1. Islamic Banking – Introduction, Background & Global Scenario
Islamic Shariah
• Shariah; key to understanding Islamic banking
• Sources of Shariah
• The concept of lawful and unlawful as per Shariah
Islamic Economic System
• Architecture of Islamic Financial System
• Objectives of Islamic economics and finance vs. capitalism and socialism
• The Concept of wealth in Islam
• Objectives of distribution of wealth in Islam
• Factors of production in Islam and their compensations
• Concept of free and fair market system in Islam
2. Concept of Riba, Gharar and Qimar and Other Prohibited Activities
• Riba – Quran, Hadith, definition and types
• Arguments against commercial interest
• Gharar, Qimar and Gambling
3. Islamic Law of Contract
• Basic elements of contract Void and valid conditions Uqood Muawadha and Ghair Muawadha
4. Islamic Law of Sale
• Subject matter, price, delivery & possession
• Bai Batil, Bai Fasid, Bai Makrooh
• Prohibited transactions in Islam
• Khayar, Iqala
5. Comparison of Islamic and Conventional Banking
• Conceptual difference between Islamic and conventional banking
• Difference between the governing principles
• Business model differentiation
• Product level differentiation
• Features of Islamic banking (Liability/Assets)
• Concept of reward and risk under shariah
6. Categories of Islamic Modes of Finance
• Trade based modes
• Participation based modes
• Rental based modes
• Disclosed agent, non disclosed agent
• Wakalatul Istismar contract (portfolio management)
• Differeniate Waadah (unilaterial promise), Muawadah (bilateral promise), Aqd (contract) Dhamanat
• Guarantee, mortgage, liquidated damages, letter of guarantee, collateral
7. Islamic products
Murabaha
• Introduction to Murabaha
• Murabaha as a financing mode
• Murabaha terminology and its variants
• Characteristics and essentials of Shariah compliant Murabaha
• Practical steps for Murabaha transactions
• Issues and mistakes in Murabaha: Rebate in early payment, penalty on late payment
• Difference between Murabaha based financing and conventional bank lending
• Risks for Islamic banks in Murabaha transactions
• Scope and application of Murabaha
Ijarah
• Basic rules of Ijarah
• Lease as a mode of Islamic financing
• Rights and Obligations of lessor and lessee
• Conditions of Ijarah/Lease
• Differentiating Islamic Ijarah from conventional leasing
• Sharia alternative to the finance lease-Ijara Muntahia Bitamleek
Musharakah
• Terminology and characteristics of Musharakah
• Type and basic rules of Mushrakah
• Termination of Musharakah
• Constructive liquidation of Musharakah
• Security/collateral in Musharakah
• Profit/loss distribution
• Application of Muharakah as a mode
• Problems and risks for banks in Mushrakah financing
Diminishing Mushrakah
• Concept of diminishing Musharakah
• Basic features of diminishing Mushrakah
• Steps in a diminishing Mushrakah transaction
• Lease rentals in diminishing Musharakha
• Unilateral promise and transfer of ownership title
• Diminishing Mushrakah as a financing mode
• Mudarabah defined
• Mudarabah capital
• Profit/loss distribution
• Unrestricted and restricted Mudarabah
• Difference between Mudarabah and Mushrakah
• Termination of Mudarabah
• Scope of Mudarabah for banking system
• Problems and risks for Islamic banks providing Mudarabah based financing
Salam
• Salam : definition and concept
• Background and purpose of Salam
• Rules for valid Salam contract
• Difference between Salam and Murabaha
• Taking delivery of Salam goods
• Parallel Salam
• Application of Salam and parallel Salam
• Risks in Salam application
• Scope and potential Salam
Istisna
• Concept and definition of Istisna
• Rules for valid Istisna contract
• Payment in Istisna
• Defference between Salam and Istisna
• Parallel Istisna
• Application of Istisna and parallel Istisna
• Risks associated with Istisna
• Application of Istisna in Islamic corporate finance
8. Liability products of Islamic banks
• Deposit (Liability) management in Islamic Banks
• Profit calculation mechanism and weight ages
9. Concept of Takaful (Islamic Insurance)
• Basic concept of Takaful
• How it is different from insurance
• Models of Takaful
10.Overview of Securitization and Sukuk
• Securitization of Musharakah, Mudarabah & Ijarah Liquidity management through securitization
• Sukuk Al-Ijara
• Corporate finance transactions with live examples
• Islamic asset and fund management
11.Introduction to AAOIFI standards
• Overview of salient features of Accounting Standards of various modes
• Adaptation of AAOIFI Standards by ICAP
• Islamic banking framework given by SBP
