Work Book for Islamic Finance & Economics IQRA University

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Transcript of Work Book for Islamic Finance & Economics IQRA University

  • Yousuf Ibnul Hasan [email protected]

    RREEAADD IINN TTHHEE NNAAMMEE OOFF AALLMMIIGGHHTTYY AALLLLAAHH

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    BBlleessssiinnggss && PPeeaaccee bbee uuppoonn HHoollyy MMeesssseennggeerr ooff AAllllaahh

    TThhee LLeeaaddeerr ooff tthhee MMaaggnniiffiicceenntt HHoonnoorraabbllee

    EEsssseennttiiaallss OOff

    IIssllaammiicc FFiinnaannccee

    YYoouussuuff IIbbnnuull HHaassaann PPRROOGGRRAAMM CCOONNSSUULLTTAANNTT

    IISSLLAAMMIICC BBAANNKKIINNGG && AAPPPPLLIIEEDD FFIINNAANNCCEE

    TThhiiss ddooccuummeenntt iiss pprreeppaarreedd tthhrroouugghh eexxtteennssiivvee rreesseeaarrcchh ccaarrrriieedd oouutt ssiinnccee 11998899.. IItt iiss ffuullll ooff mmeeaanniinngg aanndd ccoommpprreehheennssiivvee iinnffoorrmmaattiioonn oonn tthhee eeccoonnoommiicc ssyysstteemm gguuiiddeedd bbyy AAllmmiigghhttyy

    AAllllaahh ttoo tthhee mmaannkkiinndd ttoo rreemmaaiinn iinn ccooooppeerraattiioonn aanndd iinn ppaarrttiicciippaattiioonn ffoorr tthhee bbeetttteerr hhuummaanniittyy..

  • Yousuf Ibnul Hasan [email protected]

    Chapter 1 Economics System in Islam

    What is Islamic Economics? What are the principles upon which Islamic Economy, its monetary and financial systems function? Islamic Economics is a system that defines the available resources blessed by Almighty Allah to the mankind. How these resources are utilized and distributed by man keeping in it the social justice and seeking best of these in participation and cooperation by applying the knowledge, experience, ability and efforts through the power of pen and book granted by Almighty Allah to men in confirmation of Unique among Creations and Custodian to all the resources that Almighty Allah owns it alone and absolute.

    Islamic economics is as old as Islam itself. Islam is not a religion. It is a complete political, social, financial & economic system for Islamic & non Islamic communities.

    Islam is Deen. It totally differs to the religions because of the definition, depth and details and interpreted as a Lifestyle. Its principles are comprehensively guided in

    Holy Quran, explained in Hadiath and practice by Holy Prophet Muhammad May Peace Be upon Him as Shariah

    Almighty Allah identified Aims, Objectives, Purpose, Way and Means of Islamic Economics through the first guidance in Holy Quran that opens the chapters of economics system in Islam which is the life of individual Muslim.

    READ (IQRA) in the name of your Lord, who has created you with the clot of frozen blood and taught you with the power of pen .

    The word READ opens the chapter of an Islamic Economics; in RATIONAL, through EFFORTS, by APPLICATION with DISCRIPTIVENESS.

    20th Century Economists define Islamic Economics Hasan-uz-Zaman Islamic economics is the knowledge and application of injunctions and rules of the Shariah that prevent injustice in the acquisition and disposal of material resources in order to provide satisfaction to human beings and enable them to perform their obligations to Allah and the society.

  • Yousuf Ibnul Hasan [email protected]

    M. Akram Khan Islamic economics aims at the study of human recovery achieved by organizing the resources of earth on the basis of cooperation and participation.

    Dr. Nejatullah Siddiqi Role of Shariah define belief in justice and freedom, cooperation and sharing which are the fundamentals to Islamic economic philosophy within the total Islamic system. Key to Islamic economics philosophy lies in man's relationship with Allah, his universe and his people. The other human beings are the nature and purpose of man's life on earth.

