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22 Apr '16

Basic Concepts of Islamic Finance

Islamic financing has been a viable alternative to western banking since the early 1970s and complies with the major concepts of Shari law, namely that:

  • interest (usury) should not be charged or collected;
  • no form of gambling be undertaken; and
  • no investment should be made in a business which is deemed to be unlawful under Shari law.

Basic concepts

The essential basic concepts of Islamic financing are:

1. Islamic Debt financing

Ijarah – Leasing

Ijarah structure entails  the lender creating a special purpose vehicle (SPV) to purchase asset(s) that is the subject of the financing.  In turn, borrower agrees to enter into a lease agreement to lease the asset(s).  Lease payments act as part rental payments (the profit component) for use of asset and part repayment of principal debt. 

Ordinarily transaction will take on the following elements:

(i) borrower and lender enter into a purchase contract to buy asset that is the subject of the financing;

(ii) borrower and lender enter into a lease contract under the terms of which borrower agrees to lease asset that is the subject of the financing;

(iii) on completion of the lease term, borrow can either make a balloon payment to purchase asset or, alternative, if the rental has included part principal payments, can pay a small sum to the lender in exchange for ownership of asset.

This type of Islamic financing structure is very similar to hire purchase contracts.  As such, assets that are commonly the subject of this type of Islamic financing include motor cars, home appliance, electronic goods, etc.

Murabaha - Cost-plus financing / buy-sell arrangement

Essentially works by borrower asking lender to purchase asset on the understanding that after lender has purchased asset, borrower will purchase asset from lender. 

Agreement is made that lender on-sells asset to borrower at an increased price.

Repayment can either be in one balloon payment or by way of installments over a period of time.  If repayment is a balloon payment, more commonly known as a Bai’ Bithaman Ajil – or deferred payment sale agreement.

Popular structure for purchasing real estate property.  It should be noted, however, that as lender on-sells property to borrower, all land title deeds, etc. vest with the borrower.  Thus, security provisions of such an arrangement need to be considered carefully so that the lender can adequately protect themselves.

Components of this type of Islamic financing include:

(i)                     on-sell arrangement;

(ii)                    agreed mark-up on on-sell price;

(iii)                  asset must be Shari compliant;

(iv)                  asset must exist at the time of the transaction; thus, this cannot be utilized in futures trading transactions;

(v)                   all terms and conditions of the arrangement must be known by all parties at the time of entering into the arrangement;

(vi)                  reoccurring expenses cannot be passed on to the borrower.

 

Bai’ al-Inah – Sale and buy-back

 Similar concept to Murabaha.  However, due to security concerns on default, structure is changed slightly.  Lender purchases asset on behalf of borrower.  Borrower purchases asset from lender on deferred payment basis.  Asset is immediately resold to lender for cash at discount. 

Preferred financing mechanism if there is any danger that lender will become insolvent.

Musharakah  - Partnership

It's can also be referred to as Islamic venture financing

  • An arrangement between a lender and a borrower where both parties agree to make a capital contribution towards financing a commercial operation. 
  • Parties agree to share profits from the arrangement at a pre-agreed ratio. 
  • Losses from the arrangement need to be shared pro-rata to the capital contributions of each of the parties.

Tawarroq finance - Monetary finance

  • Lender agrees to purchase a commodity on behalf of the borrower. 
  • Lender sells commodity to the borrower. 
  • Borrower sells commodity to a third party buyer. 
  • Cash payment from third party buyer acts as monetary financing element of the transaction.
  • Borrower repays lender in installments.

Qardul Hassan – Benevolent loan

  • Consists of a loan given to a borrower on a “goodwill” basis, i.e. no interest or fees are charged
  • Borrower may, at their discretion, repay more than they borrowed
  • Seen as being the only “pure” form of Islamic financing loan as, unlike all the other financing structures, it makes no attempt to charge riba (interest), which is prohibited under Islam.

