Question

Give 10 advise how you get the money to pay your debt (etc) or inject money purpose from Islamic Finance instruments? Tawaruq & Sukuk etc

Answer 1

Financing methods which are compliant with Shariah laws is called Islamic finance.

In Islamic finance, funds are raised via various contracts/instruments. These are:

1. Mudaraba - A person gives money to another person for investment in business. Any gains of such businesses are shared.

2. Musharaka - Both the parties contribute entreprenurial abilities, money and other resources. Any gains or losses are shared.

3. Murabaha - It is a cost plus contract sold by an institution to the buyer. Profit is known to both the parties in advance.

4. Salam - It is a type of forward contract whereby goods are agreed to to delivered in future but the payment is made in advance.

5. Istisna - It allows a financial institution to purchase an ongoing construction project. It will be delivered in future.

6. Wadia - In this contract, property is transferred by one person to another for safe-keeping.

7. Hiwala - It is similar to factoring arrangement whereby a debtor is transferred to another person.

8. Kafala - It is similar to guarantee contract whereby one party undertakes to pay the obligation of another party in case the first party defaults.

9. Musharaka al-Mutanaqisa (Diminishing Musharka) - This type of financing is popular in case of housing. Firstly, the property is jointluy owned.

10. Ijarah - It is a contract made for hiring of persons or their services.

11. Qardh-ul Hasan - It is a type of interest free loan which is extended to people who are in need.

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