    The concept of economics It was established on the day Adam who was senseless to his needs and desires at the time he was created, disobeyed Allah Almighty on temptation of Iblees. AAddaammss aacctt ooff ddiissoobbeeddiieennccee ccrreeaatteedd tthhee pprriinncciipplleess ooff eeccoonnoommiiccss tthhaatt rreevvoollvvee aarroouunndd Theory of Need, Want and Desire that lead to Act, Acquire and Accept. PPrroopphheett AAddaamm wwaass sseenntt ttoo eeaarrtthh ttoo ddeevveelloopp mmaannkkiinndd wwiitthh aa ssyysstteemm ooff lliiffee tthhaatt ppllaacceedd tthhee NNaattuurraall EEccoonnoommiiccss aass.. Any activity that has a commercial, economical and financial purpose with the priority of social benefit to mankind is classified as Islamic Economics and the system that has basis on this classification leads to socio- economic development and not just the economic development.

    The bases of Islamic economic are well define as:

    Resources are unlimited and efforts are limited.

    Needs and wants does not effect on the supply or resources.

    Availability of resources is dependent on efforts that develop the affordability in satisfying the needs.

    Nations were putting their efforts in achieving knowledge and seeking their rights in economic system are the leaders of economic growth.

    Nation that merges the economics growth with socio development develops the Communities For the people, By the people and Of the people.

    Socio Economics Development converts Peoples into Nation.

    The Nations are in One Identity and recognizes through achievement of its knowledge and distribution of resources achieve through social justice, participation and cooperation with trust in the leadership and confidence in the nation having unity, discipline and faith that work on a system believing The voice of the nation is the voice of the God.

  • Yousuf Ibnul Hasan [email protected]

    Islamic Economic regards three factors of productions.

    Man, Money and Commodity

    These three basic factors bring other factors of productions keeping themselves as guide to socio economic system. Economic activity travels in triangle and in clock wise, the point of origin is the point of destination. Man is the source behind all activities that leads towards Islamic Economics System and its abilities, capabilities and control over is the key of efficiency and success that develop healthy communities.

    Role of Man & Money in Islamic Economics 1. The financial matters in the human life play a vital role 2. These identify principles of finance including earnings, income, and distribution of

    wealth & utilization of the same. 3. Matters pertaining to money must be fair and transparent and useful for

    developing socio-economic life of the community. 4. Monopoly of a group or an individual who keeps a control on world monetary

    policies and gets most out of these resources by blocking wealth, crossing their jurisdictions to be eliminated.

    5. It does not impose limits on amount of wealth that an individual can acquire. 6. It guides in maintaining of wealth in a proper form of distribution and incentives

    for work and efforts. 7. It shows opposition & defends against misuse of exploitation in getting hold of

    wealth through unfair means. 8. It clearly denies "free" market of Capitalism, which has led to the situation of

    survival of a part of the society. 9. It emphasizes public revenue from natural resources is used to secure the needs of

    community and not to fill pockets of casino owners. 10. It encourages state to provide public, essential resources to cover needs of every

    individual and family. 11. It outlaw hoarding of wealth and eliminate copyright or patent laws that would

    open an avenue for potential monopoly to develop. 12. It protects the ownership of businesses and companies by restricting it only to

    those who contributes both capital or effort 13. It effectively puts a seal on such concepts as "corporate takeover" from ever

    becoming a reality. 14. It classifies wealth in a systematic way to protect rights of individuals to access

    wealth. 15. It protects the society and secures the needs of the people.

    MAN

    MONEY COMMODITTY

  • Yousuf Ibnul Hasan [email protected]

    16. It mandates vital and natural resources as public property while allowing for unlimited access to luxury items.

    17. It protects society by defining certain needs as a prohibited needs. 18. It disregards corrupt man-made systems and protects honour, rights of woman,

    minor and orphans. 19. It bans all forms of prostitution, pornography or any activities that exploit charms

    and physical attractiveness of women. 20. It prohibits alcohol, gambling, spiral of corruption, social turmoil and moral

    destruction

    Relationship of Allah and Man Tawhid (Oneness of Allah) the total commitment to the will of Allah by submission & the mission to mould human life in accordance with Allahs will.

    44 GGrreeaatt wwaayyss ooff aacccceeppttiinngg TTaawwhhiidd

    1st Look back and thank Allah.

    2nd Look forward and trust Allah

    3rd Look Around and believe in Allah

    4th Look within yourself and find Allah

    Life on earth It is a test and its purpose is to prove successfully by doing Allahs willed. For man entire universe with all the natural resources and powers is opens to exploitation, which Allah owns it alone. Provisions are available to man being the nature of trust on men.

    Islam & Faith 1. Almighty Allah is absolute 2. Prophet Mohammad Peace be upon Him, was an executive judge 3. Holy Quran is the code of conduct.

    Islam organizes that Man