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1 ISLAMIC FINANCE TERMINOLOGIES

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Adadiyyah أعدادية

(pl. adadiyyat) Countables i.e. things which are measured in individual units

rather than by volume, weight, or length. An example of `adadiyyat are eggs

which are customarily purchased in unit, (half dozen, dozen, etc.) rather than by

weight.

Adl عدل

Adl is a general term which conveys the meanings of justice, equity and

fairness. In rahn transactions, the person whom both the pledger and the one for

whom the pledge is being made agree upon the custodian of the collateral.

Afw عفو

Afw is a Qur'anic term meaning surplus wealth.

Amil عامل

One who performs a task, an agent. One who deserves compensation for some

task which he does, such as the mudarib in a mudarabah contract or a zakat

collector.

Aqar عقار

Real estate, Immovable property such as land, buildings, trees and so forth.

Aqd عقد Aqd is a central term in Islamic financial Fiqh which essentially means

"contract."

Araya عرايا

(sing. Ariyyah) The term refers to palm trees which have been set aside by their

owner for the needy, for a fixed period of time such as a year, so that they may

feed themselves with its fruit. The case of araya is mentioned in the Hadeeth as

an exception to the Prophetic prohibition of the muzabanah sale. That is, while

he had forbade the people of Madinah from selling fruit on the tree for dried

fruit--ostensibly because of the gharar inherent in such a transaction--the

Prophet provided a dispensation in the case of `araya, allowing the poor who

possessed dried dates to sell them to tree owners for access to the fruit on

certain fruit trees for a year.

Ard أرض Land

O you who believe! Fulfill your

obligations (Holy Quraan)

A



Arbun أربون Earnest money/Down payment; a non-refundable deposit paid by the client

(buyer) to the seller upon concluding a contract of sale, with the provision that

the contract will be completed during the prescribed period.

Arif عارف

An expert who is consulted in situations which require an impartial, informed

decision, such as the appraisal of property.

Ariya عرية

A contract in which one party loans another the use of some item for an

indefinite period of time. Ariyah is generally used to refer to the neighborly

lending of small articles

Asabah عصبة

The male relatives to whom one is related through another male only, e. g. one's

father, paternal uncles, brothers and sons.

Aayn عين

Ayn is term used by the classical Fuqaha' to refer to currency or ready money.

The term àyn refers to gold, silver, coins, notes and any other form of ready

cash. Àyn is often contrasted with dayn.

Ainah عينة

A sale in which a purchaser buys merchandise from a seller for a stipulated

price on a deferred payment basis and then sells the same merchandise back to

the original seller for a price lower than the original purchase price.

Abu Hanifah ابو حنيفة Al-Nu`man bin Thabit, pre-eminent 2nd/8th century Faqih of Ìraq after whom

the Hanifi maslak is named.

Ahmad bin Hanbal أحمد بن حنبل

Ahmad bin Hanbal, 2nd/8th century pre-eminent Faqih and Hadeeth specialist

after whom the Hanbali maslak is named.

Ajr أجر Generally ajr means compensation or wage. In an ijarah contract, the ajr is the

price paid by the hirer to the hired party in exchange for the services which the

latter renders.

Akl al-suht أكل السحت Unlawful acquisition of wealth



Al-ajir al-khas اآلجر الخاص A hired-worker who is contracted to perform a specific task in a specific amount

of time by one party, such as a cook or a servant

Al-ajir almushtarak اآلجر المشترك

A worker, such as a tailor, who offers his services to many and thus may be

contracted by several clients at once

Al-ajr al-mithl األجر المثل The prevailing rate; the price which is normally paid for a given service.

Al-akl bi lbatil األكل بالباطل Unlawful acquisition of wealth.

Al-amin al- àmm األمين العام

One who has been entrusted with the property of another for a reason other than

safe-keeping (wadiàh), such as a tenant who rents an apartment or the mudarib

in the mudarabah contract.

Al-amin alkhas األمين الخاص One who has been entrusted with the property of another and is responsible for

it, as is the case in the wadiàh (safe-keeping) transaction.

Al-amwal alribawiyah األموال الربوية The six kinds of substances (gold, silver, dates, wheat, salt and barley) which,

when exchanged in kind, must be exchanged in equal measure and with

immediate transfer of possession. If these conditions are not met, then the

exchange is considered to be riba.

Al-Shafiì الشافعي Muhammad bin Idris, late 2nd/8th century pre-eminent Faqih after whom the

ShafiÌ madhhab is named.

Amanah أمانة Honesty, trustworthiness and loyalty. Amanah is a widely applied term in Fiqh

which is used to refer generally to anything in the safe-keeping of another which

must be guarded and preserved.

Ayah آية Sign, the term refers to a passage from the Holy Qur'an.



Ajr al-mithl / Ajrul Mithl اجر المثل Reasonable wages; wages to which a person would be entitled under normal

circumstances or customary in the community.

Fard al Kifayah فرض الكفاية Socially obligatory duties. Literally, a collective duty of Muslims, the discharge

of which by some of them absolves the rest of its performance, such as funeral

prayers. Technically it covers such functions which the community fails to or

cannot perform and hence are taken over by the state, such as the provision of

utilities, building of roads, bridges and canals etc.

