IFMP Islamic Finance Certification (IFC), Pakistan flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Riba al-nasi'ah

An increment charged for deferring repayment of a loan or debt; the Quranic form of interest that is categorically prohibited in Islamic finance.

Riba al-fadl

Excess in the exchange of identical ribawi commodities of the same genus, such as more dates for fewer dates of equal quality; prohibited by hadith.

Gharar

Excessive uncertainty in a contract's subject matter, price or delivery that makes obligations indeterminate; material gharar voids the contract.

Maysir

Gambling or any arrangement where gain depends purely on chance and corresponds to another party's loss; prohibited alongside riba and gharar.

Murabaha

A cost-plus sale where the institution discloses its acquisition cost and adds a fixed mark-up; the institution must own the asset and bear risk before sale.

Musharakah

A partnership in which partners contribute capital; profit is shared by agreed ratio, but losses must be shared strictly in proportion to capital contributed.

Mudarabah

A profit-sharing contract where the rabb al-mal provides capital and the mudarib provides effort; capital losses fall on the investor absent misconduct.

Ijarah

A lease of a usufruct for a specified rent and term; the lessor retains ownership and bears major maintenance and ownership-related risks.

Ijarah muntahia bittamleek

A lease ending in ownership transfer to the lessee through a separate promise, gift or sale, not as an embedded condition of the lease.

Salam

A forward sale in which the full price is paid at contract for a precisely specified fungible good delivered at a defined future date.

Istisna'

A manufacturing contract for a made-to-order, non-existent asset with agreed specifications and price; payment may be staged against milestones.

Sukuk

Certificates representing undivided ownership in tangible assets, usufruct or a project, with returns derived from the underlying cash flows rather than a loan.

Takaful

A cooperative insurance arrangement where participants contribute to a pooled fund and the operator manages it under wakala, mudarabah or waqf models.

Wakala model

A takaful or fund arrangement in which the operator acts as an agent for a defined fee, rather than sharing profit with participants.

Qard hasan

A benevolent, interest-free loan; in takaful it is used by the operator to cover a participants' fund deficit, repayable from future surplus.

Purification

The practice of donating the non-Shariah-compliant portion of income or dividends to charity so the retained profit remains permissible.

Shariah Supervisory Board

An independent body of Shariah scholars that issues fatwas, approves products and oversees compliance within an Islamic financial institution.

Al-kharaj bil-daman

The principle that entitlement to profit follows liability for loss; a financier cannot earn a return without bearing genuine commercial risk.

Bay' ma la yamlik

The sale of something one does not own, which is prohibited; salam and istisna' are structured exceptions with specific conditions.

Ta'zir charge

A late-payment penalty imposed on a defaulting murabaha customer; the amount is donated to charity and does not increase the institution's income.

State Bank of Pakistan

Pakistan's central bank, which regulates Islamic banking through its Islamic Banking Department and Shariah Advisory Board.

Modaraba

A Pakistani business form governed by the 1980 Modaraba Ordinance, registered with SECP and based on the mudarabah profit-sharing contract.

Takaful Rules 2005

SECP regulations governing takaful operators in Pakistan, covering participants' funds, surplus distribution and operator fees.

Islamic Export Refinance Scheme

An SBP facility providing Shariah-compliant refinance to exporters, structured using modes such as murabaha and istisna'.

Ijara Sukuk

Sukuk based on the lease of tangible assets; because they represent ownership, they are tradable in the secondary market at negotiated prices.

Murabaha sukuk

Sukuk representing a debt receivable from a cost-plus sale; they may only be traded at par before maturity, not at a premium.

Nisab

The minimum wealth threshold for zakat, commonly 85 grams of gold or 595 grams of silver, held for one lunar year.

Shariah stock screening

A process excluding haram businesses and applying financial ratio filters such as debt-to-assets and non-compliant income to revenue.

Wa'd

A unilateral promise used in Islamic finance to structure binding outcomes, such as the transfer of assets at the end of an ijarah lease.

Fatwa

A formal Shariah ruling issued by a qualified scholar or board, often approving a specific product structure or contract.

Rabb al-mal

The capital provider in a mudarabah contract, who bears the risk of capital loss unless the mudarib is negligent.

Mudarib

The entrepreneur or manager in a mudarabah who contributes effort and expertise in exchange for an agreed share of profit.