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hi everybody welcome back to 2nd video clip of islamic money this topic of financial administration that we have actually begun. Currently in the previous video in the very first video clip of islamic financing we have actually gone over a short idea regarding it and we have actually likewise seen that this system completely depends upon the islamic law or in arabic it is likewise called Sharia great okay and then we likewise go over concerning a.
bit history over there you can see that in the previous video clip not that. vital but the most vital point is the.
principles of islamic finance yeah this is very important see below.
principles of islamic money in islam passion is entirely.
prohibited yes you can” t use money to earn money paying or. Charging interest from individuals is entirely restricted in islam all.
so if any type of purchase entails rate of interest then that” s not allowed islamic. banks appropriate and afterwards spending in organizations. entailed in forbidden tasks yes islamic banks you know.
they can” t be associated with any kind of businesses which handles prohibited activities.
banned activities such as you understand betting, hooking, pornography and afterwards what do you say.
alcohol the services which handle alcohol, pork yeah all these are.
forbidden activities in islam songs market.
yeah all these points great so if any businesses are included in these.
They depend on some future event then that” s additionally not allowed all
. because there is way too much risk it amounts to gambling yeah both of.
these points are like wagering just to make sure that” s a forbidden. task in islam so you can ‘ t offer in those kind of deals.
and those kind of agreements you understand such as complex derivative instruments.
and brief marketing are completely forbidden penalty and the.
main concept another principle is the danger ought to be shared yeah the threat of.
any kind of agreement in between the loan provider and the debtor need to be shared.
fine that” s the primary principle of islamic money penalty and then the last.
is riches should be created from legitimate profession and asset-based.
investment either it need to be asset-backed or asset-based.
all right for every every purchase there have to be an underlying possession.
yeah you can” t just make use of cash to generate income that ‘ s just rate of interest. all right you can ‘ t do that to make sure that ‘ s the last principle of islamic money. fine so i wish you have actually recalled whatever we.
performed in the very first video yeah if you want to go deeper after that.
Please go in the very first video clip and view it once again all.
fine after that i” ll put the link in the summary below now returning to.
this video in this video clip what we” re going to do is. in this video we are going to see different types of agreements of islamic. finance yes various kinds of items or the solutions that are provided by.
islamic banks fine so what are the enabled methods to do.
you know banking that” s what we are going to see. over here now as you can see the principles of islamic finance there are.
a lot of restrictions so inform us what is permitted.
yep this is it right these are the 5 significant contracts that are allowed.
in islam penalty so now allow” s review this by one madaraba musharraka sukuk.
yeah let” s review this by one okay now here we have the initial agreement of.
islamic finance see here Mudaraba Mudaraba is same like collaboration fine.
collaboration or joint endeavor here what will happen is right here there will.
be two person included okay maximum two individual only yeah it can”
t be. even more than two so one celebration will certainly bring the capital.
yeah one party will bring the cash and the various other celebration will certainly bring the.
skill yeah it” s a collaboration purchase where. one celebration supplies the cash hundred percent of capital. and the other supplies administration proficiency yeah various other celebration will certainly bring.
the ability now this party who brings the resources.
will certainly be called as money distributor of financer in english.
In arabic it is called as he is called as rab-al-maal.
all right rab-al-maal and after that the celebration which brings the skill.
the monitoring knowledge the labor service provider who will certainly do all the job.
yep this person the functioning partner will certainly be called as Mudarib fine so currently he or she that is the cash.
vendor the financer he will just contribute resources he will.
not take part in management okay he” ll be the sleeping partner. Functioning companion sleeping companion is that clear. Now here what will occur this company either this
business service make. If it makes revenue after that it will be distributed in the, earnings. pre-decided ratio okay the ratio the profit sharing ratio will be determined in. beforehand itself okay yet if in situation god forbid there is a loss after that completely.
the loss will be birthed by the financer alright the that the rab-al-maal.
the cash vendor the person that has actually brought in the funding entire.
loss will certainly be birthed by the the capital company.
alright why is it like that see right here because it is taken into consideration that you understand.
this individual has actually done his 100 individual yeah he has.
