ISLAMIC FINANCE 2024
SHARIA COMPLIANT FINANCE

ISLAMIC FINANCE 2024

SHARIA COMPLIANT FINANCE ISLAMIC FINANCE 2024 ISLAMIC BANKING HALAL BANKING

Definition: Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending institutions, raise capital according to Sharia, or Islamic law. It also refers to the types of investments that are permissible under this form of law.

Islamic finance is utilized to foster ethical and just economic transactions that comply with Islamic teachings, avoiding practices such as charging interest (riba) and investing in haram (forbidden) industries like alcohol or gambling.

Islamic finance serves as a foundational pillar in the Muslim world, ensuring that economic activities align with religious beliefs, strengthening communal bonds, and promoting equitable wealth distribution.

The primary objectives of Islamic finance are to achieve justice, eliminate exploitation, and ensure fairness for all participants in a transaction, fostering a socio-economic environment that upholds the broader ethical principles of Islam.

ISLAMIC FINANCE: FREQUENTLY ASKED QUESTIONS

Frequently Asked Questions About Islamic Finance

  • WHAT IS ISLAMIC FINANCE?
  • HOW DOES ISLAMIC FINANCE DIFFER FROM CONVENTIONAL FINANCE?
  • WHAT ARE THE MAIN PRINCIPLES GOVERNING ISLAMIC FINANCE?
  • BENEFITS OF ISLAMIC FINANCE.
  • HOW HAS ISLAMIC FINANCE EVOLVED OVER THE YEARS?
  • WHAT TYPES OF FINANCIAL PRODUCT ISLAMIC FINANCE IS OFFERING?
  • PRODUCT OFFERING DIFFERENCES BETWEEN ISLAMIC AND COVENTIONAL FINANCE
  • BEST ISLAMIC BANKS NEAR ME.
  • WHAT IS THE ISLAMIC PERSPECTIVE ON INTEREST (RIBA)?
  • HOW DO ISLAMIC BANKS MAKE A PROFIT IF THEY DON'T CHARGE INTEREST?
  • WHAT IS A SHARIAH BOARD, AND WHAT IS ITS ROLE IN ISLAMIC FINANCE INSTITUTIONS?
  • HOW ARE ISLAMIC FINANCE PRODUCTS STRUCTURED TO AVOID RIBA?
  • WHAT IS THE CONCEPT OF RISK-SHARING IN ISLAMIC FINANCE?
  • ARE ISLAMIC FINANCIAL PRODUCTS TRULY INTEREST-FREE?
  • CAN NON-MUSLIMS ALSO BENEFIT FROM ISLAMIC FINANCE?
  • HOW DOES ISLAMIC INSURANCE (TAKAFUL) WORK?
  • WHAT ARE SUKUK, AND HOW ARE THEY DIFFERENT FROM TRADITIONAL BONDS?
  • HOW IS THE PRINCIPLE OF GHARAR (EXCESSIVE UNCERTAINTY) APPLIED IN ISLAMIC FINANCE CONTRACTS?
  • WHAT ARE MURABAHA, MUDARABAH AND MUSHARAKAH, AND HOW ARE THEY USED IN ISLAMIC BANKING?
  • ARE THERE ETHICAL CONSIDERATIONS IN ISLAMIC INVESTMENTS?
  • HOW DO ISLAMIC FINANCIAL INSTITUTIONS ADDRESS LATE PAYMENTS OR LOAN DEFAULTS?
  • WHAT'S THE DIFFERENCE BETWEEN HALAL AND HARAM INVESTMENTS IN ISLAMIC FINANCE?
  • ARE ISLAMIC FINANCE PRODUCTS AVAILABLE WORLDWIDE?

HOW DOES ISLAMIC FINANCE DIFFER FROM CONVENTIONAL FINANCE?

Differences Between Islamic and Conventional Finance

Criteria Islamic Finance Conventional Finance
Basis of Operation Operates based on Shariah law principles derived from the Quran and Sunnah. Functions on capitalist principles, mainly profit-driven without religious guidelines.
Interest (Riba) Prohibits charging or paying interest as it's considered unjust. Relies on interest as a primary source of profit for lending and banking activities.
Risk and Profit Sharing Encourages risk and profit-sharing between parties. Lenders and banks typically transfer all risks to borrowers, focusing solely on fixed returns.
Investment Ethics Avoids Haram (forbidden) sectors like alcohol, pork, and gambling. Investments must have a tangible asset and avoid excessive uncertainty (Gharar). Does not have religious restrictions on investments, focusing mainly on profitability.

