions to the investigation of fraud. The basis of hisbah is the
Prophet's customary inspection of the marketplace of Madinah.
Hukm حكم
(pl. ahkam) In Fiqh, the Shariah ruling (e.g. obligatory, recommendable,
neutral, reprehensible, or forbidden) associated with any action.
Husah حصاة
Pebbles, a type of sale practiced by the Arabs in the Jahiliyyah and prohibited
by the Messenger of Allah in which the sale was determined by the casting of
pebbles. Classical commentators mention three forms of the husahsale: (1) the
seller would say to the would-be purchaser, "when I throw the pebbles in my
hand, then the deal is closed and binding on you," (2) the seller would say to the
would-purchaser, "I shall sell you the commodity which your pebbles hit" or (3)
in a land sale, the seller would say, "I shall sell you the plot of land whose
dimensions are defined by the extent to which you throw this pebble." The
husah sale--like the habal al-habalah sale (see entry) was ostensibly prohibited
because of the gharar which characterized the contract which governed it.
Harikat amal شركة العمل
Partnership in which participation by the partners is based on labor or skill, but
the partnership has to be of the type inan or mufdwadah.
Heelah حيلة
Legal device
Hima حمىٰی
Keeping people away from a land which was earlier treated as usable by all so
as to restrict all outward benefits such as herbage, water and hunting to state
use.
Hizim حزم
Binding; binding contract.
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Hudud حدود
The boundary between what is Halal (lawful) and what is Haram (unlawful),
set by Allah. Whoever transgresses these limits may be punished or forgiven by
Allah.
Hujjah حجاج
Legal proof or authority
Ihtikar احتكار
Hoarding; the prohibited practice of purchasing essential commodities, such as
food and storing them in anticipation of an increase in price.
Ijarah wa iqtina اجارة و إقتناء
Lease-and-purchase transaction; a financing instrument used by practitioners of
contemporary Islamic finance in which a financier purchases reusable
merchandise (e.g. airplane, buildings, cars) and then leases them to clients in
return for an agreed upon rental fee (to be paid for the length of the lease
period) and an agreement that the client will purchase the merchandise at the
end of the lease period.. There are similar transactions of various names, among
them al-ijarah al-muntaha bi-tamlik.
Ijma اجماع Consensus, The unanimous consensus of the Muslim Ummah on a given issue,
usually as represented by the agreement of the jurists. Ijma' has traditionally
been recognized as an independent source of law, along with the Qur'an, Sunnah
and Qiyas (analogical deduction), by most of the jurists.
Ijtihad اجتهاد
Effort, exertion, diligence. The process by which a qualified Islamic jurist
(called a mujtahid) endeavors to arrive at the correct ruling on a given issue by
reflecting on source texts from the fundamental sources of the Shari`ah: the
Qur'an and Sunnah.
Iktinaz إكتناز
Hoarding wealth by not paying zakah on it.
Iman ايمان
Conviction, faith or belief; the acceptance and affirmation of Allah, His Books,
His Messengers, His Angels, the Hereafter and Divine Decree.
I
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Infaq انفاق
Spending, normally in the path of Allah. Among the various praiseworthy types
of infaq are spending on one's family, spending in preparation for jihad and
feeding and clothing orphans and other underprivileged individuals.
Iqtisad اقتصاد
Moderation. The term is used in modern standard Arabic to denote the field of
economics.
Istisna إستصناع
A type of sale, similar to salam, in which the price is paid in advance by the
purchaser/contractor for specified goods which are subsequently manufactured
and delivered on a stipulated date.
Ihya al-Mawat إحياء الموات Reviving of un-owned wasteland. One who revives such land becomes its
owner.
Ihya’ al-ardh إحياء األرض Reviving barren lands.
Ikhtilat اختالط Mixing of shares so that they can no longer be separated.
Intifaq انتفاق Granting of concessions relating to real estate e.g. the right of passage and right
to place a beam on the wall of the neighbor, etc.
Intiha انتهاء End; termination; termination or dissolution of a partnership.
Iqalah إقالة Negotiated rescission.
Iqta اقطاع Granting of ownership or usufruct rights over state land by the state to
individuals in recognition of their services for the sake of Islam.
Irtihan إرتحا ن Pledging; mortgaging.
Ishtirak اشتراك Equivocally; participation; partnership.
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Istidanah إستدانة Raising or building up credit through credit purchases. It however does not
apply to the raising of cash loans.
Isnad إسناد
The chain of transmission of a tradition.