Mudharabah - Profit sharing

  • Islamic investors agree that a Mudhareb (trustee) will provide skill and expertise.
  • Mudhareb agrees to hold and manage the assts for Islamic investors. 
  • In return for providing services, Mudhareb earns an agreed share of profits from the assets managed on behalf of Islamic investors. 
  • Mudhareb cannot claim any right to the assets - merely acts as manager and trustee of assets.

II.        Commodities financing

SSalam – Advance payment

  • Under this Islamic financing structure, purchaser agrees to make advance payment for asset/goods to be delivered at a future date. 
  • It is essential that purchase price be paid at the time of making the agreement, and not on delivery of the asset/goods - failure to comply with this requirement would alter the nature of the agreement to that of a sale of debt against debt, which is prohibited under Shari law.
  •  As Shari law stipulates that items must exist at time of contract, i.e. no futures contract, asset to be purchased must be clearly stated in the purchase agreement and the quantity and quality of the purchased asset must be capable of being specified exactly – there can be no room for dispute.
  •  Assets must be goods and cannot not include commodities; such as gold, silver or money.
  • The exact date and place of delivery of the asset/goods must be specified in the agreement.
  • Istisna’a is another Islamic financing structure that follows almost exactly the same concept as found here

III.       Deposit taking functions/strong>

WWadiah - Safe-keeping

  • Agreement between two parties where on agrees to look after the property of another.
  •  Concept is used to take deposits of money, where bank acts as custodian of money deposited by customer.
  • Bank agrees they will refund sums deposited “on call”, i.e. on demand.

Hibah  - Gift

  • Hibah literally means a ‘gift’.  This is used by banks to compensate depositors for lost earnings (interest) on their deposits.  It can also be used by borrowers who have been granted Qardul Hassan loan mention above.
  • No agreement to provide Hibah can be made – it’s an arbitrary payment made at the discretion of the person making it.

IV.       Bonds/strong>

Fixed-term, fixed-income, interest-bearing securities cannot be issued under Shari law.

SSukuk – Islamic bonds

  • Although fixed-income, interest-bearing bonds cannot be issued under Shari law, it is estimated that over $500 billion in corporate and government bonds issues have been made using Sukuk (Islamic bonds) mechanism.
  • Essentially, Sukuk bonds are long-term bond issues made by SPVs where the bond sale proceeds are used to purchase assets that are then leased back to the issuer in return for rent.  Rental payments constitute part repayment of the principal and part profit revenue to the bondholders.

Salam bonds/strong>

In certain circumstances, short-term bond issues can be made using the same mechanism concepts found in Salam transactions.  It should be noted, however, that due to the precise nature of the assets/goods that are the subject of a Salam transaction, these types of bond issues are rare and for very short-term periods.

Conclusion

The growth of Islamic financing in the past decade has been stellar.  Given the large amounts of cash available in the oil rich Middle-East, it is likely that the growth of Islamic financing will continue.  Moreover, as investors in the Middle-east look to break-out an invest elsewhere, it is certain that governments around the world will need to familiarize themselves with the principal concepts of Islamic financing, and to regulate for such, if they wish to take advantage of this growth

22 Apr '16

Indian, Pakistani, Islamic and Middle Eastern Embroidery

Publicado por Nosheen Z en Middle Eastern Embroidery

The fancy artwork used in fabrics is termed as “embroidery.” In simple terms, embroidery is art of embellishing fabrics. In practical terms, it is the art or handicraft of decorating fabrics or other materials with designs stitched in strands of thread or yarn using a needle.

The history of origins of embroidery is unclear, but it has long been popular art in many of Asian, Middle Eastern, European, African, and American countries. Elaborately embroidered clothing, religious objects, and household items have been a mark of wealth and status in many cultures including ancient Persia, India, Byzantium, medieval England and Baroque Europe. The hand embroidery has been a traditional art form passed from generation to generation in many cultures, including northern Vietnam, Mexico, and Eastern Europe. Embroidery has also been richly used in religious draperies of several religions, such as Christianity, Judaism, Islam, Hinduism, Sikhism, etc. Embroidery is still very popular art in several cultures of China, India, Pakistan, Middle East and Egypt.

