By: Naukhaiz Chaudhry
INTRODUCTION TO ISLAMIC FINANCE
LECTURE-1
Lecturer
Department of Economics &
Business Administration
UOE, Faisalabad Campus
OBJECTIVES OF THIS DISCUSSION
¬ To grab some basic concepts and philosophies of the subject
¬ Understanding the concept of life and universe
¬ Understanding Finance v/s Islamic Finance?
¬ Why Islamic Finance?
¬ Why religion in Finance?
¬ To understand the differences between conventional & Islamic Economics (which
obviously leads financial aspects)
¬ To understand the differences between conventional & Islamic Finance
WHAT IS FINANCE………?
Finance is the study of money and how it is used. Specifically, it deals with the
questions of how an individual, company or government design and takes the
following decisions:
1. How to generate money (financing decision)
2. How to operationalize the money in profit generating activities
3. Where to invest for longterm
If you are doing the same above, but in compliance of Islamic Sharia Laws, you are
managing money in Islamic way (which is Islamic finance)
A SMALL EXERCISE….
My question is, where does the
answer of these questions come from?
Is it correct or not?
Yes, in Islamic view point, it is
incorrect…
CONCEPT OF LIFE & UNIVERSE……
(A COMPARISON)
Materialistic Theories Islamic Theory
Existence of universe is accidental or by itself ALLAH (SWT) creates this universe purposefully
Man is a social animal Man is vicegerent of ALLAH (SWT)
Ultimate purpose of life is self-satisfaction Purpose of life is to satisfy ALLAH (SWT)
When this worldly life will ends….it all ends There is a day of judgment
There is no life afterwards There is an endless life
Man is not answerable to any one Man is answerable to his CREATOR
CONVENTIONAL V/S ISLAMIC FINANCE
Conventional Finance Islamic Finance
Treats money as commodity Consider money as medium of exchange
Interest is permissible Interest (Riba) is not permissible
It believes on accumulation of money It believes on distribution of money
It believes on risk transferring Risk must be shared
Any activity that generates profits is permissible Only lawful activity can be done to make profits
Exchange of money (in increase) is business too Its unlawful in Islam
Speculation (Uncertainty) is a tool to earn money Uncertainty is prohibited