Isqat إسقاط The extinction of a right.
Istidanah إستدانة Raising or building up credit through credit purchases; does not apply to the
raising of cash loans; see istiqrad.
Istihqaq al-ribh إستحقاق الربح Entitlement to profit; basis for entitlement to profit.
Istiqrad إستقراض The raising of cash loans for business purposes, declared batil by al-Sarakhsi as
it is against the principle of prohibition of Riba.
Jahiliyyah جاهلية
The Days of Ignorance, the so-called "pre-Islamic period." The period between
the Prophethood of `Isa bin Maryam (Jesus) and the Prophethood of
Muhammad. Jahiliyyah is the term Muslims use to refer to the era just before
the coming of the Prophet Muhammad and more generally to the state of affairs
which characterized this era, which was plagued by shirk (the crime of
associating partners with Allah), infanticide, tribal strife, etc.
Ja’iz جائز
Permissible; permissible contract.
Jizya جزية A tax imposed on non-Muslims who are under Muslim country.
Joalah / Joaalah جعالة
The undertaking of one party (the Jael, bank or employer) to pay a specified
amount of money to another party in return for rendering a specified service in
accordance with the terms of contract.
J
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Kafalah كفالة
Assumption of the responsibility for debt repayment; a standard Islamic
financial transaction in which X (the kafil) agrees to assume responsibility for
the debts of Y (the makful `anhu). Similar but not identical to hawalah.
Kafil كفيل
In a kafalah relationship, the party which assumes responsibility for repayment
of the debts of another.
Kharaj خراج
Kharaj is a term used by the fuqaha' to describe a certain share of the produce of
certain agricultural lands which is collected by the caliphate and added to the
bayt al-mal. The term appears in a wider sense in a well-known hadith which
came to constitute a basic principle of fiqh al-mu`amalat: profit (kharaj) goes
with liability (daman).
Khiyar خيار
Option, choice, the option extended to one or more of the parties in a sales
contract to rescind the sale, upon the appearance of a defect, for example. The
jurists have traditionally recognized several different types of khiyar, including
khiyar al-ru`yah, khiyar al-`ayb, khiyar al-shart, khiyar al-majlis.
Kafalah bi al-thaman كفالة بالثمن Surety for paying the price or sum if unpaid by the person originally liable.
Kafalah binnafs كفالة باالنفس Bail; surety for producing the body of the person wanted.
Kafil كفيل Surety; person providing the surety; guarantor.
Khalt خلط
Mixing of shares; see ikhtilat.
Khamr خمر
Wine from grape juice.
Kharaj خراج
Tax on land of non-Muslim subjects of an Islamic state; revenue from land.
K
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Khums خمس
A 20 per cent levy. It is applicable to spoils of war, mines and wealth burned in
land that has no owner.
Kihayr Izin خيار إذن
Contract terminable at the will of either party. contract terminable at the will of
either party.
Luqtah لقطة
The term luqtah refers to an item misplaced by its owner which someone else
finds. The topic of luqtah is treated in most standard Fiqh commentaries and is
often accompanied by a discussion of the responsibilities of the one who finds
the lost property. The questions discussed include: Should he leave it where he
finds it? Should he take possessions of it in order to safeguard it until the owner
comes back for it? Should he take possession of it and do what he wants with it.
Madd مد
A dry measure equal to 1/4 sa` which was in use in Madinah during the time of
the Prophet and continued to be part of the classical Islamic measurement
system.
Madhhab مذهب
Way of going, pl. madhahib. A Fiqh school or orientation characterized by
differences in the methods by which certain source-texts are understood and
therefore differences in the Shari`ah rulings which are deduced from them.
There are four well-known madhahib among Sunni Muslims whose names are
associated with the classical jurists who are said to have founded them (Hanafi,
Maliki, Shafi`i and Hanbali).
Mahr مهر
The obligatory gift, given by the groom to the bride, which is one of the integral
components of a valid marriage agreement.
Makruh مكروه
Detested; technical term used by the Fuqaha' to classify actions with regard to
their desirability. Makruh is said of an action which one is rewarded for
avoiding, but not punished for committing.
L
M
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Mal مال
Wealth, money, property; any valuable thing which can be possessed.
Malik مالك
Malik bin Anas pre-eminent faqih of the late 2nd/8th century after whom the
aliki madhhab is named.
Manfaah منفعة
Benefit, the yield which a utilizable property produces. The term is often used
by the Fuqaha' to describe the usufruct associated with a given property,
especially in leasing transactions. In an automobile lease for example, the term
manfa`ah might be used to describe the benefit which the lessee derives from
the use of the car for the duration of the lease (as opposed to the actual
ownership of the vehicle).