WHAT ARE THE MAIN PRINCIPLES GOVERNING ISLAMIC FINANCE?

Principles Governing Islamic Finance

  • Riba (Interest) Prohibition: Charging or paying interest is strictly forbidden in Islamic finance. Money, in itself, cannot be a source of profit.
  • Gharar (Uncertainty) Avoidance: Excessive uncertainty or ambiguity in terms and conditions of a financial transaction is prohibited. All terms should be clear and unambiguous. Don't make money with money without tangible assets.
  • Asset-backed Financing: Every financial transaction must be backed by tangible assets or services. Purely speculative transactions are not allowed.
  • Profit and Loss Sharing: Financial institutions are encouraged to engage in contracts that allow sharing of risks and profits rather than just transferring risks to the other party.
  • Prohibition of Haram (Sinful) Activities: Investments in sectors or activities deemed haram, such as alcohol, pork, and gambling, are forbidden.
  • Moral and Ethical Considerations: Beyond just compliance with technical requirements, all financial transactions should uphold high moral and ethical standards, ensuring fairness for all parties involved.

BENEFITS OF ISLAMIC FINANCE

Benefits of Islamic Finance

  • Ethical and Transparent: Islamic finance promotes ethical investing and transparency in financial dealings, ensuring that all parties are well-informed and treated justly.
  • Stability in Economic Cycles: Due to its tangible asset-backed nature and risk-sharing approach, Islamic finance can offer stability during volatile economic times.
  • Socially Responsible: Prohibiting investments in harmful sectors ensures that funds are used in a manner that benefits society at large.
  • Inclusive Growth: By emphasizing welfare and equitable distribution of profits, Islamic finance can contribute to inclusive economic growth and reduce income disparities.
  • Risk Diversification: The diverse range of Islamic financial products, from equity-based to lease-based, offers multiple avenues for risk diversification.
  • Alignment with Real Economy: Asset-backed financing ensures that finance flows towards productive economic activities, aligning financial sector growth with real economic growth.

HOW HAS ISLAMIC FINANCE EVOLVED OVER THE YEARS?

Evolution of Islamic Finance

  • Early Beginnings: Rooted in Islamic teachings, the concept of trade without interest can be traced back to the time of the Prophet Muhammad.
  • 20th Century Revival: In the mid-20th century, the first modern Islamic banks were established, sparking renewed interest in interest-free banking practices.
  • Growth in the Gulf: The oil boom of the 1970s in the Gulf region played a pivotal role in infusing capital into Islamic banking and its subsequent growth.
  • Diversification: The late 20th century saw a diversification of Islamic financial instruments, from savings accounts to bonds (sukuk) and insurance (takaful).
  • Global Reach: Post-2000, Islamic finance gained global prominence. Many non-Muslim majority countries started recognizing and adapting to Islamic financial structures.
  • Standardization and Regulation: With its global expansion, efforts were made to standardize Islamic finance practices. Institutions like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) were established for guidance and governance.
  • Challenges and Innovations: As the industry matured, it faced challenges such as lack of understanding and misconceptions. However, innovations and technology, like Islamic fintech, continue to drive the sector forward.

WHAT TYPES OF FINANCIAL PRODUCT ISLAMIC FINANCE IS OFFERING ?

Islamic Finance Products

  • Musawamah: General sale where price is bargained between seller and buyer without any reference to the price paid or cost incurred by the seller.
  • Murabahah: Cost-plus financing where the seller discloses the cost and adds a known profit margin.
  • Qardh-ul Hasan: Beneficent loan without interest, the borrower is only required to repay the principal amount.
  • Bai Salam: Forward sale where payment is made in advance for specified goods to be delivered later.
  • Istisna: Contract to manufacture or construct where price is paid gradually in accordance with the progress of a job.
  • Mudarabah: Profit-sharing agreement where one party provides capital and the other provides labor, and profits are shared between them.
  • Ijarah: Lease or rent agreement where the lessor leases out an asset to the lessee in exchange for a rental payment.
  • Ijarah Thumma al Bai': Lease followed by sale where the lessee leases the asset and then buys it at the end of the lease period.
  • Ijarah wa Iqtina: Lease to own, similar to Ijarah Thumma al Bai' but the transfer of ownership is gradual or occurs at the end of the lease term.
  • Ijara Mawsoofa bi al Dhimma: Forward Ijarah or future lease where the asset will be leased upon completion or upon specified future date.
  • Tawarruq: Monetization or cash financing where the buyer buys a commodity on a deferred price basis and sells it to a third party to get instant cash.
  • Musharakah: Partnership where profits and losses are shared among partners in accordance with their capital contribution.
  • Bai' Muajjal/Bai' Bithaman Ajil: Deferred payment sale where payment is made at a future date in a lump sum or installments.
  • Bai' al 'Inah: Sale and buy-back agreement where the seller sells an asset to the buyer on a deferred basis and then buys it back at a lower price.
  • Hawala: Informal money transfer system where money is transferred without the actual movement of cash.
  • Kafala: Guarantee or surety where one person guarantees the obligation of another.
  • Rahn: Pledge or collateral where an asset is used as security for a debt.
  • Wakalah: Agency where one person appoints another to act on their behalf.
  • Wadiah and Amanah: Safekeeping where valuables are kept for safekeeping. In Wadiah, the custodian may use the deposit with permission, while in Amanah, the custodian cannot use it.
  • Sukuk: Islamic bonds, certificates representing ownership in a portfolio of assets.
  • Takaful: Islamic insurance where members contribute money into a pooling system to guarantee each other against loss or damage.
  • Islamic Credit Cards: Credit cards compliant with Islamic finance principles, usually based on the concepts of Ujrah (fixed fee for services) or Qardh-ul Hasan.
  • Wa'd (Hedging): Islamic hedging, involves a promise to conduct a certain transaction in the future.

PRODUCT OFFERING DIFFERENCES BETWEEN ISLAMIC AND COVENTIONAL FINANCE

Product Differences: Islamic vs Conventional Finance

Islamic Finance Conventional Finance
Murabaha (Cost-plus Sale) Interest-based Loan
Musharaka (Partnership) Equity Financing
Mudaraba (Profit-sharing) Investment Funds
Ijara (Leasing) Leasing with Interest
Sukuk (Islamic Bonds) Conventional Bonds
Takaful (Islamic Insurance) Conventional Insurance
Qard Hasan (Benevolent Loan) Unsecured Loan with Interest
Wakala (Agency) Conventional Agency Agreement
Istisna (Manufacturing Contract) Production or Manufacturing Contract with Interest
Salam (Forward Sale) Forward Contract with Interest

WHAT IS THE ISLAMIC PERSPECTIVE ON INTEREST (RIBA)?

Islamic Perspective on Interest (Riba)

In Islam, Riba, which is often translated as "interest" or "usury", is considered haram (prohibited). The prohibition of Riba is based on the teachings of the Quran and the Hadith (sayings and actions of the Prophet Muhammad, peace be upon him). The reasons for the prohibition are multifaceted, including both ethical and economic considerations.

References in the Quran:

  • "Those who devour usury will not stand except as stand one whom the Devil has driven to madness by (his) touch. That is because they say: 'Trade is just like usury,' but Allah hath permitted trade and forbidden usury." (Quran 2:275)
  • "O you who believe! Fear Allah and give up what remains of your demand for usury if you are indeed believers. If you do it not, take notice of war from Allah and His Messenger. But if you turn back, you shall have your capital sums. Deal not unjustly, and you shall not be dealt with unjustly." (Quran 2:278-279)

Reasons for Prohibition:

  • Economic Justice: Islam promotes the fair distribution of wealth. Charging interest can lead to wealth accumulation by a few at the expense of many.
  • Ethical Considerations: Profiting from loans, especially at high interest rates, is viewed as exploitative.
  • Promotion of Real Economy: Islam encourages trade and investments in tangible assets rather than making money from money.
  • Prohibition of Uncertainty: Interest-bearing transactions can lead to uncertainty and ambiguity, which Islam seeks to avoid.

ARE ISLAMIC FINANCIAL PRODUCTS TRULY INTEREST-FREE?

Are Islamic Financial Products Truly Interest-Free?

Islamic finance operates on the foundational principle of avoiding Riba (interest), which is prohibited in Islam. The question often arises: Are Islamic financial products genuinely devoid of interest, or is it merely a rebranding of conventional interest-based systems?