Usually, fine quality colorful threads are used in embroidery. Silk threads are used in opulent types of embroidery, and Gold and silver fibers are used in extremely expensive embroideries. Sometimes, the expensive materials, such as expensive metal strips, pearls, beads, quills, and sequins, are used in expensive embroideries.

Traditionally, embroidery is done by “hand”, however in modern times sewing machines have been quite often used. The embroidery by machines is called “machine embroidery.” There are several forms of embroidery used all over the world. 

Indian & Pakistani Embroidery

Embroidery is very popular in several cultures of India. Kashmiri embroidery is very popular in the Northern India. Kashmiri embroidery or kashida is extremely beautiful embroidery. Kashmiri embroidery designs are often drawn from scenic beauties of nature, flowers, creepers and chinar leaves, fruits, etc. The whole pattern of Kashmiri embroidery is created using one or two embroidery stitch styles. The craftsmen used floral colored threads to create fantastic embroidery. Kashmiri embroidery is popular in shawls, kashmiri suits, lady suits, shervanis, sharwar kameez used by Hindus, Punjabis, and Muslims of the North India.   

Sozni embroidery or dorukha is another skilful embroidery form in which designs appear on both sides of fabric, in different colors both side. There is no wrong side of fabric. This form of embroidery is particularly popularly done on shawls, “chunries” or “dupatas” and saris in the North India.

'Papier mache' embroidery is another popular form of embroidery in India. In this type of needle embroidery, flowers and leaves are worked in satin stitch in bright colors such as those of papier mache and designs are then outlined in black. This embroidery is done either in broad panels on either side of the breadth of a shawl.

Ari or hook embroidery is another popular form of embroidery in India. This embroidery is known for its floral designs finely worked in concentric rings of chain stitch. This embroidery is the same as colored Zari or ari embroidery.

Embroidery is extremely popular part of Indian and Pakistani women drapery. Kashmiri embroidery is very popular in Muslim wedding dresses. The Muslim wedding dresses, such as lehnga- kurtis (women), dupattas, suits (women), Shervanis (men), and Shalwar Kameez (men) have finely worked embroidery designs. Usually the neckline, cuffs, shoulder seams, fronts, and bottoms have rich floral embroidery designs. Usually ari or hook embroidery is used to embroider fine designs on neckline, cuffs, and shoulder-seams of the Muslim bridal dresses. The wedding salwar kameez of the Muslim men also have rich embroidery designs at necklines, shoulder seams, cuffs, and sometimes fronts. Kashmiri embroidery is also popularly used in carpets, rugs, mats, and wall hangings. 

Silk is one of the most coveted textiles used to tailor Indian and Pakistani Muslim wedding dresses. Usually silk threads are preferred for embroidering Indian and Pakistani Muslim wedding dresses. However sometime extremely expensive embroidery on the Indian and Pakistani Muslim wedding dresses use some precious materials, such as gold & silver fibers, pearls, beads, quills, and sequins.

Some cheap quality, but better looking silky threads, such as rayon is used to embroider routine wears of Indian and Pakistani women dresses. In some cultures of India and Pakistan, women are very particular and selective about the embroidery on their dresses. Usually cotton or some other cotton mix fabrics are used for routine wears. Indian and Pakistani Muslim religious caps also have rich embroidery works. Indian and Pakistani Muslims also use richly embroidered religious drapery, such as head clothes, prayer mats, clothes wrapped around the holy “Quran,” etc.  

Sozni embroidery is popular in women shawls, dupattas and sometimes on Saris. Hindu women wedding dresses also have fine embroidery designs. Again, Silk is the most preferred textile for tailoring the Hindu women wedding dresses. Usually, highly expensive fine quality silk threads are used in Hindu wedding Saris. Sometime gold & silver fibers are also used to show off expensive embroidery designs on Hindu wedding Saris.   

