A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Ahadeeth: Sayings and traditions of the Holy Prophet Muhammad (S.A.W.). Singular: Hadith.

Ahl ar-ra'y: Means people of opinion. It refers to people that are consulted on Islamic matters. These people are highly learned in Islam.

Ahliyah: Legal capacity.

Ahliyat al-add': Legal capacity for execution.

Ahliyat al-wujub: Legal capacity for the acquisition of rights and obligations.

Ajrul Mithl: A remuneration based on what is customary in the community or Salary.

Al-Wadi'ah: This refers to deposits in trust, in which a person may hold property in trust for another, sometimes by implication of a contract.

Al-Wakalah al Mutlaqa: Resale of goods with a discount on the original stated cost.

Al-Qard al-Hassan: Loans fixed for a definite period of time without interest or profit sharing.

'Alim: An Islamic religious scholar. Plural: Ulamaa.

Amanah: Something given to someone for safekeeping. Trust. The contract of amanah gives rise to fiduciary relationships and duties.

Amwal: Wealth. In business context, Amwal means wealth that is contributed as capital in a partnership. Plural: mal.

Ameen, also spelled Amin: Custodian or guardian.

'Arbun : down payment; a nonrefundable deposit paid by a buyer retaining a right to confirm or cancel the sale

Arkan: The elements or essential ingredients of an act, without which the act is not legally valid.

Aqd: A contract.

Aqd Sahih: A legal contract.

amanah : trust.

'Ayn : a tangible (physical) asset
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Bai' also Bay’: Literally means sale. Commonly used as a prefix in referring to different types of sales: Muajjal, Murabahah, Tawliyah and Wadi'ah.

Bai' Bithaman Ajil (Al), also spelled as Al-Bay-Bithaman Ajil (BBA) financing: In modern Islamic banking, the term refers to a buying and selling transaction between the bank (or financial institution) and the customer, whereby the former buys a property (or an asset, e.g. a house) at the prevailing market price and sells it to the customer at a mark-up price where payments are made by installments over a period of time agreed upon by both parties. The profit earned by the bank is legitimate from the Shari'ah point of view since the transaction is based on a sale contract rather than a loan contract. Any predetermined profit arising from the loan is prohibited in Islam as it amounts to Riba.

Bai Mu'ajjal, also spelled as Bay Mu'ajjal: Sale based on deferred payment, either in a lump sum or instalments. A form of Murahaba.

Bai Salam, also spelled as Bay Salam: This term refers to the advance payment for goods which are delivered later. Normally, no sale can be effected unless the goods are in existence at the time of the bargain. But this type of sale is the exception to the general rule provided the goods are defined and the date of delivery is fixed. The objects of this type of sale are mainly tangible but exclude gold or silver as these are regarded as having monetary value. Barring these, bai al-salam covers almost all things which are capable of being definitely described as to quantity, quality and workmanship. One of the conditions of this type of contract is advance payment; the parties cannot reserve their option of rescinding it but the option of revoking it on account of a defect in the subject matter is allowed. It is also applied to a mode of financing adopted by Islamic banks. It is usually applied in the agricultural sector, where the bank advances money for various inputs to receive a share in the crop, which the bank sells in the market.

Baitul Mal: An Islamic treasury intended for the community development as well as provision for Masakeen (needy Muslims).

Baligh: One who has reached the age of maturity.

Batil: Null and void.
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Dhaman : liability

Dhaman al-'Amal: Liability underlying a partnership formed on the basis of labor, where the partner is liable for performing the contract or completing the work accepted by either partner.

Dhaman al-Thaman: Liability underlying a partnership formed on the basis of credit-worthiness where each partner is liable, jointly and severally, for paying the price of goods bought on credit.

Dharar : harm, damage

Dayn: Loan or debt.

Diminishing Musharakah: Another form of Musharakah (a financing mode), developed in recent years. According to this concept, a financier and his client participate either in the joint ownership of a property or equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically, thus increasing his own share until all the units of the financier are purchased by him so as to make him the sole owner of the property, or the commercial enterprise, as the case may be.
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Fadl (Riba): A type of interest. Taking something of superior quality in exchange for the same kind of thing of poorer quality. Allah Subhana wa Ta'ala has strictly prohibited any kind of Riba and has warned of severe punishment for those who have any association with it. See the Holy Qur' an, Surah Al-Baqara (2):275-280

Fa'idah: Benefit. In investment context it means return on investment.