Al-Aamilu-Alaz-Zakah عامل الزكوة

Zakah collector.

Alim عالم

An Islamic religious scholar. Plural: Ulamaa.

Al-Mofaviza المفاوضة General Partnership (one of the types of partnership under Musharakah)

Al-sharikah dhat al-mas uliyah al-mahdudah الشركة ذات المسئو لية المحدودة The name for a private limited company in Egyptian law

Al-wakala al mutlaqa الوكالة المطلقة Resale of goods with a discount on the original stated cost. Absolute power of

attorney.

Amwal اموال Wealth; in business context wealth that is contributed as capital in a partnership;

(pl. of mal)

Aqd ghayr Azim عقدغيرعازم

A contract that is terminable at the will of the parties, like partnership.

Aqd Sahih عقد صحيح

A legal contract

Aqd عقد

Agreement, contract.

Ard / Ardh عرض

land; property that includes goods, slaves and even real estate; according to

most jurists land is not eligible for entitlement to profit as compared to other



things that are: wealth, labor, credit-worthiness qiyas (analogy); a principle of

law; principal amount in a debt; see A’s al-mal.

Athmaan mutlaqah الثمن المطلق

Absolute currencies; the term is usually applied to dinars and dirhams

Batil باطل Void, invalid. Said of a transaction, a contract which governs a transaction or an

element in such a contract when they are null and void. opp. Sahih.

Bay بيع Sale; an agreement between two parties (the seller and the buyer) to the effect

that the ownership of the sale item is transferred from the seller to the buyer in

exchange for a price

Bay ajil بيع آجل

Delayed-for-immediate sale. A type of sale in which the sale price is paid

immediately and delivery of the sale item is delayed.

Bay al-inah بيع العينة

A prohibited type of sale in which one sells an item on credit then buys it back

for a lesser price.

Bay al-kali بيع الكالي

Sale of a debt for a debt, it is a type of sale which the Prophet is reported to

have prohibited. The Fuqaha' use this term to describe several different types of

debt-for-debt exchanges. The most well-known of these is the exchange in

which a lender extends his debtor's debt repayment period in return for an

increase on the principal i. e. interest. The term kali' is a synonym for debt.

Bay almu'ajjal بيع المؤجل

Deferred payment sale, credit sale; a sale in which payment is delayed and

delivery of the contracted goods is immediate.

Bay al-salam بيع السلم

Deferred delivery sale; a type of sale in which the sale price is paid immediately

and delivery of a specified sale item is deferred for a stipulated period.

B



Bay bithaman ajil بيع بالثمن اآلجل

Deferred payment sale, Some Islamic banks carry out a transaction of this name

in which goods are requested by a client, purchased by the bank and then sold to

the client at an agreed upon price which includes the bank's mark-up profit.

Often the client is offered the option of paying in installments. This is

essentially identical to the murabahah financing used throughout the Islamic

banking sector.

Bayatan fi bay بيعتان في بيع

Two sales in one, a type of transaction which was explicitly prohibited by the

Prophet. The meaning of the expression "two sales in one" is explained by the

fuqaha' in various ways. Also called "safaqatan fi safaqah.

Bayt al-mal بيت المال

The treasury of the Muslim Community; historically, the bayt al-mal as an

institution was developed by the early Caliphs but which soon fell into

disrepair. The funds contained in the bayt al-mal were meant to be spent on the

needs o the Ummah e. g. supporting the needy.

Badal بدل

Substitute; substitute compensation.

Bai al Dayn bi addayn بيع الدين بالدين The exchange of a debt for a debt (prohibited based on a tradition and

unanimously by the jurists based on ijma).

Baligh بالغ

Mature person; person who has attained puberty, the outward sign of majority

and discretion, in the absence of which jurists determines different ages for the

presumption of puberty.

Buda’ah بضائع Goods given to another for trading without giving wages or sharing profits (like

a shopkeeper leaving his shop with another shopkeeper during his absence).

Daif ضعيف

Weak, Said of a hadith which whose transmission is defective so that its

authenticity is in question.

D



Daman ضمان

Responsibility for financial coverage in the case of destruction or damage.

Daman al-mal ضمان المال

Liability for the debts of the partnership; the usual form of liability underlying

all partnerships, especially one formed based on wealth.

Daman al-talaf ضمان التلف

Liability for damaging or destroying property accepted by the partnership for

value-added work.

Daman al-thaman ضمان الثمن

Liability underlying a partnership formed on the basis of credit-worthiness

where each partner is liable, jointly and severally, for paying the prince of goods

bought on credit.

Dayn دين Debt; some form of wealth which one is required to pay back to another.

Dhimmah ذمة Dhimmah is a basic term in fiqh al-mu`amalat which roughly corresponds to the

concept of liability. A debt is said to be "established in someone's dhimmah" if

he is in debt to someone else. The Fuqaha' also speak about a person's dhimmah

"being occupied" and "being cleared." The concept of dhimmah may be likened

to a virtual liability container which it may be said that every responsible person

has. These containers, it may be imagined, are constantly being filled with

rights and obligations--such as the obligation to repay someone.