Embroidery is extremely popular part of the Punjabi women dresses. The Zardosi workmanship is the most ornate and tedious form of Indian embroidery used in several cultures of Indian and Pakistani Punjab. This form uses metal thread instead of the usual silk or rayon. The fabric, usually silk or velvet is used for Zardosi Embroidery. Sometimes this embroidery uses precious stones, beads, pearls, and gems in Embroidery. This embroidery was once popular part of the women of royal families of India and Pakistan. Nowadays, this is one of the most expensive forms of embroidery. This embroidery is popularly used in some highly expensive Punjabi Suits popular in both India and Pakistan. Usually, Silk or velvet is the coveted fabric for Punjabi wedding dresses and often expensive Punjabi wedding dresses have rich Zardosi embroidery designs. Silk, Gold or Silver fibers, pearls and beads are used for embroidery work on expensive party wears of Indian and Pakistani Punjab. However the rayon or some other fine threads are used for embroidery work on routine Punjabi wears. 

Embroidery work is also very popular in Punjabi “Juttis” (shoes). Punjabi “juttis” of both men and women have rich embroidery works. Usually, fine quality gold or silver color fine fibers called “tilla” is used for embroidery works on Punjabi “Juttis.”

Phulkari work is also popular part of Punjabi women dress. Phulkari literally means flower work. Often the word Phulkari is used for head cloth/odini/shawl of Punjabi “mutiars” (young Punjabi women). Phulkari is extremely popular in the Malwa region of the Indian Punjab. Pulkaris are also popular in Pakistani Punjabi women. Phulkaris often have rich floral embroidery designs. 

Middle Eastern Embroidery (Also used in Islamic Clothing

Persian embroidery is very popular in the Middle Eastern cultures. The Persian embroidery is form of Persian art. The Persian embroidery uses floral designs and especially Persian figures, animals, and patterns related to hunting.

The embroidery in the Middle Eastern cultures is popularly used on divan coverings or ceremonial cloth for present-trays, carpets, rugs for the bathing-rooms, prayer-mats, women's embroidered trousers known as ‘naghshe,’ and religious drapery, such as that used in covering or wrapping around the holy Quran, or religious head covering or caps. Hardanger embroidery or Hardangersom is popularly worked on the religious drapery of the Middle Eastern Cultures. Embroidery is popularly used on “ghutras” or head coverings used by men and women. 

The embroidery in the Middle Eastern cultures is more often used in carpets and rugs rather than the routine clothes. The Middle Eastern “Kaleens” (carpets or rugs) manifest the royal tastes of the Arabian cultures. The Middle Eastern carpets and rugs are popular all over the world. 

Suzani is popular textile of some Middle Eastern cultures. Suzani is an antique and decorative tribal textile made in Tajikistan, Uzbekistan, Kazakhstan and other Central Asia countries.

Jewish Kippahs (religious caps) have also rich embroidery designs. The Jewish and Christian religious drapery is also richly embroidered. 

21 Apr '16

Islamic Calligraphy

Publicado por Nosheen Z en Islamic Calligraphy

Calligraphy is the art of beautiful penmanship or handwriting. Calligraphy has been popular in western, Arabic and Chinese / oriental domains. Within Islamic culture, Islamic Calligraphy has usually involved the beautiful penmanship of Quranic verses. Muslims from all over the world have produced Islamic artists that have produced quality Islamic calligraphic works.

The following profiles Islamic calligraphic works of Ricardo Panizza who has produced various digital Islamic calligraphic models.

 

 

 

Buy Quran English Arabic - click the link to get your copy.

21 Apr '16

Islam in Spain

Publicado por Nosheen Z en Islam in Spain

Islam and Spain have a special relationship that cannot be comparable to any other nation in Europe.

Muslims ruled Spain, or al-Andalus, for more than 700 years, from 711 to 1492 – a period of time during which both the religion and the country thrived as a spiritual, economic and commercial haven.

The Reconquista campaign launched by Christian forces in northern Spain culminated in the end of Muslim rule in 1492 when Queen Isabel of Castile took Granada.