took part and he has actually functioned truly tough and still he couldn” t make profit. he couldn ‘ t make revenue in this service after that it is believed that it is argued.
that you recognize he has actually done 100% of his work so he can” t. be penalized yep he can” t be because he doesn ‘ t have the money that ‘ s why he has. only brought his skill yeah yeah he doesn ‘ t have cash and or.
anything to ensure that” s why he can ‘ t bear the loss only the money carrier.
will birth the loss it ‘ s argued like that in islam.
alright is that clear so this is what mudaraba is. just two individuals one will bring the capital various other will certainly bring the skill. yeah if there is a revenue it will certainly it will certainly be separated in the it will certainly be. dispersed in the pre-decided ratio yeah and if there is a loss the loss. will completely be borne by the funding provider and there is an. exception over right here if this individual is included in some fraudulence or anything. Since of his neglect or his, yes if the loss is.
he is guilty then the loss will be birthed by he or she alright.
in case mistake is there by this person clear otherwise typically the entire loss.
will certainly be birthed by the capital supplier this is what Mudaraba agreement is straightforward.
partnership okay now let” s see one more one currently. you can stop briefly the video and take this note if you like yeah otherwise simply.
continue on currently below we have the second form of.
agreement see below Musharaka currently Musharaka is likewise exact same like.
mudaraba only yet there are large differences so see here.
it” s a joint venture or collaboration framework yeah exact same like Mudaraba.
just where at the very least 2 celebrations or even more yeah that” s the important things here the. parties can be more likewise in mudaraba we saw there will certainly be just. two events right one rab-al-maal the money supplier and.
one the labor supplier Mudarib yet right here it” s
not. like that here the parties can be more yeah several parties can be there.
yes so see below several events can be there they will certainly bring their capital as.
well as skills bring capital and abilities and everybody.
are functioning partners yeah or they want they can be resting.
companions but every person can be what they can be functioning companion they.
can participate in the monitoring of the business.
all right and these person the companions they are called as.
musharrek in this contract okay musharik everybody are musharik.
musharik musharik musharik fine everybody can get involved in.
If there is a.
profit then the profit revenue be distributed dispersed the, management now the major distinction below is.
pre-decided proportion good whatever they determine in the beginning itself.
but then if there is a loss after that the loss needs to be purely it needs to be.
distributed in the capital ratio fine whatever funding.
they generated that ratio just the loss will certainly be.
shared among them construct amongst them okay so this is what Musharaka is okay.
the main distinction is the loss difference in the mudaruba.
in the mudrabah we saw the loss is completely birthed by the money service provider.
yeah yet right here the financing is provided by everybody.
What will certainly happen here is that the loss will certainly be.
dispersed in the resources ratio of the mushariks the partners.
clear and another distinction was that every person are working companion over here.
everyone can take part in administration but below.
only the the skill company the supervisor he” s the supervisor right’he ‘
s just. getting involved right here in mudaraba in mudaraba I indicate yeah.In Musharaka
here every person can take part in the.
management of business clear so this is what Musharaka is basic extremely easy.
currently let” s proceed to the third agreement you understood appropriate Musharaka nothing.
it” s simple and afterwards we have sukuk now what are.
sukuk? sukuk are the islamic bonds you recognize the bonds that are structured in.
such a means regarding create go back to investors.
without infringing islamic legislation that prohibits passion currently generally.
traditionally what happens yeah regular bonds just how are they? when the.
firm issues bond the standard bonds then.
they pay interest on them to the bond holders right if you have acquired the.
bonds that implies you are getting passion from them.
yeah you as an investor if you have purchased any kind of bonds after that you will certainly be.
receiving passion from the company which has issued the.
bonds isn” t it indeed that ‘ s what conventionally generally occurs yet right here. in islam rate of interest is entirely restricted. rate of interest is not permitted so if interest is not permitted after that exactly how.
can bonds work that” s what you need to consider all.
right so right here the bonds are structured in such a way.
to create returns to investors without infringing islamic regulation that restricts.
interest rate of interest can” t be there in these bonds in this these bonds. passion are not there however financiers are getting returns. just how does that work let ‘ s comprehend this see below sukuk target at.