Understanding the Interest-Free Nature:

  • Asset-Backed Financing: Unlike conventional loans, where money is lent and interest is charged on the principal, Islamic finance is based on tangible assets. The profit earned is from the sale or lease of these assets, not from lending money.
  • Profit and Loss Sharing: Instruments like Musharaka (partnership) and Mudaraba (profit-sharing) emphasize sharing both profits and losses, ensuring that both parties have skin in the game.
  • Transparent Mark-up: In contracts like Murabaha (cost-plus sale), a clear profit margin is set on the sale of goods. This is not hidden or compound interest but an agreed-upon profit.
  • No Penal Interest: Late payment penalties in Islamic finance don't accrue to the benefit of the lender. Any such penalties are usually donated to charity, ensuring the bank doesn't profit from a client's financial distress.

While critics might argue that the end result of some Islamic financial products mimics interest-based finance, the underlying contracts, ethical considerations, and processes are distinct and adhere to Shariah principles, aiming to eliminate exploitation and promote just financial practices.

HOW DO ISLAMIC BANKS MAKE A PROFIT IF THEY DON'T CHARGE INTEREST?

Islamic banks operate based on Shariah (Islamic law) principles, which prohibit the charging of interest (Riba). Instead of earning money through interest, Islamic banks engage in trade, equity financing, and lease-based contracts to generate profit. These methods are structured to ensure both risk and reward are shared between the bank and its customers.

Main Profit-Generating Mechanisms:

  • Murabaha (Cost-Plus Sale): The bank purchases an item the customer wants, then sells it to the customer at a marked-up price, payable in installments.
  • Musharaka (Partnership): Both the bank and the customer invest in a venture. Profits (or losses) are shared based on the initial investment percentages.
  • Mudaraba (Profit-Sharing): The bank provides capital, and the customer manages the business. Profits are shared based on a pre-agreed ratio, while losses are borne by the bank unless due to the customer's negligence.
  • Ijara (Leasing): The bank buys an asset and leases it to the customer for a fixed period, earning profit through the leasing fee.
  • Sukuk (Islamic Bonds): Instead of lending money and earning interest, the bank invests in tangible assets or projects and earns a share of the profits.

By using these methods, Islamic banks provide financial services that are both ethical and profitable, adhering to the principles of fairness, transparency, and risk-sharing.

WHAT IS A SHARIAH BOARD, AND WHAT IS ITS ROLE IN ISLAMIC FINANCE INSTITUTIONS?

Shariah Board in Islamic Finance

The Shariah Board is a critical component of Islamic finance institutions, ensuring that all operations and products are in line with Islamic principles. Comprising qualified Islamic scholars well-versed in Shariah (Islamic law) and its application in finance, the board reviews, certifies, and monitors the financial offerings of the institution.

Primary Roles of the Shariah Board:

  • Product Review & Certification: The board evaluates new financial products and services to ensure they are compliant with Shariah principles. If they are, the board issues a certification.
  • Continuous Monitoring: Once a product or service is launched, the board regularly reviews its operation to ensure ongoing compliance.
  • Guidance & Consultation: The board provides guidance to the institution on Shariah matters, ensuring that the bank or finance company remains true to Islamic teachings.
  • Conflict Resolution: In cases of disagreement or uncertainty, the board makes binding decisions on Shariah matters related to finance and banking.

Through these roles, the Shariah Board upholds the ethical and moral principles of Islam in the financial sector, fostering trust and confidence among customers who seek Shariah-compliant financial services.

HOW ARE ISLAMIC FINANCE PRODUCTS STRUCTURED TO AVOID RIBA?

Riba, or interest, is strictly prohibited in Islam as it's seen as unjust enrichment and exploitation. As such, Islamic finance has developed unique structures and contracts to facilitate financial transactions without resorting to interest-based mechanisms.

Key Structures Used to Avoid Riba:

  • Murabaha (Cost-Plus Sale): A bank purchases an item and then sells it to a customer at a higher price. The profit margin is predetermined, transparent, and agreed upon by both parties. It's not interest, but a mark-up.
  • Musharaka (Partnership Financing): Both the bank and the customer jointly invest in a venture. Profits or losses are shared according to an agreed-upon ratio.
  • Mudaraba (Profit-Sharing Agreement): One party provides the capital while the other offers expertise and management. Profits are shared, but if there's a loss, the capital provider bears it unless it's due to the manager's negligence.
  • Ijara (Leasing): Islamic banks purchase an asset and then lease it out to a client for a specified period and fee. The ownership can be transferred to the client at the end of the lease period.
  • Salam and Istisna (Purchase Order Financing): Pre-payment for goods delivered in the future. This helps producers obtain funds for production.

These structures ensure that the financial transaction is based on tangible assets or clear benefits, making the earning morally and ethically justified in Islam, without resorting to prohibited Riba.

