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Is it ok to work in Islamic banking related Jobs ?

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  • #16
    Re: Is it ok to work in Islamic banking related Jobs ?

    Originally posted by Mockingjay View Post
    Will look into this Ijara concept and consult to my ustad :insha:

    So far I only have the halal concept of buying house is through murabaha. But will look into this again.

    :jkk:
    As far as I understand, there are about 6 financial techniques in islam which are accepted and permissible.

    You mentioned 1 of them which is:

    1. Murabaha (this is probably the simplest of the 6): Asset purchased by the bank and sold on to the customer with an agreed mark-up.
    You said the same thing in your post, just different words. As in an investor buys a house for 200k, and sells it to you for 220k via monthly payments over say 25 years, or even as a single payment. 20k profit, not interest, kind of like buying a banana for $1 and selling it for $1.20. Just on a bigger scale.

    The bank I use uses another 2 techniques out of the 6 which are:

    2. Ijara: Asset purchased by the bank and leased to the customer over a specified period.
    This is basically the same as me buying a house and putting in on rent.

    3. Musharaka: Investment partnership in which profit sharing terms are agreed in advance and losses are attributable to the sum invested. Similar to a joint venture agreement.
    I explained this one above.

    The remaining 3 are:

    4. Sukuk: Islamic type of bond representing the ownership by the Sukuk holders in the underlying asset;
    I'm not sure how this one works

    5. Mudaraba: Partnership financing contract under which one party provides the labour whilst the other provides the capital;
    This is self explanatory.

    6. Takaful: Mutual insurance.
    Believe it or not, insurance is actually possible islamically (not exactly the same as western insurance). It basically involves a group of people who keep money in a pot (doesn't have to be in a pot literally). Then when something happens, the money in the pot is used to help one of the members out. Kind of like a group of people putting money aside in a pot if the worst were to happen.

    I don't know of any others. let me know what you're Ustad says about all these. It will be interesting to see what Ustad's from other countries views are and how and if they differ.
    Last edited by oshirowanen; 14-04-14, 01:08 PM.

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    • #17
      Re: Is it ok to work in Islamic banking related Jobs ?

      Originally posted by oshirowanen View Post
      As far as I understand, there are about 6 financial techniques which are accepted and permissible.

      You mentioned 1 of them which is:

      1. Murabaha (this is probably the simplest of the 6): Asset purchased by the bank and sold on to the customer with an agreed mark-up.
      You said the same thing in your post, just different words.

      The bank I use uses another 2 techniques out of the 6 which are:

      2. Ijara: Asset purchased by the bank and leased to the customer over a specified period.
      This is basically the same as me buying a house and putting in on rent.

      3. Musharaka: Investment partnership in which profit sharing terms are agreed in advance and losses are attributable to the sum invested. Similar to a joint venture agreement.
      I explained this one above.

      The remaining 3 are:

      4. Sukuk: Islamic type of bond representing the ownership by the Sukuk holders in the underlying asset;

      5. Mudaraba: Partnership financing contract under which one party provides the labour whilst the other provides the capital;

      6. Takaful: Mutual insurance.

      I don't know of any others.
      So ,why would people go for the Ijara concept if Murabaha is the simplest , Does it involve a higher deposit.
      I mean end of the Day Buying is easier than Leasing right.
      Visit my channel - https://www.youtube.com/channel/UCYk...dE4pHzSid7Lr0w

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      • #18
        Re: Is it ok to work in Islamic banking related Jobs ?

        Originally posted by oshirowanen View Post
        As far as I understand, there are about 6 financial techniques in islam which are accepted and permissible.

        You mentioned 1 of them which is:

        1. Murabaha (this is probably the simplest of the 6): Asset purchased by the bank and sold on to the customer with an agreed mark-up.
        You said the same thing in your post, just different words. As in an investor buys a house for 200k, and sells it to you for 220k via monthly payments over say 25 years, or even as a single payment. 20k profit, not interest, kind of like buying a banana for $1 and selling it for $1.20. Just on a bigger scale.

        The bank I use uses another 2 techniques out of the 6 which are:

        2. Ijara: Asset purchased by the bank and leased to the customer over a specified period.
        This is basically the same as me buying a house and putting in on rent.

        3. Musharaka: Investment partnership in which profit sharing terms are agreed in advance and losses are attributable to the sum invested. Similar to a joint venture agreement.
        I explained this one above.

        The remaining 3 are:

        4. Sukuk: Islamic type of bond representing the ownership by the Sukuk holders in the underlying asset;
        I'm not sure how this one works

        5. Mudaraba: Partnership financing contract under which one party provides the labour whilst the other provides the capital;
        This is self explanatory.