Falas: Bankrupt

Faqeeh: An Islamic scholar who can give an authoritative legal opinion or judgement.

Faqir: A poor person.

Fard: Obligatory. An act which is obligatory on Muslims.

Fard 'Ain: An action which is obligatory on every Muslim.

Fatwa: A legal verdict given on a religious basis. The sources on which a fatwa is based are the Holy Qur'an, Sahih Bukhari and Muslim, and all other authenticated Ahadeeth. Plural: Fatawa.

Fidyah: Compensation for missing or wrongly practising necessary acts of worship. Fidyah usually takes the form of donating money or foodstuff, or sacrificing an animal.

Fiqh: Islamic jurisprudence.

Fuqahaa: Jurists.
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Gharar: Uncertainty, hazard, chance or risk, ambiguity and uncertainty in transactions. Technically, the sale of something which is not present at hand; or the sale of something where the consequences or outcome is not known. It can also be a sale involving risk or hazard in which one does not know whether it will come about or not, such as fish in water or a bird in the air; or an event where assurance or non-assurance is subject to chance and thus not known to parties of a transaction. Can also mean uncertainty or a hazard that is likely to lead to a dispute in a contract.

Gharim: A person in debt.
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Halal: An act or product that is permitted by Islam.

Hadith: A saying or tradition of the Prophet Muhammad (S.A.W.). Plural: Ahadeeth.

Hadith-Qudsi: A saying of Allah Ta'ala narrated by Prophet Muhammad (S.A.W.), that is not a part of the Holy Qur'an.

Halal : permissible, lawful

Haram: An act or product which is unlawful or prohibited in Islam.

Hawala : contract of assignment of debt

Haq: Legal right.

Hijri: Name of the Islamic lunar calendar. It took its name from the early Muslims who migrated from Mekkah to Madinah, and commences from the date of the Prophet Muhammad's (S.A.W.) Hijra, which he made with Abu Bakr as-Siddiq (A.S.), in 622AC. Often abbreviated to A.H. (After Hijra).

Hudud: The boundary between what is Halal (lawful) and what is Haram (unlawful), set by Allah.

Hukum: The closest equivalent in the English language is "verdict". It usually applies to a judgement on legal issues, especially with regard to religious matters.

Huquq: Plural of haq.
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Ijarah, also spelled ijara: Literally means "to give something on rent".

Ijarah wa iqtina: Contract of renting, hiring or leasing. This term refers to a mode of financing adopted by Islamic banks. It is a contract under which the Islamic bank finances equipment, a building or other facility for the client against an agreed rental together with an undertaking from the client to purchase the equipment or the facility. The rental as well as the purchase price is fixed in such a manner that the bank gets back its principal sum along with some profit, which is usually determined in advance.

'Ijma: Consensus. What all the Ulama (people of religious knowledge) from among the Muslims agree upon.

Ijtihad: Technically, it means an endeavour of a jurist to derive or formulate a rule of law on the basis of evidence found in sources; scholarly effort through which a jurist/scholar derives Islamic law on the basis of the Qur'an and Sunnah.

Ishtirak: Equivocally; participation; partnership.

Istidanah: Raising or building up credit through credit purchases. It however does not apply to the raising of cash loans.

Istisna': This is a kind of sale, where a commodity is transacted before it comes into existence. It means to order a manufacturer to manufacture a specific commodity for the purchaser. If the manufacturer undertakes to manufacture the goods for him with material from the manufacturer, the transaction of Istisna' comes into existence. But it is necessary for the validity of Istisna' that the price is fixed with the consent of the parties and that necessary specification of the commodity (intended to be manufactured) is fully settled between them. This kind of sale, used as a mode of financing, is also called 'Parallel Istisna'.

Iwad: Compensation or counter-value.
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Ja'alah : a unilateral contract promising a reward for a specific act or accomplishment

Jahalah: Uncertainty in a contract that may lead to a later dispute; see gharar.

Jo'alah, also spelled Joaalah: The undertaking of one party (the Jael, bank or employer) to pay a specified amount of money to another party in return for rendering a specified service in accordance with the terms of contract.

Jizya: A tax imposed on non-Muslims who are in a Muslim country.
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Kafalah bi al-Thaman: Surety for paying the price or sum if unpaid by the person originally liable.

Kafil: A person providing surety or a guarantor.