Dinar دينار

A gold coin used by Muslims throughout Islamic history. The standard mass of

the dinar which is referred to in Fiqh is mithqal (app. 4.25 grams.)

Diyah دية

The compensation paid by one who commits manslaughter or unintentional

homicide to the relatives of the deceased.

Faqih فقيه

Muslim jurist; A Muslim who is an expert in Fiqh; a Muslim who is

knowledgeable of the rules of the Shariah and knows how these rules are related

to the source texts upon which they are based.

F



Faqir فقير

A poor person (pl. fuqara)

Faskh فسخ

Undoing, dissolving, cancellation. Faskh is a term used by the classical Fuqaha

to refer to the dissolution of a contract or agreement. It has been described as

the cancellation of a contract, such that affairs return to the state in which they

were before the closing of the contract, without any addition or subtraction.

Many of the classical fuqaha' apply the term faskh to instances in which a

previously valid (sahih) contract is cancelled voluntarily by the contractual

parties--such as in iqalah, khiyar al-`ayb (option to return in case of a defect)

and khiyar al-shart (stipulated option of return)--and use the term infisakh for

cancellations which occur outside of the will of each of the contractual parties

such as the cancellation of a sale contract when the sale item is destroyed,

before the seller can hand it over to the purchaser or the dissolution of certain

partnerships upon the death of one of the participating parties.

Fatwa فتووٰی

(pl. fatawa) A formal response issued by an expert Faqih, called a mufti in

response to a question.

Fuduli فضولى

A party is described as "fuduli" whenever it transacts (e. g. sells, rents, etc.)

with someone else's property without the permission of the Shariah (e. g.

wakalah). Such is the case when a party does not own the property with which it

transacts and is not the wakil (authorized representative) or wali (guardian) of

the true owner. For example, if a person were to negotiate and "close" a deal

with a buyer in which he sold some machinery without the owner of the

machinery having made him his wakeel (authorized representative) the "seller"

would be described as fuduli.

Fard فرض Obligatory, an act which is obligatory on Muslims

Fard Ain فرض العين An action, which is obligatory on every Muslim

Fasid فاسد

Vitiated; irregular; unenforceable; used in the sense of voidable in the positive

law, but a contract is voidable at the option of the parties, while the fasid

contract can become valid only if the offending condition is removed.



Falas افالس

Bankcrupt

Fulus فلوس

(pl. of fals) copper coin

Fidyah فدية

Compensation for missing or wrongly practising necessary acts of worship.

Fidyah usually takes the form of donating money or foodstuff, or sacrificing an

animal.

Fuqaha فقهاء

(singular, faqih) Jurists who give opinion on various issues in the light of the

Quran and the Sunnah and who have thereby led to the development of Fiqh.

Gharar غرر

A quality said to exist in a contractual transaction when an essential element of

the transaction is indeterminate. The sale of an item which the seller does not

possess for example is a gharar sale. Contractual transactions which contain

gharar are batil i. e. void. Avoiding gharar in transactions is one of the essential

principles of Islamic finance.

Gharim غارم

(pl. gharimun) A debtor who does not possess the funds with which to repay his

debt. According to the Hanifi jurists, a gharim is one who whose funds, after

repayment of his debt, would not equal the nisab. The Shafi`i and Maliki jurists

divide the gharimun into two types: 1) those whose debts were incurred in their

own benefit and 2) those whose debts were incurred benefiting others. The

gharimun are one of the eight groups mentioned in the Qur’an as legitimate

recipients of zakah funds.

Ghasb غصب

The wrongful appropriation of property by force.

Gharim غارم

A person in debt; debtor unable to pay the debt from his wealth.

Ghasb غصب

Usurpation; abduction.

G



Habal alhabalah حبل الحبلة

A type of sale practiced by the Arabs during the Jahiliyyah, in which the

essence of the agreement between the two transacting parties depended on a

pregnant she-camel giving birth to a female calf which would subsequently

become pregnant itself. The habal al-habalah transaction was prohibited by the

Prophet, according to several well-known reports, ostensibly because of the

extreme uncertainty in the essence of the contract, given that neither of the

contractual parties can be even remotely certain that a pregnant she-camel

would successfully give birth to a another she-camel, which would subsequently

mature and become pregnant itself.

Hadith حديث

(pl. ahadith) A successively transmitted report of an utterance, deed, affirmation

or characteristic of the Prophet Muhammad. The Ahadeeth are the source texts

by which the Sunnah is preserved.

Halal حالل

Permissible, lawful; said of a deed which is not prohibited by Allah, opp.

Haram.

Haqq حق

Truth, right, Al-Haqq is one of the names of Allah. In the Fiqh of financial

transactions, the term haqq signifies a right which a party possesses, for

example the creditors right to payment.

Haram حرام

Impermissible, unlawful, opp. Halal.

Hawalah حوالة

Debt transfer; a transaction in which debtor A transfers the obligation to repay

his debt, which is due to lender B, to a third party C, who generally is already in

debt to A. The result is that C now owes B and A is free from the burden of

repayment.