Maqasid al-Shari`ah مقاصد الشريعة
The Objectives of the Shariah. The term maqasid al-shariah refers to a juristic-
philosophical concept developed by the later generations of the classical
Fuqaha', who attempted to formulate the goals and purposes of the Shariah in a
comprehensive manner to aid in the process of investigating new cases and
organizing previous existing rulings.
Maysar ميسر
Gambling, a game of chance. Originally a game of chance played by the Arabs
in the Jahiliyah, maysar came to refer to any game of chance.
Miskin مسكين
A poor, indigent person. The miskin is mentioned in the Qur'an as one of the
recipients of zakah.
Muamalah معاملة
A financial transaction. Fiqh al-mu`amalat is the traditional Islamic discipline
concerned with the jurisprudence of financial transactions.
Mudarabah مضاربة
A standard Islamic transaction between two parties in which one party, the rabb
al-mal or investor, provides capital for a venture project and the other, the
mudarib or entrepreneur, using his entrepreneurial skills, utilizes the capital to
generate a profit. Profits arising from the mudarabah are distributed between the
rabb al-mal and the mudarib according to a pre-determined ratio and any losses
are borne by the investor alone.
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Mudarib مضارب
In a mudarabah contract, the party who acts as the entrepreneur-manager.
Mufti مفتي
A highly qualified jurisconsult who issues fatwa (informed legal
pronouncements), usually in response to questions posed to him.
Mugharasah مغارسة
A type of agricultural contract similar to muzaraah in which a land owner and a
worker agree that, in return for the worker's planting and tending of fruit-
bearing trees on the land owner's field, the landowner will assign to him a share
of the orchard's harvest.
Mujtahid مجتهد
One who exerts himself) a highly qualified expert in fiqh who engages in
independent legal reasoning (ijtihad).
Mukhabarah مخابرة
Mukhabarah is a term used by some of the classical fuqaha' as a synonym for
muzara`ah (see entry) and by others to mean an arrangement between a
landowner and a worker. Mukharabah is similar to muzara`ah except that in
mukhabarah, supplies (e. g. seed) are provided by the worker while in
muzara`ah they are provided by the landowner.
Murabahah (Bay al-murabahah) مرابحة
Originally a term describing any sale in which the seller ells his merchandise for
more than the price at which he acquired it, the term murabahah is now used in
contemporary Islamic finance to describe a financing scheme in which a
financial institution agrees to purchase merchandise for a client provided that
the client promises to purchase it from the financial institution at an agreed
upon mark-up. This transaction, called simply murabahah or murabahah
financing, is widely used in contemporary Islamic finance.
Musaqah مساقاة
A type of partnership in which the owner of an orchard agrees to share a
stipulated portion of the produce of the orchard's trees with a worker, in
exchange for the latter's irrigation of the garden.
Musharakah مشاركة
Partnership, a standard Islamic transaction in which two or more parties enter
into any one of several related types of partnerships. In a typical musharakah
agreement, two or more parties agree to provide capital (ra's mal) towards the
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financing of a commercial venture, share profits according to a stipulated ratio
and share losses on the basis of equity participation.
Muzabanah مزابنة
Essentially, muzabanah is a transaction in which the owner of fruit trees agrees
to sell his fruit for an estimated equivalent amount of the dried fruit, such as
palm fruit for dates or grapes for raisins. Muzabanah was an agricultural
practice known to the people of Madinah and prohibited by the Prophet
ostensibly because of the strong element of gharar present in such a transaction.
Muzara`ah مزارعة
Share-cropping; an agreement between two parties in which one agrees to allow
a portion of his land to be used by the other in return for a part of the produce of
the land.
Najash نجش
The prohibited practice of deceiving and inciting a potential buyer during the
course of pre-sale negotiations or bidding by egging him on, either through
insincere bidding on the part of a spectator (such as bidding with no intention of
buying and merely in order to have the would-be buyer raise his bid), or false
statements on the part of the seller himself (such as the seller claiming that the
commodity is of greater value than its true worth).
Najis نجس
Impure.
Nisab نصاب
The exemption limit for the payment of zakah. A Muslim who possesses wealth
below the nisab is exempted from paying zakah, while a Muslim who possesses
wealth at or above this exemption limit is obliged to pay zakah. The nisab
differs depending on the type of wealth in question.
