GMS 695 Chapter Notes - Chapter 9: Commercial Bank, Ijara
21 Jan 2018
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What is it: interest-free banking based on sharing pro ts and losses, first islamic commercial bank in1975 (in dubai) What are the rules: riba: generally translated as usuary , which is unjust, exploitive gains made in trade or business, usually money made by charging interest on money. Mudharabah (pro t sharing): an entrepreneur invests his/her own money and expertise and a bank contributes capital too. The bank is rst in line to recover it"s capital, and the pro ts of the venture are shared between the parties in a pre-speci ed manner. Morabaha (cost plus): an intermediary (bank) purchases a commodity, based on a buyer"s need and sells it to the buyer. The buyer takes possession immediately but pays at a later date. The payment price is preset, and is higher than the bank"s purchase price.