Hawl حول

The term hawl is used by the jurists to describe the amount of time which must

pass before a Muslim in possession of funds equaling or exceeding the

exemption limit (nisab) must pay Zakah on his wealth. In the case of cash, gold

and silver it is one Islamic year i.e. a lunar year of app. 354 days.

H



Hibah هبة

Gift

Hisbah حسبة

Hisbah is a term used by the classical fuqaha', among them Ibn Taymiyyah, to

describe the function of regulating the market place which is to be carried out

by the Islamic authority (often called the muhtasib in this sense). Hisbah

includes taking whatever steps may be needed in order to maintain a fair and

orderly market place. Historically, various Islamic rulers have undertaken the

duty of hisbah by supervising activities ranging from the inspection of eateries

for sanitary conditions to the investigation of fraud. The basis of hisbah is the

Prophet's customary inspection of the marketplace of Madinah.

Hukm حكم

(pl. ahkam) In Fiqh, the Shariah ruling (e.g. obligatory, recommendable,

neutral, reprehensible, or forbidden) associated with any action.

Husah حصاة

Pebbles, a type of sale practiced by the Arabs in the Jahiliyyah and prohibited

by the Messenger of Allah in which the sale was determined by the casting of

pebbles. Classical commentators mention three forms of the husahsale: (1) the

seller would say to the would-be purchaser, "when I throw the pebbles in my

hand, then the deal is closed and binding on you," (2) the seller would say to the

would-purchaser, "I shall sell you the commodity which your pebbles hit" or (3)

in a land sale, the seller would say, "I shall sell you the plot of land whose

dimensions are defined by the extent to which you throw this pebble." The

husah sale--like the habal al-habalah sale (see entry) was ostensibly prohibited

because of the gharar which characterized the contract which governed it.

Harikat amal شركة العمل

Partnership in which participation by the partners is based on labor or skill, but

the partnership has to be of the type inan or mufdwadah.

Heelah حيلة

Legal device

Hima حمىٰی

Keeping people away from a land which was earlier treated as usable by all so

as to restrict all outward benefits such as herbage, water and hunting to state

use.

Hizim حزم

Binding; binding contract.



Hudud حدود

The boundary between what is Halal (lawful) and what is Haram (unlawful),

set by Allah. Whoever transgresses these limits may be punished or forgiven by

Allah.

Hujjah حجاج

Legal proof or authority

Ihtikar احتكار

Hoarding; the prohibited practice of purchasing essential commodities, such as

food and storing them in anticipation of an increase in price.

Ijarah wa iqtina اجارة و إقتناء

Lease-and-purchase transaction; a financing instrument used by practitioners of

contemporary Islamic finance in which a financier purchases reusable

merchandise (e.g. airplane, buildings, cars) and then leases them to clients in

return for an agreed upon rental fee (to be paid for the length of the lease

period) and an agreement that the client will purchase the merchandise at the

end of the lease period.. There are similar transactions of various names, among

them al-ijarah al-muntaha bi-tamlik.

Ijma اجماع Consensus, The unanimous consensus of the Muslim Ummah on a given issue,

usually as represented by the agreement of the jurists. Ijma' has traditionally

been recognized as an independent source of law, along with the Qur'an, Sunnah

and Qiyas (analogical deduction), by most of the jurists.

Ijtihad اجتهاد

Effort, exertion, diligence. The process by which a qualified Islamic jurist

(called a mujtahid) endeavors to arrive at the correct ruling on a given issue by

reflecting on source texts from the fundamental sources of the Shari`ah: the

Qur'an and Sunnah.

Iktinaz إكتناز

Hoarding wealth by not paying zakah on it.

Iman ايمان

Conviction, faith or belief; the acceptance and affirmation of Allah, His Books,

His Messengers, His Angels, the Hereafter and Divine Decree.

I



Infaq انفاق

Spending, normally in the path of Allah. Among the various praiseworthy types

of infaq are spending on one's family, spending in preparation for jihad and

feeding and clothing orphans and other underprivileged individuals.

Iqtisad اقتصاد

Moderation. The term is used in modern standard Arabic to denote the field of

economics.

Istisna إستصناع

A type of sale, similar to salam, in which the price is paid in advance by the

purchaser/contractor for specified goods which are subsequently manufactured

and delivered on a stipulated date.

Ihya al-Mawat إحياء الموات Reviving of un-owned wasteland. One who revives such land becomes its

owner.

Ihya’ al-ardh إحياء األرض Reviving barren lands.

Ikhtilat اختالط Mixing of shares so that they can no longer be separated.

Intifaq انتفاق Granting of concessions relating to real estate e.g. the right of passage and right

to place a beam on the wall of the neighbor, etc.

Intiha انتهاء End; termination; termination or dissolution of a partnership.

Iqalah إقالة Negotiated rescission.

Iqta اقطاع Granting of ownership or usufruct rights over state land by the state to

individuals in recognition of their services for the sake of Islam.

Irtihan إرتحا ن Pledging; mortgaging.

Ishtirak اشتراك Equivocally; participation; partnership.



Istidanah إستدانة Raising or building up credit through credit purchases. It however does not

apply to the raising of cash loans.

Isnad إسناد

The chain of transmission of a tradition.

Isqat إسقاط The extinction of a right.