Kharaj: Tax imposed on the revenue from land taken from non-muslims to ensure their equal rights under Islamic law.
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Maiser: Gambling. Literally means getting something too easily.

Makrooh: Disapproved of, but not prohibited by Allah Subhana wa Ta'ala.

Manfa'ah : usufruct. Sale of usufruct is ijarah

Morabaha: Sale at a special profit margin. The seller purchases the goods desired by the buyer and sells them at an agreed mark-up price. The payment being settled within an agreed time frame, either in instalments or lump sum. The seller undertakes all management needed for the purchase and also bears the risk for the goods until they have been delivered to the buyer.

Mubah: Things or acts permissible in Islamic law.

Mufawadah: A basic contract of partnership based on wakalah and kafalah. It requires full commitment from the partners. In order to achieve this purpose, the partners must try to maintain equality in the capital, labor, liability and the legal capacity and also declare each partner to be a surety for the other.

Modaraba: An agreement between two or more persons whereby one or more of them provide finance, while the other(s) provide enterpreneurship and management to carry on any business venture whether trade, industry or service with the objective of earning profits. The profit is shared in an agreed proportion. The loss is borne by the financiers only in proportion to their share in the total capital.

Mudarib: The partner who provides entrepreneurship and management in a Mudharabah agreement.

Mufti: One who passes verdicts.

Muhaddith: A scholar of Ahadeeth. Plural: Muhaditheen.

Muhadhitheen: Scholars of Ahadeeth (sayings and traditions of the Holy Prophet Muhammad, may Allah bless him and grant him peace). Singular: Muhadith. Muhammad Believed by Muslims to be the Final Messenger of Allah Subhana wa Ta'ala to Ins wal Jinn (mankind and the Jinn).

Muqaradah: Another name for Modraba.

Musaddiq: The person discharging voluntary charity.

Musharika: A temporary equity participation agreement between a bank and a client for effecting a certain operation within an agreed period of time. Both parties contribute to the capital of the operation in varying degree and agree to divide the net profits or losses in proportions agreed upon in advance.

Mustahab: Recommended, but not obligatory.
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Nis'a (Riba al): A type of interest. Taking interest on loaned money. An act which is Haram. See the Holy Qur'an, Al-Baqara (2):275-280 and Aali'imran(3):13O.

Nisab: A threshold of wealth of which any excess is subject to Zakah.
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Qabz : possession

Qarz: A loan given for a good cause in the name of Allah, in hopes of repayment or reward in the Hereafter.

Qarz al Hassan: A loan extended without interest or profit-sharing.

Quadaa: Paying in a debt.
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Ra's al-mal: Capital invested in Mudarabah or Musharakah.

Rabb al-ard: Owner of the land in Musaqah or Musaqat and Muzara'ah contracts.

Rabb al-mal: A person who invests in Mudarabah or Musharakah.

Rahn: Pledge or mortgage.

Riba: Increase, addition, expansion or growth. However, not every increase or growth is prohibited by Islam. Under the Shari'ah, Riba technically refers to the premium that must be paid without any consideration. According to the jurists of Islam, this definition covers the two types of Riba, namely Riba Al Fadhl and Riba Al Nasi'ah.

Example 1 of Riba: If A sells $100 to B with $110. The premium of $10 is without any consideration or compensation. Therefore, this amount of $10 will be Riba.

Example 2 of Riba: If A lends $100 to B (a borrower) with a condition that B shall return him $110 after one month. In this case, the premium paid that must be paid by the borrower to the lender along with the price is Riba because the premium of $10 is without any consideration.

Riba aI-Fadhl: An extension of Riba to trade because while trade is allowed, not everything in trade is permissible. The prohibition of Ribaal-fadl closes all back doors to Riba through trade; unlawful excess in the exchange of two counter-values, where the excess is measurable through weight or measure. According to some Ahadith, (Sayings of the Holy Prophet) if six things i.e. gold, silver, wheat, barley, dates and salt are exchanged against themselves, they should be spot and be equal and been specified. If these conditions are not found, this transaction will become Riba Al Fadhl.

Riba al-Nasi'ah: It refers to the 'premium' that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or an extension in its maturity. It is thus equivalent to interest. The 'addition' of the 'premium' which is paid to the lender in return for his waiting as a condition for the loan and is technically the same as interest.