Qabd قبض
Seizing, taking possession of the exchange commodity in an exchange
transaction, such as the exchanger taking possession of the silver which he
traded for his own gold. It’s being immediate is a necessary condition for the
validity of currency exchange.
N
Q
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Qard قرض
A loan, a transaction in which X lends Y some wealth (e.g. money) to be repaid
after the elapsing of a specified amount of time.
Qard hasan حسن قرض
A loan granted for welfare purposes or to bridge short-term funding
requirements; it could also take the form of a no remunerated deposit account.
The borrower is required to repay only the principal.
Qimar قمار
A type of prohibited arrangement in which the acquisition of property is
contingent upon the occurrence of an uncertain event, as is the case in gambling.
Qirad قراض
Another name given by the Malilkis to the contract of mudarabah, from the
word qard.
Qubul قبول
Acceptance.
Quirat قيراط
Gold, coin used during the time of Holy Prophet PBUH
Ra's al-mal رأس المال
Capital, the money or property which an investor (rabb al-mal) invests in a
profit-seeking venture, often in a partnership (musharakah) such as a mudarabah
or shirkah arrangement.
Rabb al-mal رب المال
In the mudarabah, the investor.
Rahn رهن
Collateral; a pledge or the transaction which governs such a pledge.
Retakaful ريتكافل
A form of Islamic reinsurance that operates on the takaful model.
Riba ربوٰی
Increase, any increase in a loan or sale transaction which accrues to the lender,
seller or buyer, without the provision of an equivalent counter-value to the other
R
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party. In Islam, riba is one of the most abhorrent of all sins and is absolutely
prohibited. Riba encompasses various types of illict gain, of which banking
interest is one example.
Riba al-fadl ربوا الفضل
The riba of exchange surplus. Any commodity-for-commodity exchange
transaction (i. e. barter) in which the exchanged commodities are of the same
type but of unequal measure, or the delivery of one commodity is postponed.
Riba al-nasi'ah ربوا النسئية
Postponement riba, it is one of the two categories into which riba is often
divided by the Fuqaha', the other being riba al-fadl. Riba al-nasi'ah takes place
when two ribawi substances are exchanged, one immediately and the other with
a delay.
Ribaa al-diyvn ربوا الديون
ribaa al-diyvn (debt usury): Interest, same ribaa al-nase`a.
Rishwah رشوة
Bribery.
Rukn ركن
Pillar (pl. arkaan), an integral part of an act, such as a transaction, without
which the act can not be said to have been performed.
Rabb al-ard رب األرض
Owner of land, owner of the land in Musaqah/Musaqat and Muzara’ah
contracts.
Radd bi-al-ayb رب العيب
Return of goods after a sale due to defects in the goods.
Raghabah رغبة
Property, which belongs to all people. Neither state nor individuals can prevent
others from its lawful use.
Rikaz ركاز
Ancient wealth found hurried in land whose
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Sa صاع
A dry measure in use in Madinah during the time of the Prophet in which dates,
barley and other similar items were weighed.
Sadaqah صدقة
Charitable giving (pl. sadaqat).
Sahih صحيح
Sound, healthy, correct, said of a valid contract, A Hadeeth of the highest level
of authentication.
Salam سلم
A type of sale in which the full price of the goods is paid in advance and the
goods are delivered at a specified date in the future.
Sarf صرف
Currency exchange.
Shahadah شهادة
Testimony to the fact that Allah has the unique right to be worshipped to the
exclusion of anything or anyone else and that the Prophet Muhammad is the
Messenger of Allah by declaring, "Ashhadu an la ilaha illallah wa ashhadu anna
Muhammadan rasulullah" (i.e. "I testify that there is no one or thing rightfully
worshipped except Allah and that Muhammad is the Messenger of Allah).
Shari`ah شريعة
The Sacred Revealed Law of Islam which governs the affairs of Muslims.
Shart شرط
(pl. shurut) A necessary condition, something which needs to exist or be present
in order for something (like a transaction) to be valid. Also a condition or
stipulation in a contract.
Shirkah شركة
Any contract between two or more persons in which they agree to jointly enter
into a financial enterprise whose profits will be divided between them.
S
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Shufah شفعة
The right of pre-emption in sale transactions, for example, a real estate sale in
which some party possesses the right to force the seller to sell him all or part of
the real estate in the event of a sale.