Istidanah إستدانة Raising or building up credit through credit purchases; does not apply to the

raising of cash loans; see istiqrad.

Istihqaq al-ribh إستحقاق الربح Entitlement to profit; basis for entitlement to profit.

Istiqrad إستقراض The raising of cash loans for business purposes, declared batil by al-Sarakhsi as

it is against the principle of prohibition of Riba.

Jahiliyyah جاهلية

The Days of Ignorance, the so-called "pre-Islamic period." The period between

the Prophethood of `Isa bin Maryam (Jesus) and the Prophethood of

Muhammad. Jahiliyyah is the term Muslims use to refer to the era just before

the coming of the Prophet Muhammad and more generally to the state of affairs

which characterized this era, which was plagued by shirk (the crime of

associating partners with Allah), infanticide, tribal strife, etc.

Ja’iz جائز

Permissible; permissible contract.

Jizya جزية A tax imposed on non-Muslims who are under Muslim country.

Joalah / Joaalah جعالة

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.

J



Kafalah كفالة

Assumption of the responsibility for debt repayment; a standard Islamic

financial transaction in which X (the kafil) agrees to assume responsibility for

the debts of Y (the makful ànhu). Similar but not identical to hawalah.

Kafil كفيل

In a kafalah relationship, the party which assumes responsibility for repayment

of the debts of another.

Kharaj خراج

Kharaj is a term used by the fuqaha' to describe a certain share of the produce of

certain agricultural lands which is collected by the caliphate and added to the

bayt al-mal. The term appears in a wider sense in a well-known hadith which

came to constitute a basic principle of fiqh al-muàmalat: profit (kharaj) goes

with liability (daman).

Khiyar خيار

Option, choice, the option extended to one or more of the parties in a sales

contract to rescind the sale, upon the appearance of a defect, for example. The

jurists have traditionally recognized several different types of khiyar, including

khiyar al-ru`yah, khiyar al-àyb, khiyar al-shart, khiyar al-majlis.

Kafalah bi al-thaman كفالة بالثمن Surety for paying the price or sum if unpaid by the person originally liable.

Kafalah binnafs كفالة باالنفس Bail; surety for producing the body of the person wanted.

Kafil كفيل Surety; person providing the surety; guarantor.

Khalt خلط

Mixing of shares; see ikhtilat.

Khamr خمر

Wine from grape juice.

Kharaj خراج

Tax on land of non-Muslim subjects of an Islamic state; revenue from land.

K



Khums خمس

A 20 per cent levy. It is applicable to spoils of war, mines and wealth burned in

land that has no owner.

Kihayr Izin خيار إذن

Contract terminable at the will of either party. contract terminable at the will of

either party.

Luqtah لقطة

The term luqtah refers to an item misplaced by its owner which someone else

finds. The topic of luqtah is treated in most standard Fiqh commentaries and is

often accompanied by a discussion of the responsibilities of the one who finds

the lost property. The questions discussed include: Should he leave it where he

finds it? Should he take possessions of it in order to safeguard it until the owner

comes back for it? Should he take possession of it and do what he wants with it.

Madd مد

A dry measure equal to 1/4 sa` which was in use in Madinah during the time of

the Prophet and continued to be part of the classical Islamic measurement

system.

Madhhab مذهب

Way of going, pl. madhahib. A Fiqh school or orientation characterized by

differences in the methods by which certain source-texts are understood and

therefore differences in the Shari`ah rulings which are deduced from them.

There are four well-known madhahib among Sunni Muslims whose names are

associated with the classical jurists who are said to have founded them (Hanafi,

Maliki, Shafi`i and Hanbali).

Mahr مهر

The obligatory gift, given by the groom to the bride, which is one of the integral

components of a valid marriage agreement.

Makruh مكروه

Detested; technical term used by the Fuqaha' to classify actions with regard to

their desirability. Makruh is said of an action which one is rewarded for

avoiding, but not punished for committing.

L

M



Mal مال

Wealth, money, property; any valuable thing which can be possessed.

Malik مالك

Malik bin Anas pre-eminent faqih of the late 2nd/8th century after whom the

aliki madhhab is named.

Manfaah منفعة

Benefit, the yield which a utilizable property produces. The term is often used

by the Fuqaha' to describe the usufruct associated with a given property,

especially in leasing transactions. In an automobile lease for example, the term

manfaàh might be used to describe the benefit which the lessee derives from

the use of the car for the duration of the lease (as opposed to the actual

ownership of the vehicle).

Maqasid al-Shariàh مقاصد الشريعة

The Objectives of the Shariah. The term maqasid al-shariah refers to a juristic-

philosophical concept developed by the later generations of the classical

Fuqaha', who attempted to formulate the goals and purposes of the Shariah in a

comprehensive manner to aid in the process of investigating new cases and

organizing previous existing rulings.

Maysar ميسر

Gambling, a game of chance. Originally a game of chance played by the Arabs

in the Jahiliyah, maysar came to refer to any game of chance.

Miskin مسكين

A poor, indigent person. The miskin is mentioned in the Qur'an as one of the

recipients of zakah.

Muamalah معاملة

A financial transaction. Fiqh al-muàmalat is the traditional Islamic discipline

concerned with the jurisprudence of financial transactions.