        6. Takaful: Mutual insurance.
        Believe it or not, insurance is actually possible islamically (not exactly the same as western insurance). It basically involves a group of people who keep money in a pot (doesn't have to be in a pot literally). Then when something happens, the money in the pot is used to help one of the members out. Kind of like a group of people putting money aside in a pot if the worst were to happen.

        I don't know of any others. let me know what you're Ustad says about all these. It will be interesting to see what Ustad's from other countries views are and how and if they differ.
        Actually if all those Islamic concepts is implemented by non bank organization (non financing institution) will be pretty much fine. But what's doubtful is caused it says "bank".

        But will look into this more :insha:

        They want to extinguish the light of Allah with their mouths, but Allah will perfect His light, although the disbelievers dislike it (61 : 8)

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        • #19
          Re: Is it ok to work in Islamic banking related Jobs ?

          Originally posted by muzzybee View Post
          So ,why would people go for the Ijara concept if Murabaha is the simplest , Does it involve a higher deposit.
          I mean end of the Day Buying is easier than Leasing right.
          Ijara is not the same as Murabaha, So you can't buy a house from an investor using Ijara techniques.

          Murahaba is buying something from an investor at a higher price than the investor paid for it
          Ijara is leasing out something you own
          Musharaka is a joint venture.

          Murabaha is the simplest to understand, but it's more difficult to offer as a product. You have to be very very very rich to be able to be an investor who offers Murabaha. Plus the buyer here will most likely have to make much bigger monthly payments. This is because of the risk factor, the investor will most likely want his/her money back faster, which means less time to pay, which means bigger payments. Here the investor doesn't really make a profit until right at the end. Kind of risky as you can imagine if the buyer dies for example.

          Ijara and Musharaka may be more difficult to understand and setup, but the end result is that investors are not in as much risk (risk still exists, but it's less), which means they are more willing to spread the payments over longer periods of times. Here the investor starts making a profit right away.
          Last edited by oshirowanen; 14-04-14, 01:27 PM.

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          • #20
            Re: Is it ok to work in Islamic banking related Jobs ?

            Originally posted by oshirowanen View Post
            Murabaha is the simplest to understand, but it's more difficult to offer as a product. You have to be very very very rich to be able to be an investor who offers Murabaha. Plus the buyer here will most likely have to make much bigger monthly payments. This is because of the risk factor, the investor will most likely want his/her money back faster, which means less time to pay, which means bigger payments. Here the investor doesn't really make a profit until right at the end. Kind of risky as you can imagine if the buyer dies for example.

            Ijara and Musharaka may be more difficult to understand and setup, but the end result is that investors are not in as much risk (risk still exists, but it's less), which means they are more willing to spread the payments over longer periods of times. Here the investor starts making a profit right away.
            Is this less risk because of the leasing factor.
            Visit my channel - https://www.youtube.com/channel/UCYk...dE4pHzSid7Lr0w

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            • #21
              Re: Is it ok to work in Islamic banking related Jobs ?

              Originally posted by muzzybee View Post
              Is this less risk because of the leasing factor.
              It's more to do with sharing the risk level.

              If I was on the receiving end of an Ijara and Musharaka contract, I would personally find this less risky because it means (right from day 1) I am part owner of the property and because it shares the risk more than the Murahaba concept. However, having said that. Banks do prefer Murabaha more to be honest, But islamically, it seems that Musharaka (joint ventures) are preferred. Islam puts a lot of emphasis on community, and a joint venture is exactly that. All islamic financial concepts have their own personal good points about them. Murabaha concepts has most of the risk 1 sided.
              Last edited by oshirowanen; 14-04-14, 01:58 PM.

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              • #22
                Re: Is it ok to work in Islamic banking related Jobs ?

                Originally posted by oshirowanen View Post
                It's more to do with sharing the risk level.

                If I was on the receiving end of an Ijara and Musharaka contract, I would personally find this less risky because it means (right from day 1) I am part owner of the property and because it shares the risk more than the Murahaba concept. However, having said that. Banks do prefer Murabaha more to be honest, But islamically, it seems that Musharaka (joint ventures) are preferred. Islam puts a lot of emphasis on community, and a joint venture is exactly that. All islamic financial concepts have their own personal good points about them. Murabaha concepts has most of the risk 1 sided.
                Oh ok Jazakallah khairan.
                Visit my channel - https://www.youtube.com/channel/UCYk...dE4pHzSid7Lr0w

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