Sighah (Sighat al-`aqd) صيغة
Sighah is a term used by the Fuqaha' to refer to the formal exchange which
takes place between the contractual parties indicating their willingness to enter
into the contractual agreement and therefore constitutes the contract itself. The
sighah is a rukn (integral element) of the Islamic contract and essentially
consists of a proposal (ijab) on the part of one contractual party and an
acceptance (qabul) on the part of the other, either of which may be verbal,
written or even gestural, depending on the circumstances under which the
contract is closed.
Suftajah سفتجة
A debt transfer transaction, practiced in Islamic societies since the `Abbasi
period in which A, a debtor authorizes his agent (wakil) or someone who owes
him a debt, to pay a given amount to C to whom A owes a debt. Suftajah is
related to and may be considered a special case of the standard Islamic debt
transfer transaction known as hawalah (see entry).
Sukuk سكوك
Sukuk is the Arabic name for a financial certificate but can be seen as an
Islamic equivalent of bond. However, fixed income, interest bearing bonds are
not permissible in Islam, hence Sukuk are securities that comply with the
Islamic law and its investment principles, which prohibits the charging, or
paying of interest. Sukuk is a certificate of equal value representing undivided
shares in ownership of tangible assets, usufruct and services or (in the
ownership of) the assets of particular projects or investment activity.
Sunnah سنة
The actions, deeds, affirmations and characteristics of the Prophet Muhammad,
the customary practice of the Prophet which informs the life of a Muslim.
Sadaqah al-Fitr صدقة الفطر
A compulsory levy after the month of fasting (Ramadan). Every Nisab-holder
has to give to the poor one saa (21/2 kg.) of commonly used grain for himself
and each one of his dependents.
Samsarah سمسرة
Brokrage, agency, business of commisson. See Simsar.
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Shakhsiyah iitbariyah شخصية إعتبارية
Juristic person; artificial personality; corporate personality.
Sharik شريك
Partner
Sharikah al-wujuh شركة الوجوه
Partnership based on credit-worthiness of the partners in which the ratio of
profit and loss is based on the liability borne, but the partnership has to be of
the type inan or mufawadah.
Sharikah amah شركة عامة
General partnership; a partnership in which each partner is a general attorney
for the other partners; a partnership that permits trading in all types of goods.
Sharikah khassah شركة خاصة
Special partnership; partnership for a single venture or for trading in a
particular item; partnership in which each partner is a special attorney of the
other partners.
Sharikah Musahamah شركة مساهمة
In Egyptian law it is the name for a corporation or for a public limited
company.
Sharikah شركة
Partnership; in Egyptian law the term is used for joint-stock companies and
corporations as well, but is qualified with an adjective to indicate its nature:
thus, sharikah musahamah for a public limited company or a corporation whose
capital has been subscribed to by the general public.
Sharikat al- inan شركة العنان
A basic contract of partnership based on agency in which participation may
either be on the basis of wealth or labor or credit-worthiness, and in which
equality of contribution or legal capacity is not necessary.
Sharikat al-abdan شركة األبدان Another name for sharikat al-amal.
Sharikat al-amwal شركة األموال
A partnership in which participation is based on the contribution of wealth by
all partners, but the partnership has to be of the type indn or mufdwadah.
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Sharikat al-ibahah شركة اإلباحة
Common rights of individuals to gather possesses and own free commodities.
Sharikat al-jabr شركة الجبر
Mandatory co-ownership created by an act of law, like inheritance.
Sharikat al-mafalis شركة المفالس
A partnership between persons whose assets have been reduced to copper coins
and who have to buy on the basis of credit-worthiness; see sharikat al-wujuh.
Sharikat al-milk شركة الملك
Co-ownership. Sharikat al-mudarabah: see mudarabah.
Sharikat al-taqabbul شركة التقابل
Partnership for the acceptance of work, which is the same thing as a partnership
based on labor or skill.
Sharikat al-zimam شركة الذمم
A term used by the Malikis to indicate a situation where two or more persons
are buying goods on credit it is different from the Hanafi sharikat al-wujuh
insofar as it requires the physical presence of all the partners at the time of
purchase.
Shira’ bi al-nasiah شراء بالنسئية A credit-purchase.
Shirb شرب
The right of irrigation.
Shirikat al- aqd شركة العقد
A partnership created through contract as opposed to co-ownership that may be
the result of a joint purchase or agreement or it may result from inheritance or
from some other legal situation.
Shirkah شركة
Another form of the term sharikah. Partnership between two or more persons
whereby, unlike mudarabah, all of them have a share in finance as well as
entrepreneurship and management, though not necessarily equally. See
Appendix II for details.
Shirkat al-amal شركة األعمال
See sharikat at-amal.