Mudarabah مضاربة

A standard Islamic transaction between two parties in which one party, the rabb

al-mal or investor, provides capital for a venture project and the other, the

mudarib or entrepreneur, using his entrepreneurial skills, utilizes the capital to

generate a profit. Profits arising from the mudarabah are distributed between the

rabb al-mal and the mudarib according to a pre-determined ratio and any losses

are borne by the investor alone.



Mudarib مضارب

In a mudarabah contract, the party who acts as the entrepreneur-manager.

Mufti مفتي

A highly qualified jurisconsult who issues fatwa (informed legal

pronouncements), usually in response to questions posed to him.

Mugharasah مغارسة

A type of agricultural contract similar to muzaraah in which a land owner and a

worker agree that, in return for the worker's planting and tending of fruit-

bearing trees on the land owner's field, the landowner will assign to him a share

of the orchard's harvest.

Mujtahid مجتهد

One who exerts himself) a highly qualified expert in fiqh who engages in

independent legal reasoning (ijtihad).

Mukhabarah مخابرة

Mukhabarah is a term used by some of the classical fuqaha' as a synonym for

muzaraàh (see entry) and by others to mean an arrangement between a

landowner and a worker. Mukharabah is similar to muzaraàh except that in

mukhabarah, supplies (e. g. seed) are provided by the worker while in

muzaraàh they are provided by the landowner.

Murabahah (Bay al-murabahah) مرابحة

Originally a term describing any sale in which the seller ells his merchandise for

more than the price at which he acquired it, the term murabahah is now used in

contemporary Islamic finance to describe a financing scheme in which a

financial institution agrees to purchase merchandise for a client provided that

the client promises to purchase it from the financial institution at an agreed

upon mark-up. This transaction, called simply murabahah or murabahah

financing, is widely used in contemporary Islamic finance.

Musaqah مساقاة

A type of partnership in which the owner of an orchard agrees to share a

stipulated portion of the produce of the orchard's trees with a worker, in

exchange for the latter's irrigation of the garden.

Musharakah مشاركة

Partnership, a standard Islamic transaction in which two or more parties enter

into any one of several related types of partnerships. In a typical musharakah

agreement, two or more parties agree to provide capital (ra's mal) towards the



financing of a commercial venture, share profits according to a stipulated ratio

and share losses on the basis of equity participation.

Muzabanah مزابنة

Essentially, muzabanah is a transaction in which the owner of fruit trees agrees

to sell his fruit for an estimated equivalent amount of the dried fruit, such as

palm fruit for dates or grapes for raisins. Muzabanah was an agricultural

practice known to the people of Madinah and prohibited by the Prophet

ostensibly because of the strong element of gharar present in such a transaction.

Muzara`ah مزارعة

Share-cropping; an agreement between two parties in which one agrees to allow

a portion of his land to be used by the other in return for a part of the produce of

the land.

Najash نجش

The prohibited practice of deceiving and inciting a potential buyer during the

course of pre-sale negotiations or bidding by egging him on, either through

insincere bidding on the part of a spectator (such as bidding with no intention of

buying and merely in order to have the would-be buyer raise his bid), or false

statements on the part of the seller himself (such as the seller claiming that the

commodity is of greater value than its true worth).

Najis نجس

Impure.

Nisab نصاب

The exemption limit for the payment of zakah. A Muslim who possesses wealth

below the nisab is exempted from paying zakah, while a Muslim who possesses

wealth at or above this exemption limit is obliged to pay zakah. The nisab

differs depending on the type of wealth in question.

Qabd قبض

Seizing, taking possession of the exchange commodity in an exchange

transaction, such as the exchanger taking possession of the silver which he

traded for his own gold. It’s being immediate is a necessary condition for the

validity of currency exchange.

N

Q



Qard قرض

A loan, a transaction in which X lends Y some wealth (e.g. money) to be repaid

after the elapsing of a specified amount of time.

Qard hasan حسن قرض

A loan granted for welfare purposes or to bridge short-term funding

requirements; it could also take the form of a no remunerated deposit account.

The borrower is required to repay only the principal.

Qimar قمار

A type of prohibited arrangement in which the acquisition of property is

contingent upon the occurrence of an uncertain event, as is the case in gambling.

Qirad قراض

Another name given by the Malilkis to the contract of mudarabah, from the

word qard.

Qubul قبول

Acceptance.

Quirat قيراط

Gold, coin used during the time of Holy Prophet PBUH

Ra's al-mal رأس المال

Capital, the money or property which an investor (rabb al-mal) invests in a

profit-seeking venture, often in a partnership (musharakah) such as a mudarabah

or shirkah arrangement.

Rabb al-mal رب المال

In the mudarabah, the investor.

Rahn رهن

Collateral; a pledge or the transaction which governs such a pledge.

Retakaful ريتكافل

A form of Islamic reinsurance that operates on the takaful model.

Riba ربوٰی

Increase, any increase in a loan or sale transaction which accrues to the lender,

seller or buyer, without the provision of an equivalent counter-value to the other

R



party. In Islam, riba is one of the most abhorrent of all sins and is absolutely

prohibited. Riba encompasses various types of illict gain, of which banking

interest is one example.

Riba al-fadl ربوا الفضل

The riba of exchange surplus. Any commodity-for-commodity exchange

transaction (i. e. barter) in which the exchanged commodities are of the same

type but of unequal measure, or the delivery of one commodity is postponed.

Riba al-nasi'ah ربوا النسئية

Postponement riba, it is one of the two categories into which riba is often

divided by the Fuqaha', the other being riba al-fadl. Riba al-nasi'ah takes place

when two ribawi substances are exchanged, one immediately and the other with

a delay.

Ribaa al-diyvn ربوا الديون

ribaa al-diyvn (debt usury): Interest, same ribaa al-nase`a.

Rishwah رشوة

Bribery.

Rukn ركن

Pillar (pl. arkaan), an integral part of an act, such as a transaction, without

which the act can not be said to have been performed.

Rabb al-ard رب األرض

Owner of land, owner of the land in Musaqah/Musaqat and Muzara’ah

contracts.

Radd bi-al-ayb رب العيب

Return of goods after a sale due to defects in the goods.

Raghabah رغبة

Property, which belongs to all people. Neither state nor individuals can prevent

others from its lawful use.

Rikaz ركاز

Ancient wealth found hurried in land whose



Sa صاع

A dry measure in use in Madinah during the time of the Prophet in which dates,

barley and other similar items were weighed.

Sadaqah صدقة

Charitable giving (pl. sadaqat).

Sahih صحيح

Sound, healthy, correct, said of a valid contract, A Hadeeth of the highest level

of authentication.

Salam سلم

A type of sale in which the full price of the goods is paid in advance and the

goods are delivered at a specified date in the future.

Sarf صرف

Currency exchange.

Shahadah شهادة

Testimony to the fact that Allah has the unique right to be worshipped to the

exclusion of anything or anyone else and that the Prophet Muhammad is the

Messenger of Allah by declaring, "Ashhadu an la ilaha illallah wa ashhadu anna

Muhammadan rasulullah" (i.e. "I testify that there is no one or thing rightfully

worshipped except Allah and that Muhammad is the Messenger of Allah).

Shari`ah شريعة

The Sacred Revealed Law of Islam which governs the affairs of Muslims.

Shart شرط

(pl. shurut) A necessary condition, something which needs to exist or be present

in order for something (like a transaction) to be valid. Also a condition or

stipulation in a contract.

Shirkah شركة

Any contract between two or more persons in which they agree to jointly enter

into a financial enterprise whose profits will be divided between them.

S



Shufah شفعة

The right of pre-emption in sale transactions, for example, a real estate sale in

which some party possesses the right to force the seller to sell him all or part of

the real estate in the event of a sale.

Sighah (Sighat al-`aqd) صيغة

Sighah is a term used by the Fuqaha' to refer to the formal exchange which

takes place between the contractual parties indicating their willingness to enter

into the contractual agreement and therefore constitutes the contract itself. The

sighah is a rukn (integral element) of the Islamic contract and essentially

consists of a proposal (ijab) on the part of one contractual party and an

acceptance (qabul) on the part of the other, either of which may be verbal,

written or even gestural, depending on the circumstances under which the

contract is closed.

Suftajah سفتجة

A debt transfer transaction, practiced in Islamic societies since the `Abbasi

period in which A, a debtor authorizes his agent (wakil) or someone who owes

him a debt, to pay a given amount to C to whom A owes a debt. Suftajah is

related to and may be considered a special case of the standard Islamic debt

transfer transaction known as hawalah (see entry).

Sukuk سكوك

Sukuk is the Arabic name for a financial certificate but can be seen as an

Islamic equivalent of bond. However, fixed income, interest bearing bonds are

not permissible in Islam, hence Sukuk are securities that comply with the

Islamic law and its investment principles, which prohibits the charging, or

paying of interest. Sukuk is a certificate of equal value representing undivided

shares in ownership of tangible assets, usufruct and services or (in the

ownership of) the assets of particular projects or investment activity.

Sunnah سنة

The actions, deeds, affirmations and characteristics of the Prophet Muhammad,

the customary practice of the Prophet which informs the life of a Muslim.

Sadaqah al-Fitr صدقة الفطر

A compulsory levy after the month of fasting (Ramadan). Every Nisab-holder

has to give to the poor one saa (21/2 kg.) of commonly used grain for himself

and each one of his dependents.

Samsarah سمسرة

Brokrage, agency, business of commisson. See Simsar.



Shakhsiyah iitbariyah شخصية إعتبارية

Juristic person; artificial personality; corporate personality.

Sharik شريك

Partner

Sharikah al-wujuh شركة الوجوه

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.

Sharikah amah شركة عامة

General partnership; a partnership in which each partner is a general attorney

for the other partners; a partnership that permits trading in all types of goods.

Sharikah khassah شركة خاصة

Special partnership; partnership for a single venture or for trading in a

particular item; partnership in which each partner is a special attorney of the

other partners.

Sharikah Musahamah شركة مساهمة

In Egyptian law it is the name for a corporation or for a public limited

company.

Sharikah شركة

Partnership; in Egyptian law 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- inan شركة العنان

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 شركة األبدان Another name for sharikat al-amal.

