Islamic Banking Glossary, SBP

The rental as well as the purchase price are fixed in

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The rental as well as the purchase price are fixed in such a manner that the bank gets back its principal sum alongwith with some profit, which is usually determined in advance. Ijtihad ( ): It refers to an endeavor of a qualified jurist to derive or formulate a rule of law to determine the true ruling of the divine law in a matter on which the revelation is not explicit or certain, on the basis of Nass or evidence found in the Holy Qur’an and the Sunnah. Express injunctions have no room for Ijtihad. Implied injunctions can be interpreted in different ways by way of inference from the accepted principles of the Shariah. ‘Illah ( ): It is the attribute of an event that entails a particular Divine ruling in all cases possessing that attribute. ‘Illah is the basis for applying analogy for determining permissibility or otherwise of any act or transaction. Ijma‘ ( ): Consensus of all or majority of the leading qualified jurists on a certain Shariah matter in a certain age. ‘Inah ( A kind of Bai ) ( ): Double sale by which the borrower and the lender sell and then resell an object between them, once for cash and once for a higher price on credit, with the net result of a loan with interest. ‘Inan (A type of Shrikah) ( ): It is a form of partnership in which each partner contributes capital and has a right to work for the business, not necessarily equally.
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4 Istihsan ( ): It is a doctrine of Islamic law that allows exception to strict legal reasoning, or guiding choice among possible legal outcomes, when considerations of human welfare so demand. Israf ( ): It refers to immoderateness, exaggeration and waste and covers spending on lawful objects but exceeding moderation in quantity or quality; spending on superfluous objects while necessities are unmet; spending on objects which are incompatible with the economic standard of the majority of the population. See also Tabzir Istisna’a ( ): It is a contractual agreement for manufacturing goods and commodities, allowing cash payment in advance and future delivery or a future payment and future delivery. A manufacturer or builder agrees to produce or build a well described good or building at a given price on a given date in the future. Price can be paid in installments, step by step as agreed between the parties. Istisna’a can be used for providing the facility of financing the manufacture or construction of houses, plants, projects, and building of bridges, roads and highways. Jahl or Jahala ( ): Ignorance, lack of knowledge; indefiniteness in a contract, sometime leading to Gharar. Jua alah or Ji’alah ( ): Literally, Joalah constitutes wages, pay, stipend or reward. Legally, it is a contract for performing a given task against a prescribed fee in a given period. A similar contract is ‘Ujrah’ in which any work is done against stipulated wage or fee. Kali bil-Kali (
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The rental as well as the purchase price are fixed in such...

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