WHAT IS THE CONCEPT OF RISK-SHARING IN ISLAMIC FINANCE?

Risk-Sharing in Islamic Finance

The concept of risk-sharing is fundamental to Islamic finance. It emphasizes partnerships, shared responsibilities, and jointly bearing the financial risks of a venture. This contrasts with conventional finance, where risks are often transferred from one party to another, like in interest-based loans where borrowers bear the full risk.

Key Features of Risk-Sharing in Islamic Finance:

  • Joint Ventures: Financial institutions and clients come together as partners in a business venture. Both parties invest capital and share both profits and losses.
  • Asset-Backed Financing: Every financial transaction is backed by tangible assets. This ensures that the financier has a stake in the asset and its associated risks.
  • Profit and Loss Sharing: In contracts like Musharaka and Mudaraba, profits and losses from a business venture are shared based on pre-agreed ratios, ensuring both parties are invested in the venture's success.
  • Ethical Investment: Risk-sharing promotes ethical investment. Ventures deemed harmful to society, even if profitable, are generally avoided.

The emphasis on risk-sharing fosters a culture of mutual cooperation, responsibility, and fairness. It ensures that all parties involved in a transaction are genuinely invested in its success, promoting ethical and sustainable financial practices.

CAN NON-MUSLIMS ALSO BENEFIT FROM ISLAMIC FINANCE?

Islamic finance's ethical framework and unique financial products offer benefits that can appeal to both Muslims and non-Muslims alike.

Key Benefits for Non-Muslims:

  • Ethical Investment: Islamic finance promotes ethical investments, avoiding ventures related to alcohol, gambling, or anything harmful to society. This aligns with the values of many socially responsible investors.
  • Risk Management: Due to its prohibition of speculative behavior, Islamic finance can offer more stability, especially in volatile markets.
  • Transparent Transactions: Islamic financial products are structured with clarity and transparency, making the terms clear for customers.
  • No Hidden Fees or Compound Interest: With no compound interest and a focus on upfront transparency, customers often find Islamic financial products to be straightforward.

HOW DOES ISLAMIC INSURANCE (TAKAFUL) WORK?

How Does Takaful (Islamic Insurance) Work?

Takaful is the Islamic alternative to conventional insurance and is grounded in the principles of mutual assistance and cooperation. It provides a system where participants contribute money to a common pool, which is then used to cover claims made by participants.

Key Features of Takaful:

  • Mutual Risk Sharing: Participants contribute to a collective fund, known as the Takaful fund, with the intention to provide compensation to any participant who suffers a loss.
  • Asset Management: The Takaful operator invests the funds in Shariah-compliant ventures, ensuring that investments align with Islamic ethical principles.
  • Clear Profit Division: Profits generated from the investment of the Takaful fund are shared among participants and the Takaful operator based on pre-agreed ratios.
  • No Gambling (Gharar) & Interest (Riba): Contracts in Takaful are clear, transparent, and free from prohibited elements like excessive uncertainty (Gharar) and interest (Riba).

WHAT ARE SUKUK, AND HOW ARE THEY DIFFERENT FROM TRADITIONAL BONDS? HTML FORMAT

Sukuk vs. Traditional Bonds

Sukuk, often referred to as Islamic bonds, are financial instruments designed to comply with Islamic finance principles, particularly the prohibition of interest (riba). While they serve a similar purpose to traditional bonds in raising capital, their structure and underlying principles differ significantly.

Comparison Table:

Criteria Sukuk Traditional Bonds
Basic Definition Certificates representing ownership in an asset or project. Debt instruments where the issuer owes the bondholders a debt.
Return Based on profit from the underlying asset or project. Based on fixed interest (coupon) and principal amount.
Underlying Principle Asset-based or asset-backed, compliant with Shariah principles. Based on lending-borrowing principle.
Risk Sharing Risk is shared between issuer and investors. Risk is typically borne by the issuer.

While Sukuk aligns with the principles of asset and profit-sharing, traditional bonds focus on interest-based returns. This fundamental distinction makes Sukuk a preferred choice for those seeking Shariah-compliant investment opportunities.

HOW IS THE PRINCIPLE OF GHARAR (EXCESSIVE UNCERTAINTY) APPLIED IN ISLAMIC FINANCE CONTRACTS?

