Norms Relating to Riba, Gharar, Tawun

Abu hurayrah 28 islamic banking norms relating to

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Abu Hurayrah 28 Islamic Banking
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Norms relating to Gharar: Inadequacy or Inaccuracy of Information Uncertainty may be caused by lack of adequate value-relevant information jahl . Two types of transactions had been forbidden by Prophet (PBUH); al-mulamasah and al-munabadhah. Mulamasah transaction is that when a man can feel a garment but is not allowed to unfold it or examine what is in it, or he buys by night and does not know what is in it. Munabadhah is that a man throws his garment to another and the other throws his garments without either or them making any inspection. Abu Hurayrah 29 Islamic Banking
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Norms relating to Gharar: Inadequacy or Inaccuracy of Information Scholars of fiqh have described gharar as involving want of knowledge (jahl) with regard to the price, the subject matter, or with regard to the characteristics of the price or of the subject- matter, the date of settlement of contract etc. Gharar also refers to possibility of deceit, fraud, which may be due to deliberate withholding of value-relevant information by either party in a contract. The Quran strictly warns against possibility of fraud and deceit specially in measures and weights. 30 Islamic Banking
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Norms relating to Gharar: Complex Contracts - Derivatives Gharar also refers to undue complexity in contracts. For example combining two sales in one: I sell you my house if you sell me your car. Multiple contracts must be independent of each other. 31 Islamic Banking
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Norms relating to Gharar: Pure Game of Chance ( Al-Qimar & Al-Maisir ) The following Quranic verses form the basis of prohibition of contracting under conditions of uncertainty or games of chance. “ye who believe! intoxicants and gambling, sacrificing to stones, and (divination by arrows, are an abomination, - of Satan’s handiwork: eschew such (abomination), that ye may prosper”. (3:90) “Satan’s plan is (but) to excite enmity and hatred between you, with intoxicants and gambling, and hinder you from the remembrance of Allah, and from prayer: will ye not then abstain?” (3:91) 32 Islamic Banking
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Norms Relating to Ta’wun Mutual co-operation, solidarity and brotherhood are central to Islamic ethics. Surah Maida in the holy Quran says: "Assist one another in the doing of good and righteousness. Assist not one another in sin and transgression, but keep your duty to Allah" (5:2) Prophet Muhammad (PBUH) said: “Believers are to other believers like parts of a structure that tighten and reinforce each other." (Al-Bukhari and Muslim) 33 Islamic Banking
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