revenue sharing by providing the investor ownership in service and properties currently.
let” s take an instance and comprehend this
see’right here. allow ‘ s state i have a firm right and let ‘ s state this firm released. bonds yes it is need to so cook so vehicle released great so now let
‘ s state you. subscribe you acquire those to prepare now you will certainly be paying cash
right so i” m. obtaining dollars i” m getting money so currently what i ‘ m going to do as a company. initially i will certainly select and manager sukuk manager. So that sukuk manager will be you recognize in managing.
every little thing pertaining to these bonds great so now what the business will certainly do is.
firm will buy a property generally why do you elevate.
debt financing primarily to buy possession right so what you” re going to do is you. are going to acquire an asset the company is going to purchase a property.
So currently what the business will certainly do is firm will provide you.
Because which money is this, ownership in those assets.
this cash is of bond holders you are a bondholder right why you are a.
shareholder since you have actually signed up for the bonds.
the sukuk right so you will obtain possession of the.
possession which has actually been bought from your cash yeah the money flow which the.
firm will certainly obtain from you yeah after issuing the bonds from that.
they will certainly buy the property and the possession of that possession will certainly be.
provided to you to the bondholders fine so when you end up being owner of.
something yeah when you end up being proprietor of something.
then you are qualified to the advantages and threat coming out of that.
property right so whatever revenue that will be generated from that asset.
you will certainly obtain a component of that so that” s how you will certainly receive.
earnings from these bonds alright you will certainly not obtain passion alright rate of interest is.
entirely prohibited in islam you understand that yeah however here in sukuk.
there is a profit sharing objective by providing the investor possession in.
When you obtain the possession you are, property right.
qualified to the benefits in addition to the threat of that possession.
Whatever cash has been generated because of that possession.
yeah a component of that will be sent out to you yeah it will certainly be offered to you it will be.
dispersed to you right involvement in earnings that” s exactly how you will. take part in the profit of that possession yeah due to the fact that you possess.
it right you as a sukuk holder penalty so this.
is how sukuk jobs so unlike traditional bonds sukuk are.
connected to a hidden concrete asset yeah a possession.
will be there you bear in mind the what the last concept.
of islamic finance wide range should be produced from legit.
trade and asset based investment all right this is what.
it is yeah there is a hidden asset over below you are not.
simply obtaining you know interest no you are not getting.
interest over below you are getting profit you are getting.
income over below from the asset based financial investment all right.
is that clear very easy right so this is what sukuk is.
all best straightforward alright and after that the 4th kind of agreement we have.
is ajara ijara resembles a lease contract fine.
When we believe concerning leases what comes to our mind we think about the principal.
quantity plus rate of interest yes that” s exactly how
leases. jobs isn” t it the lessee will certainly make payment to the lower.
for using the possession and that payment will consist of.
what primary amount plus rate of interest however now below in islam.
rate of interest is entirely restricted so exactly how these contracts are mosting likely to function.
yeah how is it going to work so see here that” s what we need to comprehend. an ijara purchase is the islamic matching of a lease agreement.
where one celebration owner permits one more celebration lessee.
to utilize their possession versus the repayment of a rental cost.
now below since passion is restricted so an established rental charge will be.
set between the events the lower and.
lessee and that rental fee will certainly be paid which doesn” t consist of rate of interest it is
a. predetermined fee all right it” s not like compounding passion and all.
all best yes so currently let” s comprehend that in very much detail see here.
let” s state you need a cars and truck and you put on ‘ t have money to acquire it outright okay.’right away you put on ‘ t have money to acquire it so what are you mosting likely to. do is you are going
to method islamic financial institution. all right and you will certainly obtain a contract with them of a. ijara yeah you will certainly get an ijara contract currently what is this ijara agreement what. will take place is see right here as i claimed you require an auto so financial institution will. buy the auto and make the payment in whole in one go. So they will certainly make the whole settlement to the supplier. and bank will advise the supplier this honda display room this manager. to provide it to you okay so the car will certainly be delivered to you.
alright you will certainly have the placement of the car yeah and you will have to make an.
initial down payment to the financial institution all right preliminary some cash you have to.
pay to the financial institution for the assurance or something yep.