Islamic rule in Spain saw Muslims living side by side with Jews and Christians. In fact, even after the Muslims were forced out of the Iberian Peninsula, many Jews moved with them because they enjoyed having the freedom to worship and the protection of the Muslim leaders.

Among the great Islamic architectural legacies of al-Andalus are the Mezquita (mosque) in Cordoba and the Mosque of Cristo de la Luz, one of only10 surviving mosques in Toledo.

It is now estimated the only 3% percent of the population, or about 1 million people, are Muslims, mostly Sunnis. However, there has been a recent surge in the number of Muslims because of immigration from Morocco and other parts of North Africa.

In 2003, the sound of the Muslim call to prayer returned to Granada for the first time since the Reconquista, with the opening of the Great Mosque of Granada. It is encouraging to note that the mosque was built to cater for a group of about 500 Spanish Muslims who had converted to Islam over the past 30 years.

It is estimated that there are between 200 and 400 places of worship for Muslims throughout Spain. The difficulty in obtaining exact figures stems from the fact that many “mosques” are within apartment buildings and shops rather than dedicated masjids.

Nevertheless, all places of worship must have a license from the government. The main mosques in Spain are the Abu Bakr El-Sidik and Marbia masjids.

Islam is officially recognized in Spain through the 1967 religious freedom act. In 1989, 15 Islamic organizations joined forces to form the Union of the Islamic Association, later becoming the Union of Islamic Society and expanding to 17 members.

Islam is taught in schools and education institutes where Muslims are studying with the Spanish government trying to integrate second-generation Muslim immigrants into the society.

However, in recent years, Spanish authorities have started to treat the Muslim community with suspicion, to the extent that some politicians wanted to monitor and censor Friday sermons.

The government was also pondering the setting up of a registry of mosques and religious leaders in the country.

These days, Muslims in Spain are represented by Al-Hidaya, which is part of the Council of the Spanish Federation of Islamic Religious Entities.

In January, 2007 Al-Hidaya spoke out against another group, the Islamic Council, which wanted to revive prayer in the Cathedral of Cordoba, which was the Mezquita during Islamic rule in Spain.

Al-Hidaya maintained that coexistence between Christians and Muslims requires separate places of worship.

Despite native Spanish converts comprising only 2% of the population, they have emerged as a vocal, liberal and moderate voice for Muslims, especially since the Madrid bombings of 2004.

In the 80s, they were instrumental in helping Muslims gain the same rights granted to Catholics, and in current times, they are trying to portray Islam as it was during the days of al-Andalus, when Muslims, Jews and Christians lived together harmoniously.

Islam and Spain have a special relationship that cannot be comparable to any other nation in Europe.

Muslims ruled Spain, or al-Andalus, for more than 700 years, from 711 to 1492 – a period of time during which both the religion and the country thrived as a spiritual, economic and commercial haven.

The Reconquista campaign launched by Christian forces in northern Spain culminated in the end of Muslim rule in 1492 when Queen Isabel of Castile took Granada.

Islamic rule in Spain saw Muslims living side by side with Jews and Christians. In fact, even after the Muslims were forced out of the Iberian Peninsula, many Jews moved with them because they enjoyed having the freedom to worship and the protection of the Muslim leaders.

Among the great Islamic architectural legacies of al-Andalus are the Mezquita (mosque) in Cordoba and the Mosque of Cristo de la Luz, one of only10 surviving mosques in Toledo.

It is now estimated the only 3% percent of the population, or about 1 million people, are Muslims, mostly Sunnis. However, there has been a recent surge in the number of Muslims because of immigration from Morocco and other parts of North Africa.

In 2003, the sound of the Muslim call to prayer returned to Granada for the first time since the Reconquista, with the opening of the Great Mosque of Granada. It is encouraging to note that the mosque was built to cater for a group of about 500 Spanish Muslims who had converted to Islam over the past 30 years.

It is estimated that there are between 200 and 400 places of worship for Muslims throughout Spain. The difficulty in obtaining exact figures stems from the fact that many “mosques” are within apartment buildings and shops rather than dedicated masjids.

