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ISLAMIC FINANCIAL SYSTEM ASSGNMNT

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ISLAMIC FINANCIAL SYSTEM ASSGNMNT
INTRODUCTION
Islamic finance system has its basis in great Islamic value. It is Riba-free system ( Riba means interest) which ensures the abolition of profit-sharing from the whole financial system.
Islamic Finance System (IFS) can be categorized with absence of ,
Interest based transactions
Interest based financial institution
Unethical and doubtful transactions
Companies’ stocks involved in unlawful activities
Market manipulation
And so on and so forth.
Islamic Financial System is opposite of Conventional financial System i.e system which is based on interest/Riba. The Riba based financial system has been proven as inefficient for the economic balance which is needed in any society. The conventional banking is also of 2 types ; Socialistic and Capitalistic. In Socialistic system , government gets to enjoys freedom whereas in capitalistic system, individuals get to enjoy freedom. But in the light of Shariah in Islamic finance system, restrictive freedom is allowed for both government and individuals. In Islamic finance system, solutions of economic problems are derived from Al-Qur’an and from A hadith of Prophet (S.A.W).It focuses on providing economic opportunities in the society by keeping in consideration political, social and other cultural factors.

ISLAMIC FINANCE SYSTEM
Islamic finance is defined as ;
“ A Financial service principally implemented to comply with the main principles of Sharia (or Islamic Law) “
In turn , the main sources of Sharia are the Holy Quran , Hadith , Sunnah , Ijma , Qiyas and Ijtihad. The Holy Quran is the book of revelation given to the Prophet Muhammad (S.A.W); Hadith is the narrative relating the deeds and utterances of Prophet Muhammad (S.A.W) ; Sunnah refers to the habitual practice and behaviour of Prophet Muhammad (S.A.W) during his lifetime ; Ijma is the consensus among religion scholars about issues not envisaged in either the Holy Quran or the Sunnah ; Qiyas is the use of deduction by analogy to provide an opinion on


References: 5. “ Islamic Economics – A School; of Thought and a System. A Comparative Study “ by Al-Tahavi-Ibrahim. Assembly of Islamic Research (Majma’ al-Buhuth al Islamiya). 1974 6 8. Economic of Islam : A comparative study by Shaikh Mahmud Ahmad Lahore (1952) 9 10. The feature “ Riba Was Originally Forbidden in Other Religion “ was adapted from “ Penubuhan Bank Islam “ (The History and Background of Bank Islam), 1982 11
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