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Takaful تكافل
Mutual support; Islamic insurance; an Islamically acceptable alternative to
conventional commercial insurance which is based on the concept of mutual
financial support.
Tawarruq توارق
Reverse murabahah. As used in personal financing, a customer with a genuine
need buys something on credit from the bank on a deferred payment basis and
then immediately resells it for cash to a third party. In this way, the customer
can obtain cash without taking an interest-based loan.
Ta’yin تعيين
Ascertainment of the goods sold through weight or measure.
Tabarru تبرع Act of charity.
Tafwid تفويض Delegation.
Tahjir تجارة Earmarking a piece of wasteland that has no owner by an individual in order to
rehabilitate it. (This establishes the right of ownership on such land).
Takhrij تخريج Derivation; a methodology practiced by the Faqih, and that is based upon
reasoning from principles.
Takhsis تخصيص Restriction, restriction of the meaning of a text.
Ummah أمة The Muslim Community.
Ulamaa علماء
(pl. of Alim) The people of knowledge from amongst the Muslims who act on
what they know and do what they say.
T
U
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Urudh عروض
(pl. of Ardh) property that includes goods, slaves and even real estate.
Ushr عشر
Ten per cent (in some cases five per cent) of agricultural produce payable by a
Muslim as a part of his religious obligation, like Zakat
Wadi`ah وديعة
Safe-keeping, deposit, The standard Islamic financial transaction in which
entrusts property to Y for safe-keeping. Wadi`ah refers to the deposited
property.
Wakalah وكالة
Agency; a standard Islamic practice wherein X (the wakil) acts as the agent of
Y. In this capacity X may execute the affairs of Y. Wakalah is a widely
applicable phenomena in Islamic practice which is often used in financial
transactions: whenever a party cannot personally supervise a given affair, it
deputizes another party to execute it on its behalf.
Waqf وقف
Cessation (pl. awqaf); a standard Islamic transaction in which one 'freezes' his
property such that it is considered to have been arrested in perpetuity and can
neither be sold, inherited or donated. The term waqf frequently refers to the
property itself. The use of a waqf (e. g. a park) is often dedicated to the relief of
the poor, the public at large or other charitable ends.
Wasiyyah وصية
Will, testament, bequest. The statement of a Muslim in which he details the
manner in which his wealth is disposed of after his death.
Waijdb / Wajib واجب
Compulsory, obligation as distinguished from wujub (duty).
Wakalah وكالة
Agency
Wakil وكيل
Agent
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Wakalah amah وكالة عامة
General agency.
Wakalah khassah وكالة خاصة
Special agency.
Wakalah qasirah وكالة قاصرة
Restricted agency.
Wali ولي
Guardian
Wilayah والية
Guardianship
Wilayat al-istidanah والية اإلستدانة
Authority granted by one partner to another to buy on credit beyond the limit of
the capital of the partnership.
Zakah زكوة
The third pillar of Islam; an obligatory alm-giving which every well-off Muslim
is required to hand over to the Islamic authority for distribution to the poor and
the needy. In the absence of the Islamic authority, well-off Muslims are required
to distribute their alms among the poor and the needy, as prescribed by the
Shari`ah, themselves. The payment of zakah is prescribed by Allah for all
persons having wealth above an exemption limit (nisab) fixed in the Sunnah.
Zakah al-Fitr زكوة الفطر
A small obligatory head-tax imposed on every Muslim who has the means for
himself and his dependants. It is paid once yearly at the end of Ramadan before
Eid al-Fitr.
Zakah Al-Mal زكوة المال
The Muslims wealth tax: One must pay 2.5% of one’s yearly savings above a
certain amount to the poor and needy Muslims. The Zakah is compulsory on all
Muslims who have saved (at least) the equivalent of 85g of 24 carat gold at the
time when the annual Zakah payment is due.
Zakatul Huboob زكوة الحبوب
Zakah of grain/corn
Z
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Zakatul Madan زكوة المعدن
Zakah of minerals
Zakatur Rikaaz زكوة الركاز
Zakah of treasure/precious stones
Zakatu-rid Tijaarah زكوة ربح التجارة
Zakah of profits of merchandise
Zar ذر Seed; crop to be sown
Zhulm ظلم
A comprehensive term used to refer to all forms of inequity, injustice,
exploitation, oppression and wrongdoing whereby a person either deprives
others of their rights or does not fulfil his obligations towards them.
Zimmah ذمة Equivalent of legal personality in positive law; receptacle for the capacity for
acquisition.