Nevertheless, all places of worship must have a license from the government. The main mosques in Spain are the Abu Bakr El-Sidik and Marbia masjids.

Islam is officially recognized in Spain through the 1967 religious freedom act. In 1989, 15 Islamic organizations joined forces to form the Union of the Islamic Association, later becoming the Union of Islamic Society and expanding to 17 members.

Islam is taught in schools and education institutes where Muslims are studying with the Spanish government trying to integrate second-generation Muslim immigrants into the society.

However, in recent years, Spanish authorities have started to treat the Muslim community with suspicion, to the extent that some politicians wanted to monitor and censor Friday sermons.

The government was also pondering the setting up of a registry of mosques and religious leaders in the country.

These days, Muslims in Spain are represented by Al-Hidaya, which is part of the Council of the Spanish Federation of Islamic Religious Entities.

In January, 2007 Al-Hidaya spoke out against another group, the Islamic Council, which wanted to revive prayer in the Cathedral of Cordoba, which was the Mezquita during Islamic rule in Spain.

Al-Hidaya maintained that coexistence between Christians and Muslims requires separate places of worship.

Despite native Spanish converts comprising only 2% of the population, they have emerged as a vocal, liberal and moderate voice for Muslims, especially since the Madrid bombings of 2004.

In the 80s, they were instrumental in helping Muslims gain the same rights granted to Catholics, and in current times, they are trying to portray Islam as it was during the days of al-Andalus, when Muslims, Jews and Christians lived together harmoniously.

21 Apr '16

The Culture of Libya

Publicado por Nosheen Z en Libya Culture

Libya Cultural Overview

More than 90 percent of Libya’s population is a mixture of Berber and Arab ancestry. Berbers were the natives who occupied the land before the arrival of Arabs. An overwhelming majority of Libyans are Muslims. Most Libyans belong to the Sunni school of Islam, brought during the conquest by Arabs. Islam is central to Libyan life. Libyan life revolves around the regular religious practices advocated by Islam with most of the citizens attending regular prayers at mosques. Women pray at home.

Arabic Language

The national language of Libya is Arabic. The government officially discourages the use of other languages. English is the most popular second language taught in schools regularly. Also, Latin is known as second language in certain circles. In the main cities, only a few people may speak English. Latin is also a bit popular among older people. Berbers and Tuareg groups retain speaking their own tribal languages.

Islamic Clothing of Libya

Libyan men wear loose cotton shirts upon trousers and cover themselves with a cloak. They also wear a flat, brimless cap. Libyan women wear full-length robe. Most of the Libyan population living in cities is turning towards western styles of dress. Some older men and women continue their affiliation to traditional clothing, especially during festivals and celebrations. It is very common to see members of the same family dressed in traditional and in European styles. Urban girls of Libya wear bright colored western costumes while boys wear jeans and shirts. Though many resort to European styles, most women continue the Islamic tradition by covering their faces.

Libyan Foods

Libyan cuisines are a mix of Arabic and Mediterranean, strongly influenced by Italian delicacy. Pasta and macaroni, typical to Italy are very popular in Libyan menus. The national dish is the most popular couscous, a dish made from semolina or a type of wheat flour. For preparing this, the flour is sprinkled with oil and water and rolled into tiny grains. These grains are then steamed and served as a base for meat and potatoes. Couscous can be mixed with several types of sauces and can be consumed with a variety of meats and vegetables. Couscous can also be taken with honey and milk, especially seen during the breakfast. Mutton is the most popular meat, while chicken is served occasionally. Sharba is a type of highly spiced soup typical to the country. Bazin is a local dish like a hard paste made from barley adding salt and water.

Libyan Social Life

Libya is a highly conservative Islamic society. Because of over crowding, many Libyans live in single homes with extended family. High-rise buildings can be seen only in large cities meant for offices and apartments. Rural people live in stone or mud brick houses often having a single room for all their activities apart from a shed for animals. Despite conscious efforts by the government, there is repression of women, excepting those living in coastal cities. Even till today, women have very little educational opportunity and it is not quite common to see working women.