Islamic Banking

REFERENCE: A Glossary Of Islamic Finance Terms

Chris Hamblin, Compliance Matters , Editor, 20 December 2013


Ribawi asset    Assets
which are subject to specific rules in sales to avoid the implication of riba.
These assets consist of six (6) types and are classified into two (2)

(a) Medium of exchange (currency) represented by gold and
silver and any items used as currency; and

(b) Staple food represented by wheat, barley, dates, and

If an exchange involves the same type of asset such as gold
for gold or wheat for wheat, then it must be of equal counter-value and on spot
basis. If the exchange involves assets of different type but within the same
category such as the exchange of gold for paper currency, then it has to be
done on spot basis.

Rabbul mal      Capital

Salam              A
contract in which advance payment is made for an asset to be delivered at a
future date.

Takaful                        An
arrangement based on mutual assistance under which takaful participants agree
to contribute to a common fund providing for mutual financial benefits payable
to the takaful participants or their beneficiaries upon the occurrence of
pre-agreed events

Ta`addi                        Misconduct.

Takhliyah                    Relinquishing
or abandoning the rights of ownership.

Taqsir              Negligence.

Tamkin                        Enabling
the person who has the ownership of an asset transferred to him to make full
use and assume liability of the asset.

Tawarruq                     An
arrangement that involves sale of in which an asset to the purchaser is
purchased with on a deferred basis, and subsequently subsequent sale of the
asset sold to a third party on spot a cash basis to obtain cash or vice versa.

Purchasing an asset with a deferred price, either on the
basis of musawamah or murabahah, and subsequently selling it to a third party
to obtain cash.

Tawliyah                     Sale of a good at its
cost price.

Ta`widh                       Compensation.

Tasarruf fuduli            Unauthorized

`Urf                 Customary

`Urf tijari                     Common
business practice which is accepted by the community and does not contradict
Shariah rulings.

`Urbun             Earnest
money paid to secure purchase of an asset in an exchange contract which is
considered part of the price if the buyer decides to continue the contract and
is not refundable.

`Urf tijari                     Common
business practice which is acceptable by the community and does not contradict
the Shariah rulings.

Wa`d               An
expression of commitment given by one party to another to perform certain
action(s) in the future. OR...promise or commitment or pledge or covenant.

Wakalah                      A
contract in which a party (muwakkil) authorises another party as his agent
(wakil) to perform a particular task in matters that may be delegated, either
voluntarily or with imposition of fee.

Wadi`              Custodian.

Wadi`ah yad amanah  Safekeeping
based on trusteeship.

Wadi`ah yad dhamanah          Safekeeping
based on guarantee.

Wasi                Nominee.

Wakalah                      Agency

Wakalah bi al-istithmar           Agency
contract for investment

Wakalah bi ujrah         Fee
based agency

Wakalah muqayyadah Restricted

Wakalah mutlaqah      Unrestricted

Wakil               Agent

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes