The Islamic banking and finance industry has grown rapidly in recent years with the result that those wishing to study its various aspects find a shortage of material to guide them. This is particularly so with regard to content in the English language, where superficiality is commonplace and the gulf that exists between theory and practice is often ignored. Perhaps most notably, only a small portion of modern literature deals with the wider economic and political issues that surround the practice of Islamic banking and finance. Even if individual financial products satisfy the narrow requirements imposed by certain scholars of Islamic law, are they contributing towards the overall objectives of shari‘ah? Does the former automatically produce the latter?

Islamic Banking and Finance: What It Is and What It Could Be has been designed to address the scarcity of commentary on these topics at undergraduate level and above. We have aimed to be inclusive in our treatment but we do not refrain from highlighting our own opinion where we feel it is necessary. Under the sponsorship of 1st Ethical Charitable Trust in the United Kingdom, and with contributions from several leading thinkers, this work provides the modern student with a rounded perspective on the critical issues facing practitioners, scholars and policy-makers.

The book commences with an overview of the religion of Islam itself, its history, its legal system, and the various Islamic schools of juristic, philosophical and economic thought through the centuries. A review of fiqh al-mu'āmalāt is provided in Section Two, from both the traditional and modern perspectives, so that the reader can become familiar with the basic tool-kit of the sharī`ah scholar. Here, we also look at various institutions and activities that are beyond the immediate scope of Islamic banking and finance but are nevertheless relevant to it. These include Islamic insurance, the law of Islamic wills and inheritance, and zakāh. The core concepts of mu'āmalāt introduced in this Section will help to answer an important question: are the modern principles of Islamic banking and finance true to their traditional precursors, or is a new Islamic law developing before us? The answer to this question emerges once the applications of modern Islamic finance are analysed in detail, and Section Three is intended to fulfil this purpose. Section Four begins with a review of the institutions and product ranges of the interest based system. This is intended to help readers who are unfamiliar with interest based finance to better comprehend the dialogue that often takes place between the Islamic and secular worlds of finance. The discussion then expands to consider the implications of sharī`ah for economic activity. What would be the features of a genuinely Islamic economic system? How would its framework compare with that of the interest-based system?

A wide range of aptitudes are catered for, so that readers can in many cases skip the advanced theoretical content without compromising their understanding of the core issues. Self-tests will help experienced readers to assess the relevance of each Section to their own personal needs, and will give new students a useful gauge of their understanding in the concepts that have been introduced. Our suggestions for further reading at the end of each sub-section have been chosen to provide a balance of stimulation and relevant information. For transliteration we have endeavoured to use one of the more widely accepted standards. The glossary lists the transliteration, definition, and Arabic text spelling for various technical terms, and an English definition is also given in brackets for the first occurrence of each such term in the text.


Mohammed Amin
This is an impressively well presented book, hardbound, printed on high quality paper and 500 pages long including the appendices and index. Including the editor, there are 12 contributors including experts in Shariah, lawyers and academics. However, only one of the authors, Shaharuddin Zainuddin is a practicing banker. Unlike many multi-author publications, with two exceptions (pieces expressly appearing over the names of the editor and of Nejatullah Siddiqui), specific parts of the text are not attributed to named authors, a process that clearly attaches the author’s reputation to the text that he writes. However, page xxiv sets out in broad terms who was the main contributor of each section ... more

Elaine Housby
This book is a valuable addition to the literature on Islamic economics and banking. It has been written by a team of authorities on the subject, including Nejatullah Siddiqi, the author of some of the best known books from the period of the emergence of the modern Islamic financial services industry in the early 1980s ... more

Dr. Salman Khan
A view rapidly gaining ground in the world of Islamic finance is that the industry deviated substantially from its proclaimed mandate at the very outset of its development in the 1970’s. Proponents of this view often argue that the objectives of the Shariah with regard to commerce (including, for example, fairness, ethics, morality, the forbidding of exploitation and the derivation of profit from genuine trade) have little room for expression in the current system, which is based closely on the conventional banking model. It is also observed that the bulk of currently available industry discourse either fails to analyse why practice has departed so radically from theory, or has been co-opted under the relentless burden of commercial pressure ... more

Section 1 Islam and the Sharī‘ah
1.1 History
1.2 Religious Codes
1.3 Sources of Knowledge
1.4 The Islamic Judicial Framework
1.5 The Conceptual Framework for Economic Activity
1.6 Self-test
Section 2 Traditional Contract Forms
2.1 Introduction to Mu‘āmalāt
2.2 Contracts of Exchange
2.3 Contracts of Investment
2.4 Contracts of Security
2.5 Contracts of Charity
2.6 Other Forms of Contract
2.7 Islamic Inheritance Law and Wills
2.8 Zakāh
2.9 Some Modern Practices from a Sharī‘ah Perspective
2.10 Self-test
Section 3 Contemporary Practices
3.1 Banking and Financing Products
3.2 Wholesale Financing Products
3.3 Investment funds
3.4 Islamic Insurance
3.5 Regulation of the Islamic Financial Market
3.6 Self-test
Section 4 A Response to Capitalism
4.1 The Interest-based Financial System
4.2 The Islamic Monetary System
4.3 Rebuilding the Islamic Economy
4.4 Self-test
Section 5 Glossary
Section 6 Bibliography
Section 7 Index

T. Ahmad
Taris Ahmad read law at the London School of Economics and King's College. He now works with an international law firm in London and Riyadh.

T. Eldiwany
Tarek graduated in Accounting and Finance from the University of Lancaster in 1985. He established a fixed income derivatives dealing desk and Islamic project finance department for a major financial institution in London during the 1990’s and now works as a financial consultant and analyst. He is the author of The Problem With Interest, writer and presenter of the film documentary Why are We All in Debt?.

A. Fazel
Ahmed was born in South Africa and is of Indian descent. After matriculation with exemption he pursued Islamic studies in South Africa, India, Pakistan and Saudi Arabia and later graduated as an ‘Alim in South Africa. Between 1992 and 2000, Ahmed served as the Arabic-English translator for the South African Office of the Muslim World League. He has been a guest lecturer in uṣūl al-fiqh at Rand Afrikaans University and is a regular khaṭīb at several masājid. Ahmed undertakes research in all areas of the sharī‘ah, including Islamic finance.

H. al-Haddad
Sheikh Haitham studied for many years with various scholars in the Middle East, including Shaykh ‘Abd al-‘Azīz ibn Bāz and Shaykh ‘Abdullāh ibn Jibrīn. He has an ijāzah from Shaykh ‘Abdullāh ibn ‘Aqīl in fiqh and uṣūl al-fiqh, holds a degree in Law and Sharī‘ah from Omdurman University in Khartoum, and is currently completing a PhD in Islamic Law at SOAS in London. Shaykh Haitham sits on the board of advisors of a number of key Islamic organisations in the United Kingdom, specialising in principles of Islamic jurisprudence, law and finance.

S. Hasan
Salman read law at the London School of Economics and was called to the English bar in 2001. He studied various traditional sharī‘ah disciplines, including Islamic jurisprudence and principles of Islamic jurisprudence with some of the leading scholars of Syria over a period of three years and co-founded the Ibn Jabal Arabic and sharī‘ah institute ( in 2001. Salman is currently an Associate at the international law firm, Simmons & Simmons, and specialises in structuring sharī‘ah compliant investments and drafting Islamic finance documentation in both English and Arabic.

S. G. Ismail
Sufyan is a founding trustee of the 1st Ethical Charitable Trust. He has contributed significantly to the discourse on Islamic finance in the United Kingdom by authoring research papers and guides on numerous topics, including the calculation of zakah on contemporary assets, Islamic wills in the context of English law, and an Islamic perspective on the credit crunch. He is active on the national lecture circuit, presenting to students and scholars at various events and training courses in mosques, community centres and universities across the United Kingdom.

M. A. Kholwadia
Shaykh Muhammad has an ijāzah in Hanafī fiqh from Qādī Mujāhid al-Islām of Patna in India. He studied Qur’ān and hadīth at the seminary of Deoband in northern India (1981) from where he received ijāza in hadīth from Qārī Muhammad Tayyib. He has been a spokesman on Islamic theology in the Greater Chicago area and is the founder and director of Darul Qasim, an institute for higher Islamic education in Illinois.

F. Manjoo
Shaykh Faizal obtained his BA (Honours) in Islamic Studies, LLB, Diploma in Advanced Labour Law, and Diploma in Advanced Banking Law from the University of Johannesburg where he was also a lecturer. He also has an MA in Islamic Management, Finance and Banking from Loughborough University. Faizal graduated as an Aalim Faadhil through the Darse Nizami system from Madrassah Arabia Islamia (South Africa). He is a practicing attorney at law in South Africa and has a special interest in family law, the law of inheritance and Islamic finance. He is a member of the sharī‘ah supervisory boards of Islamic financial institutions in South Africa, Bahrain and Mauritius and author of Risk Management: A Takāful Perspective.

M. N. Siddiqi
Muhammad has served as Professor of Economics at KAU Jeddah and Professor of Islamic Studies at Aligarh Muslim University where he now enjoys the status of Professor Emeritus. He has also been a fellow at the University of California at Los Angeles in its Center for Near Eastern Studies. In addition to his Ph.D in economics, Nejatullah has also undertaken a traditional Islamic education and conducts much of his research using original Arabic texts. One of his earliest works is an annotated translation of Abū Yūsuf’s Kitab al Kharaj into Urdu. He has authored several books on Islamic economics and Islamic banking, including the well-known Banking Without Interest, and in recognition of these contributions has been awarded the King Faisal Prize in Islamic Studies.

B. Timol
Bashir is a founding trustee of the 1st Ethical Charitable Trust and manages its day to day operations. He has authored numerous papers on the application of shari‘ah principles to the problems faced by British Muslims and on the development of a viable alternative to the interest-based banking model. Bashir assisted with the launch of the al-Qalam Shariah Scholar Panel and has spearheaded the development of OneE Group’s business angel musharakah service. He liaises with Her Majesty's Revenue & Customs, HM Treasury and the Financial Services Authority on the development of shari‘ah-compliant regulation and successfully lobbied for the 2006 White Paper on Trusts to cater appropriately for Islamic wills.

S. Zainuddin
Shaharuddin is a Chartered Financial Analyst and Chartered Certified Accountant. He holds a degree in Accounting from the University of East Anglia in the United Kingdom. As Director of Banking Operations at AAOIFI, Shaharuddin gained substantial experience of the regulatory environment in Islamic banking and finance. He is currently a Director of Islamic Banking Compliance for a European investment bank in Bahrain.


Islamic Banking and Finance: What It Is and What It Could Be
Hardback, March 2010
536 pages
ISBN: 978-0-9565186-0-6
Published by 1st Ethical Charitable Trust, Springfield House, Springfield Court, Summerfield Road, Bolton, BL3 2NT, United Kingdom.
Contributions from T. Ahmad, T. Eldiwany (contributing editor), A. Fazel, H. al-Haddad, S. Hasan, S. G. Ismail, M. A. Kholwadia, F. Manjoo, N. Siddiqi, B. Timol and S. Zainuddin



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xiv 2.8 image 2.8 (bold font face)
6 para. 5: Important Sunni beliefs that contrast with Shi`i theology include following: image Among Shi`i theologians, there are some who diverge from the Sunni position in regard to the following:
10 Table 1: details for `Abdullah ibn `Umar duplicate previous entry for Anas ibn Malik. image `Abdullah ibn `Umar was a pillar of knowledge among the companions. He narrated numerous ahadith from the Prophet (pbuh), as is evident from Imam Malik's famous work, al-Muwatta'. He was a devout follower of the practices of the Prophet (pbuh), and was profoundly knowledgeable about the intricate details of the sunnah.
37 para. 4: An example of ijtihad is that `Umar ibn al-Khattab introduced the land tax (kharaj) and the tenth (`ushr) payment of zakah on agricultural produce, although no such payments were previously required under shari`ah. image An example of ijtihad is that `Umar ibn al-Khattab applied the land tax (kharaj) and the import duty of `ushur (similar to `ushr, the payment of zakah on agricultural produce) in ways that were not previously required. [Footnote: `Umar levied kharaj on fertile lands, whether cultivated or not, and did so for a wide range of persons including men, women, minors and slaves (see ibn Sallam, Kitab al-Amwal, p. 69). He also took `ushur from Byzantine traders on their trade inventories at a rate of ten percent (see ibn Sallam, Kitab al-Amwal, p. 488). Some jurists maintain however that `Umar extracted the `ushur in this manner not through his own ijtihad but rather because he relied upon instructions given by the Prophet (pbuh) during his lifetime.]
112 Para. 4. image Para. removed, footnote 203 now refers to the example given on p. 403.
155 Para. 2. image Para. moved to p. 318 and merged with para. 2.
157 General Cornerstones of a Partnership Contact. image General Cornerstones of a Partnership Contract.
338 "General Takaful" label. image This label should be placed underneath the lower of the two diagrams on the page.
340 Insurance model diagram. image "Participant" in central box should read "investment profit". "Participant" in left-hand box remains unchanged.
420 Graph on left side of page. image Grey columns should be in black, black columns should be in grey.