The possession of that auto will remain with the bank.
okay the possession will certainly remain with the financial institution so whatever benefits and threat.
exist of that possession of that cars and truck will remain with the.
bank itself so if there is any kind of major maintenance expense.
yeah there” s any kind of upkeep after that the bank will have to build the upkeep.
cost and everything yeah however if there” s a small upkeep. or something then you will have to build it.
yourself now exactly how you are going to pay to the bank.
you are mosting likely to pay in type of leasings fine the services will certainly be concurred.
in the starting itself fine fixed rentals fine.
You will pay the leasings and at the end of the lease period.
yeah you will likewise decide the least duration likewise with the bank at the.
starting itself so at the end of the lease duration what.
will certainly happen goes to completion of the lease duration the financial institution.
will give you alternative do you wish to get the property yeah buy.
the car just by making some added additional.
repayment yeah a new agreement will be made.
or do you desire to return the car back to the financial institution yeah.
This supervisor will certainly provide the auto to you he will give the setting to you. The possession will continue to be with the bank and financial institution will.
due to the fact that the threat and incentive are with the bank.
due to the fact that they have the ownership right so of course and you will certainly be paying regular in.
services to the bank and at the end you will certainly be offered the choice.
either to purchase or return the asset back clear this is what a lease agreement is.
If you desire you can stop the video and, easy lease agreement yep.
take this down appropriate all right so currently let” s relocate on now below we have.
the last the final contract of islamic money.
that you” re going to see in this video Murabaha the fifth contract.
Much we have actually covered four agreements mudaraba musharaka.
sukuk and ijara so currently what is this Murabaha.
see Murabaha is only just a credit report sale alright debt sale agreement that” s.
all Murabaha is.See the meaning over right here a.
Murabaha deal is a deferred settlement sale.
or an installation credit sale and is primarily made use of for the acquisition of products.
for prompt shipment on credit basis.
If the products are of hundred, currently you already recognize what is installment credit sale.
dollars you will pay 20 20 20 in installations now what is.
deferred payment basis? credit means what you are.
postponing the payment at a later day okay you will pay at a.
later date that” s what deferred repayment basis is straightforward.
Currently let” s understand just how this muraba will function.
see for instance allowed” s say you require to purchase a possession or some products.
and you wear” t have money to buy it straight-out quickly you wear” t have. enough money you have some cash so now what are you.
going to do is you need to enter into an agreement agreement with the bank.
islamic financial institution certainly right so now what the bank will certainly do is.
financial institution will certainly purchase the possession or the items for you.
and the bank will certainly sell it to you at a revenue margin.
If the financial institution bought that property for 100.
right so what the bank will do bank will add 20.
a lot more profit 100 plus 20 a markup and offer it to you for 120 and in the.
starting only they will certainly be it will certainly be decided yeah the markup and.
everything will be various chosen at the.
starting itself it is not such as the financial institution will conceal any kind of terms of contract from you.
all right they will certainly divulge everything so it will.
not be oppression to you right and after that what you need to do is.
after obtaining the property you have to pay in form of installations.
fine whatever you agreed upon yeah in installments or on postponed.
settlement basis you can likewise promise them to pay at a later day.
yeah that can likewise take place yes easy yeah this is what Murabaha.
is yeah you want to ask it you approach to the bank bank will buy it for.
you and offer it to you with a profit margin expense plus earnings.
you have to pay in form of installations or.
deferred payment basis clear that” s what muraba. is easy is that easy so currently what i” m gon na do is i ‘ m gon na include timestamps in. the video clip if you intend to change or go back to any one of these agreements.
Simply go to the summary and see the timestamps and go back and.
view these all right fine alright after that see in the next video clip right that” s it for today.
If any type of transaction involves rate of interest then that” s not allowed in islamic. Now here what will occur this service either this
business company will certainly. So that sukuk manager will certainly be you understand in handling.
So they will make the entire repayment to the supplier. The ownership will certainly stay with the bank and bank will.