Download - Introduction to Islamic Banking and Finance
Introduction to Islamic Banking
and Finance
IN HOUSE TRAINING PROGRAM
OUTLINE
PROGRAM SCOPE:
HOW THIS COURSE WILL ASSIST?
The objective of this program offered by Sharia House is to educate and train
individuals who are new to the Islamic Finance and less equipped with the
knowledge in this field. This course will be a comprehensive guide for attendees,
equipping them with the basic and detailed understanding of the Sharia based
finance system. The course content is developed with the rich content keeping the
needs of attendees in the mind.
COURSE DESCRIPTION
Introduction to Islamic banking and finance course is designed to understand the
need of Islamic banking and the difference between conventional counterparts.
Attendees will also be enlightened with Islamic law of business transactions and
contracts. This course will not only help the attendees to work with the Islamic
modes of finance but will also equip them with enough understanding of Islamic
Investment Banking, Fund Management, and Project Finance & Financial
Engineering.
Introduction to Islamic Finance
Ethical Financial System
Distinguishing Features of Islamic Economic System
Islamic Law of Contracts and Business Transactions
Islamic Modes of Finance
Islamic Investment Banking
Islamic Financial Engineering
Islamic Fund Management
Islamic Project Financing
Training Methodology
In order to engage diversified group of participants and ensure learning of the
comprehensive concepts to every participant, we have developed diversified and
tested training techniques that include:
- Discussion based interactive class room sessions
- Case Studies
- Group Discussion/ Class Exercises
- Presentations
TRAINING COURSE OUTLINE
DAY – 1
“Ethical Fianancial System"
Topic 1: Distinguishing Features of Islamic Economic System.
Session 1 introduces the fundamentals of Sharia for Islamic Finance. It will
highlight the sources of Sharia, and its objectives. Difference between trade and
usury is particularized in terms of application of Sharia principles in the conduct
of Islamic banking. It will highlight the main prohibited elements in Islamic
transactions and will discuss the norms of ethics in Islamic financial system.
Islamic Sharia and its Objectives
Sources of Sharia Tenets
Objectives (Maqasid) of Sharia
Paraphernalia of Islamic Economics
Ownership of Resources and Property Rights
The Factors of Production
Restrained Individual Freedom
Liberalism versus State Intervention
Topic 2: Islamic Financial System: An Overview
Session 2 will develop the understanding of basic philosophy of Islamic finance
and rulings on avoidance of elements in Islamic Finance.
In this session we will discuss the basic features of Islamic finance directly
affecting the products, instruments, institutions and markets in the framework of
business and finance. This includes avoiding interest, involvement in genuine
trade and other business, Kharaj bi-al-Daman (Risk and Return), and other
requirements for profit entitlement in various kinds of businesses, money earning
money versus risk-based business and their impact on banks, depositors and the
fund users.
Norms of Ethics in an Islamic Financial System
Financial System Efficiency
Financial Product & Services
Financial Markets
Norms Relating to Riba
Norms Relating to Gharar
Norms Relating to Ta'wun
Topic 3: Islamic Law of Contracts and Business Transactions
Session 3 will develop the understanding of basic concepts about Wealth, its use
and ownership from Islamic viewpoint. It will cover the sharia’s standpoint on
contract, and the basic elements of contracts. Different transactions have
different features that need to conform to the tenets of the Sharıa. We will
comprehensively discuss Contracts that do not conform to Sharia doctrines or
that involve prohibited elements to have an in-depth understanding of these
elements to avoid invalid contracts.
Islamic banks and financial institutions are dealing in goods by entering into
contracts like sale, leasing, partnership, surety ship, agency, assignment of debt,
and mortgages it will be valuable discussion in detail.
Maal (Wealth), Usufruct and Ownership
General Frame work of Contracts
Elements of a contract
Broad Rules for the validity of Muamalat
Wadah (Promise) and related matters
Types of Contracts
Commutative Contracts and Non-commutative Contracts
Legal Status of Conditional and Contingent Contracts
DAY – 02
“Islamic Commercial Banking”
Topic 1: Commercial Banking
Day 2’s first Session will span over several topics including the discussion on
conventional commercial banking, their appraisal form Islamic finance angle
and what are their Islamic counter parts available. We will comprehensively
discuss the Islamic models of deposit and their mechanism. Finally we will
thoroughly cover the Islamic debit and charge card.
Conventional Commercial Banking
Islamic Appraisal of Conventional Commercial Banking
Islamic Alternatives
Current Deposit (Wadiah/Qardh)
Debit & Charge Card
Saving Deposits (Wadiah/Qardh)
Investment Deposits (Mudarabah)
Issues in Product Management
Topic 2: Financing Products (Equity - Based)
After understanding the essentials of commercial banking, we will lead the
discussion towards the basic modes of Islamic Finance; Mudarabah facility will
be elaborated which acts as a trustee partnership facility. We also discuss the
Musharaka mode of finance, more over the innovative mode of declining
partnership will be discussed which is being used frequently by the Islamic banks
to facilitate their clients.