Gharar (Excessive Uncertainty) in Islamic Finance

The principle of Gharar refers to excessive uncertainty and ambiguity in contracts, which is strictly prohibited in Islamic finance. This principle ensures transparency, fairness, and honesty in financial transactions, preventing parties from entering into transactions with unclear terms or speculative behavior.

Applications of Gharar Principle:

  • Defined Terms: All terms and conditions, including price, delivery, and other key aspects, must be clearly defined and agreed upon at the time of contract.
  • Avoidance of Speculation: Transactions based on pure speculation or gambling (Maysir) are not allowed.
  • Transparent Transactions: Both parties in a contract should have clear understanding and disclosure of the subject matter and its price.
  • Prohibition of Selling Unowned Goods: Selling goods that one does not possess, or selling fish before catching them, is considered Gharar and is thus prohibited.

Gharar's prohibition aims to ensure that both parties in a transaction have clarity and are not subject to deceit. By avoiding excessive uncertainty, Islamic finance promotes ethical and just financial practices that benefit all parties involved.

HOW DO ISLAMIC FINANCIAL INSTITUTIONS ADDRESS LATE PAYMENTS OR LOAN DEFAULTS?

Islamic Approaches to Late Payments:

  • Grace Periods: A grace period may be provided to the debtor to make the payment, understanding that genuine difficulties can arise.
  • Charitable Donations: Instead of penalty interest, some Islamic banks may charge a fee for late payments, which is then donated to charity. This ensures that the bank does not profit from the client's hardship.
  • Debt Restructuring: If a borrower faces genuine financial hardship, the institution may consider restructuring the debt or rescheduling payments.
  • Asset-based Financing: Many Islamic finance contracts are asset-backed, meaning the bank can recover its funds by claiming the underlying asset in the case of default.
  • Mediation and Counseling: Engaging with borrowers through mediation or financial counseling to understand their difficulties and find viable solutions.

While seeking to ensure that contracts are honored and obligations met, Islamic financial institutions also emphasize compassion, fairness, and mutual assistance, especially when dealing with clients in genuine financial distress.

WHAT'S THE DIFFERENCE BETWEEN HALAL AND HARAM INVESTMENTS IN ISLAMIC FINANCE?

Halal vs Haram Investments in Islamic Finance

Criteria Halal Investments Haram Investments
Interest (Riba) Do not derive income from interest or involve interest-based transactions. Involve or derive income from interest-based transactions.
Alcohol, Pork, etc. Do not engage in or derive profits from industries related to alcohol, pork, or other non-permissible products in Islam. Engage in or derive profits from prohibited sectors like alcohol or pork industries.
Gambling (Maisir) Do not involve or derive income from gambling or speculative activities. Engage in or derive income from gambling or speculative activities.
Uncertainty (Gharar) Based on clear, unambiguous terms and avoid excessive uncertainty. Involve high levels of ambiguity or uncertainty.
Shariah Compliance Adhere to Shariah principles and often have a Shariah board ensuring compliance. Do not conform to Shariah principles or are not certified by a Shariah board.

The distinction between Halal and Haram investments in Islamic finance is based on Shariah principles that promote ethical and moral financial practices. Halal investments are permissible, while Haram investments are prohibited.

ARE ISLAMIC FINANCE PRODUCTS AVAILABLE WORLDWIDE? HTML FORMAT

Availability of Islamic Finance Products Worldwide

Islamic finance products have gained popularity and are available in many countries around the world. Their availability is not limited to predominantly Muslim-majority countries; they can also be found in regions with diverse populations. The following factors contribute to the global presence of Islamic finance:

Factors Supporting Global Availability:

  • **Global Financial Centers:** Major financial hubs like London, New York, and Singapore have established Islamic finance windows, allowing access to Shariah-compliant products.
  • **Demand for Ethical Finance:** A growing global demand for ethical and responsible finance has led to increased interest in Islamic finance principles.
  • **Regulatory Frameworks:** Many countries have developed regulatory frameworks to accommodate Islamic finance, ensuring its legal and operational compatibility.
  • **Diverse Offerings:** Islamic finance institutions offer a wide range of products, including banking, insurance (Takaful), investments, and Sukuk, catering to various financial needs.

While the availability of Islamic finance products has expanded globally, it is important to note that the depth and breadth of these offerings may vary from one country to another. Some countries have well-established Islamic finance sectors, while others are still in the early stages of development.

TYPES OF ISLAMIC FINANCE PRODUCTS BY LOANS TYPE AND COUNTRIES

SHARIA BANKS BY COUNTRY