Sharikat al-amwal شركة األموال

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-ibahah شركة اإلباحة

Common rights of individuals to gather possesses and own free commodities.

Sharikat al-jabr شركة الجبر

Mandatory co-ownership created by an act of law, like inheritance.

Sharikat al-mafalis شركة المفالس

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-milk شركة الملك

Co-ownership. Sharikat al-mudarabah: see mudarabah.

Sharikat al-taqabbul شركة التقابل

Partnership for the acceptance of work, which is the same thing as a partnership

based on labor or skill.

Sharikat al-zimam شركة الذمم

A term used by the Malikis 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.

Shira’ bi al-nasiah شراء بالنسئية A credit-purchase.

Shirb شرب

The right of irrigation.

Shirikat al- aqd شركة العقد

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 شركة

Another form of the term sharikah. 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. See

Appendix II for details.

Shirkat al-amal شركة األعمال

See sharikat at-amal.



Takaful تكافل

Mutual support; Islamic insurance; an Islamically acceptable alternative to

conventional commercial insurance which is based on the concept of mutual

financial support.

Tawarruq توارق

Reverse murabahah. As used in personal financing, a customer with a genuine

need buys something on credit from the bank on a deferred payment basis and

then immediately resells it for cash to a third party. In this way, the customer

can obtain cash without taking an interest-based loan.

Ta’yin تعيين

Ascertainment of the goods sold through weight or measure.

Tabarru تبرع Act of charity.

Tafwid تفويض Delegation.

Tahjir تجارة Earmarking a piece of wasteland that has no owner by an individual in order to

rehabilitate it. (This establishes the right of ownership on such land).

Takhrij تخريج Derivation; a methodology practiced by the Faqih, and that is based upon

reasoning from principles.

Takhsis تخصيص Restriction, restriction of the meaning of a text.

Ummah أمة The Muslim Community.

Ulamaa علماء

(pl. of Alim) The people of knowledge from amongst the Muslims who act on

what they know and do what they say.

T

U



Urudh عروض

(pl. of Ardh) property that includes goods, slaves and even real estate.

Ushr عشر

Ten per cent (in some cases five per cent) of agricultural produce payable by a

Muslim as a part of his religious obligation, like Zakat

Wadi`ah وديعة

Safe-keeping, deposit, The standard Islamic financial transaction in which

entrusts property to Y for safe-keeping. Wadi`ah refers to the deposited

property.

Wakalah وكالة

Agency; a standard Islamic practice wherein X (the wakil) acts as the agent of

Y. In this capacity X may execute the affairs of Y. Wakalah is a widely

applicable phenomena in Islamic practice which is often used in financial

transactions: whenever a party cannot personally supervise a given affair, it

deputizes another party to execute it on its behalf.

Waqf وقف

Cessation (pl. awqaf); a standard Islamic transaction in which one 'freezes' his

property such that it is considered to have been arrested in perpetuity and can

neither be sold, inherited or donated. The term waqf frequently refers to the

property itself. The use of a waqf (e. g. a park) is often dedicated to the relief of

the poor, the public at large or other charitable ends.

Wasiyyah وصية

Will, testament, bequest. The statement of a Muslim in which he details the

manner in which his wealth is disposed of after his death.

Waijdb / Wajib واجب

Compulsory, obligation as distinguished from wujub (duty).

Wakalah وكالة

Agency

Wakil وكيل

Agent

W



Wakalah amah وكالة عامة

General agency.

Wakalah khassah وكالة خاصة

Special agency.

Wakalah qasirah وكالة قاصرة

Restricted agency.

Wali ولي

Guardian

Wilayah والية

Guardianship

Wilayat al-istidanah والية اإلستدانة

Authority granted by one partner to another to buy on credit beyond the limit of

the capital of the partnership.

Zakah زكوة

The third pillar of Islam; an obligatory alm-giving which every well-off Muslim

is required to hand over to the Islamic authority for distribution to the poor and

the needy. In the absence of the Islamic authority, well-off Muslims are required

to distribute their alms among the poor and the needy, as prescribed by the

Shari`ah, themselves. The payment of zakah is prescribed by Allah for all

persons having wealth above an exemption limit (nisab) fixed in the Sunnah.

Zakah al-Fitr زكوة الفطر

A small obligatory head-tax imposed on every Muslim who has the means for

himself and his dependants. It is paid once yearly at the end of Ramadan before

Eid al-Fitr.

Zakah Al-Mal زكوة المال

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.

Zakatul Huboob زكوة الحبوب

Zakah of grain/corn

Z



Zakatul Madan زكوة المعدن

Zakah of minerals

Zakatur Rikaaz زكوة الركاز

Zakah of treasure/precious stones

Zakatu-rid Tijaarah زكوة ربح التجارة

Zakah of profits of merchandise

Zar ذر Seed; crop to be sown

Zhulm ظلم

A comprehensive term used to refer to all forms of inequity, injustice,

exploitation, oppression and wrongdoing whereby a person either deprives

others of their rights or does not fulfil his obligations towards them.

Zimmah ذمة Equivalent of legal personality in positive law; receptacle for the capacity for

acquisition.

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