Rukn: Pillar. Singular of Arkan.
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Salam : sale with deferred delivery of exchanged good but with advanced price payment

Sarf : currency exchange

Sahib al-Mal: The financier in the modaraba form of partnership agreement. Plural of Ashab al-mal. The sahib al-mal (also, rabb al-mal) provides the finance while the mudarib provides the entrepreneurship and management. There can be many ashab al-mal and mudaribs in a given muddrabah agreement.

Shari'ah: Islamic law as ordained by Allah Ta'ala. Literally it means 'a road'. The Shari'ah is the legal and social modality of a people based on the revelation of their prophet. The last Shari'ah in history is that of Islam. It abrogates all previous Shari'ahs. It is, being the last, therefore the easiest to follow, for it is applicable to the whole human race wherever they are.

Sharikah: The term is used for joint-stock companies and corporations as well, but is qualified with an adjective to indicate its nature. Thus, sharikah musahamah for a public limited company or a corporation whose capital has been subscribed to by the general public.

Sharikat al-Wujuh: Partnership based on credit-worthiness of the partners in which the ratio of profit and loss is based on the liability borne, but the partnership has to be of the type 'inan or mufawadah.

Sharikat 'ammah: A partnership in which each partner is a general attorney for the other partner; a partnership that permits trading in all types of goods.

Sharikat khassah: Partnership for a single venture or for trading in a particular item; partnership in which each partner is a special attorney of the other partner.

Sharikat al- 'inan: A basic contract of partnership based on agency in which participation may either be on the basis of wealth or labor or credit-worthiness, and in which, equality of contribution or legal capacity is not necessary.

Sharikat al-abdan: Another name for sharikat al-a'mal.

Sharikat al-amwal: A partnership in which participation is based on the contribution of wealth by all partners, but the partnership has to be of the type 'indn or mufdwadah.

Sharikat al-jabr: Mandatory co-ownership created by an act of law, like inheritance.

Sharikat al-mafalis: A partnership between persons, whose assets have been reduced to copper coins and who have to buy on the basis of credit-worthiness; see sharikat al-wujuh.

Sharikat al-zimam: It is a term used by the Maliki school of thought to indicate a situation, where two or more persons are buying goods on credit. It is different from the Hanafi sharikat al-wujuh insofar as it requires the physical presence of all the partners at the time of purchase.

Shirikat al- 'aqd: A partnership created through contract as opposed to co-ownership that may be the result of a joint purchase or agreement or it may result from inheritance or from some other legal situation.

Shirkah: Partnership between two or more persons, whereby unlike mudarabah, all of them have a share in finance as well as entrepreneurship and management, though not necessarily equally.

Shurut: Terms and conditions in Islamic law.

Shukuk: Check, certificate of debt, certificates of investment; plural of Shak

Sunnah: All the traditions and practices of Prophet Muhammad (S.A.W.), that are recorded not only in such books as Sahih Bukhari and Sahih Muslim, but also in living people to whom these traditions and practices have been transmitted, from person to person, from then until now
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Takaful: Islamic Insurance. A scheme of mutual support that provides insurance to individuals against hazards of falling into unexpected and dire need.

Tameen: Another name for Takaful.

Thimma (zimma) : the capacity to accept obligations and duties.

Tijaarah: Trade. Act of buying and selling.
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Ulamaa: Plural of 'Alim. The people of knowledge from amongst the Muslims who act on what they know and do what they say.

Ushr: Ten percent (in some cases five percent) of the agricultural produce payable by a Muslim as part of his religious obligation, like zakah, mainly for the benefit of the poor and the needy.

Wajib: Compulsory.

Wadi-ah: Deposit.

Wakalah : agency.

Waqf: Endowment. A charitable trust in the name of Allah, usually in perpetuity, and usually for the purposes of establishing the Deen of Islam, teaching useful knowledge, feeding the poor or treating the sick.
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Zakah Al-Mal: The Muslims' wealth tax: One must pay 2.5% of one's yearly savings above a certain amount to the poor and needy Muslims. The Zakah is compulsory on all Muslims who have saved (at least) the equivalent of 85g of 24 carat gold at the time when the annual Zakah payment is due.

Zakatu-rid Tijaarah: Zakah of profits of merchandise.

Zakatul Huboob: Zakah of grain/corn.

Zakatul Ma'dan: Zakah of minerals.

Zakatur Rikaaz: Zakah of treasure/precious stones.