Trustee Partnership Facility (Mudarabah)
Joint Venture Facility (Musharaka)
Declining Partnership Facility (Musharaka)
Issues in Product Management
Areas of Application
DAY – 03
“Islamic Financing Products –
Debt Based”
Topic 1: Financing Products (Debt - Based) I
This session will shift the spot light towards the asset side of Islamic banks,
financing products of an Islamic bank would be covered. From Islamic modes of
finance; the more popular financing products based on Murabaha, Bai-
Bithaman-Ajil and Ijarah will be discussed comprehensively.
Deferred Payment (Bai-Bithaman-Ajil) with Cost-Plus-Profit Sale
Facility (Murabaha)
Leasing Facility (Ijarah)
Issues in Product Management
Areas of Application
Topic 2: Financing Products (Debt - Based) II
After discussing the common modes of finances, we will shift the limelight
towards forward delivery contracts. These are debt-financing techniques that
are slowly making their appearance on the Islamic finance scene. In Salam
which is a deferred delivery sale, we will also cover how Islamic banks can use it
for pre-shipment export finance. After covering the Salam; we will shift towards
the one in a kind Islamic mode of finance where the payment and delivery both
can be subject to the future.
Deferred Delivery Sale Facility (Salam)
Manufacture Sale Facility (Istisna)
Recurring Sale Facility (Istijrar)
Benevolent Loan Facility (Qardh)
Areas of Application
Topic 3: Financing Products (Debt - Based) III
Session 3 will be based on the overview of mechanisms which have been
introduced recently but either is forbidden or at best controversial. These
products have been the subject to intense debate, and we will uncover the
scholarly outlook in this session.
Repurchased (Bai-al-Einah)
Credit Card Based on Bai-al-Einah
Bill Discounting (Bai-ul-Dayn)
Tripartite Resale (Tawarruq)
Issues in Product Management
Areas of Application
Topic 4: Fee-Based Products
Session 4 will cover few of the wide range of fee based services offered by
Islamic banks. The modern Islamic commercial banks offer a wide array of
services to the customers based on fee and are distinct from the services that
are fund based. Some of the Islamic products such as Wakalah and Kafala will
be discussed which do not require employment of funds.
Letter of Credit (Wakalah)
Letter of Guarantee (Kafala)
DAY – 04
“Investment Banking, Fund
Management, Project Finance &
Financial Engineering”
Topic 1: Investment Banking
Day 4’s introductory session will deal with investment banking and will initiate the
discussion with how conventional investment banking is practiced and
undertakes an assessment of the same from the stand point of sharia
compliance. The Islamic alternative investment banking products – both in pre-
market stage and after-market stage will be presented briefly. Moreover, this
session will also emphasize on venture financing, creation of securities and other
services, such as stock broking.
Conventional Investment Banking
Islamic Appraisal of Conventional Investment Banking
Islamic Alternatives
Venture Finance
Creation of Securities
Stock Broking
Topic 2: Financial Engineering
Session 2 will undertake an elaborate discussion of basic risk management
products based on options, forwards and futures and swaps. An Islamic
appraisal will be done after introduction of conventional financial engineering
and their Islamic alternatives will be debated comprehensively.
Conventional Financial Engineering
Islamic Appraisal of Conventional Financial Engineering
Forwards & Futures
Options
Swaps
Islamic Alternatives
Topic 3: Fund Management
Session 3 will be devoted to fund management and will comprise the discussion
of how funds are managed conventionally through various mutual funds, unit
trusts and real estate in investment companies. This session will undertake
assessment of the same from the standpoint of Sharia compliance. The Islamic
alternative fund management products will be then briefly presented.
Furthermore, it will elaborate on various issues relating to the fund management
products.
Conventional Fund Management
Islamic Appraisal of Conventional Fund Management
Islamic Alternatives
Fund Management Products
Issues in Product Management
Topic 4: Project finance
Lastly, we will discourse project financing, and this session will begin with a
discussion of project finance as is undertaken in the conventional way and goes
on to examine the issue of Sharia compliance. Some project finance structures
that are deemed Islamic will be presented, the important issue of risk sharing
and management in the context of project finance will then be discussed.
Conventional Project Finance
Islamic Appraisal of Conventional Project Finance
Islamic Alternatives
Issues in Product Management
DAY – 05
COURSE AGENDA
“WORKSHOP & CERTIFICATION”
Session – 01: Workshop & Case Study
Session – 02: Q&A
Session – 03: Certification
Contact
AFSHEEN SHAIKH
CHAIRMAN
Emirates Towers, Level 41. Sheikh Zayed Road, Dubai, P O Box 31303, UAE
M: +971 (55) 5565980
T: +971 (4) 458 5116
F: +971 (4) 458 5178
EHSAN WAQUAR
CEO
Business Centre, Office No. 701, 7th Floor, Shahre- Faisal Road, Karachi. Pakistan
M: +92 - 300 – 8286191
T: +92-213-4324102
F: +92-213-4324101