Misconceptions - Myths

• Any Return on deposits is Riba;
• Any prefixed return – Riba
• Islamic banking: cost-less money available – Approach of Businesses
• Repayment of loans not a serious issue –be waived of
• Trade profit similar to interest on loans / debts

Riba?

• All increases in wealth or benefits accruing to a person without any labour, risk, or expertise.
• One who wishes to earn profit on his monetary investment must bear the loss or damage accruing to the business where his money capital is to be used.
• Nature of transaction important.
• Trading- Bai- Risk taking, value addition
• Leasing – Ijarah - Risk taking, value addition
• Exchange transaction – Monetary transactions
• Lending – a virtuous act; not a business
• Hand to hand exchange of currencies

Quran Guides on Def of Riba

Financial Liability:
Qard (Loan) : to give anything in ownership of other by way of virtue - same or similar amount of that thing would be paid back on demand or at the settled time.
Dayn (Debt) : Incurred by way of trade or rent or any other credit transaction - ought to be returned at the settled time without any profit.
Verse 2: 279 guides that whatever is over and above the principal of loans or debts is Riba.

Riba Prohibition

• All revealed religions
• Severe Prohibition in Quran $ Sunnah
• Unanimity on Riba Prohibition;
• Problem then?
• Interpretation
• Consensus

Islamic Banking?

Banking encompassing Islamic injunctions

To avoid:

• Riba –Earning returns from loans and debts or Selling debt contracts at discount
• Gharar – Absolute Risk or Excessive uncertainty in contracts, Gambling and chance-based games (Qimar)
• General Prohibitions
• unethical practices

Shariah Compliance & Prudent Banking

PRINCIPLES OF CONTRACTS IN THE QURAN AND SUNNAH

Islam is a complete code of life. It deals with each and every field of life. Islam tells us how to live in a society. In a society a person have to live with others. He has to perform “Ibadat” as well as he has to perform “Muamalat”. There is a great difference between these “devotional acts” and “transactions”, but Islam deals with both of them. For the beneficiary of human kind, Allah Almighty has imposed some restrictions in doing and performing these devotional acts and transaction. In other words we can say that Allah almighty has set some rules about both, the devotional acts and transactions. As business law deals only with transactions, hereby we will see only those principles which are related to the business transactions.

Free mutual consent is the first principle of transaction which has been clearly mentioned in The Holy Quran. This principle tells us that all mutual contracts should be made mutual approval and all those contracts which will are made through coercion, fraud, misrepresentation or any other illegal mean, are invalid and illegal. This principle can only be act upon when all concerning parties have certain and definite knowledge of the subject matter of the contract and the rights and obligations arising from it.
A number of verses of the Holy Quran and Ahadith of the Holy profit (S.A.W) can be cited in the support of this principle.

Islam has tolled us another valuable general principle about mutual contracts. This principle tells that any contract which may harmful for one of the concerning parties, or which may create uncertainty between concerning parties is strictly prohibited. Through this valuable principle many contracts like Qimar (gambling), Mayser, Khilabah and Ghashsh (fraud) have been prohibited. Each of these contracts has its own definition and has been mentioned through the verses of Holy Quran and Ahadith of Holy Prophet (S.A.W).
The translation verses of The Holy Quran are following:

banks in Malaysia

Bank Negara Malaysia (The central bank of Malaysia)

9 Anchor Banks (Major / Commercial banks)

1. Affin Bank Berhad
2. Alliance Bank Berhad
3. AmBank Berhad
4. CIMB Bank Berhad
5. EON Bank Berhad
6. Hong Leong Bank Berhad
7. Malayan Banking Berhad (Maybank)
8. Public Bank Berhad
9. RHB Bank Berhad

Fully Qualified Foreign-owned banks
* Citibank
* HSBC Bank Malaysia
* Oversea-Chinese Banking Corporation (OCBC Bank)
* The Standard Chartered Bank (StanChart)
* The Bank of Nova Scotia (Scotiabank)
* The Royal Bank of Scotland (RBS)-Former ABN Amro
* United Overseas Bank (UOB)

Marketing & Representative Offices in Kuala Lumpur
* ANZ National Bank Limited
* The Bank of East Asia Ltd (BEA)
* The Bank of Tokyo-Mitsubishi UFJ Limited
* The Bank of New York Mellon Limited
* Credit Suisse Limited
* DBS Bank Limited
* National Australia Bank (NAB)
* The Royal Bank of Scotland Limited
* UCO Bank Limited
* Deutsche Bank (M) Berhad
* JPMorgan Chase & Co.Bank (M) Berhad
* Bangkok Bank (M) Berhad
* Bank of America (M) Berhad
* Bank of China (M) Berhad
* Bank of Tokyo-Mitsubishi UFJ (M) Berhad

50 Offshore Banks & Branches in Labuan
* Affin Bank Berhad
* Al-Hidayah Investment Bank (Labuan) Ltd (Labuan Branch)
* Aminternational (Labuan) Ltd (Labuan Branch)
* AmMerchant Bank Berhad
* Bank Islam Malaysia Berhad, (Labuan Offshore Branch)
* Bank Muamalat Malaysia Berhad, (Labuan Offshore Branch)
* Bank of America National Association Berhad, (Labuan Branch)
* The Bank of East Asia Ltd (BEA) (Labuan Branch)
* The Bank of Nova Scotia (Labuan Branch)
* The Bank of Tokyo-Mitsubishi UFJ Limited (Labuan Branch)
* Barclays Bank PLC (Labuan Branch)
* BNP Paribas (Labuan Branch)
* Calyon (Labuan Branch)
* Capital Investment Bank Limited (Labuan)
* Cathay United Bank (Labuan)
* CIMB Bank (L) Limited
* Citibank Malaysia (L) Limited (Labuan)
* City Credit Investment Bank Limited (Labuan)
* Commercial IBT (Labuan Branch)
* Credit Suisse (Labuan Branch)
* DBS Bank Limited (Labuan Branch)
* Deutsche Bank AG (Labuan Branch)
* Dresdner Bank AG (Labuan Branch)
* ECM Libra Investment Bank Limited (Labuan)
* The Hongkong and Shanghai Banking Corporation Limited Offshore Banking Unit (Labuan)
* ING Bank NV (Labuan Branch)
* The International Commercial Bank of China (Labuan Branch)
* J.P. Morgan Malaysia Ltd (Labuan)
* J.P. Morgan Chase Bank National Association (Labuan Branch)
* KBC Bank NV (Labuan Branch)
* Kuwait Finance House Labuan Berhad (Labuan Branch)
* Lloyds TSB Bank PLC (Labuan Branch)
* Mizuho Corporate Bank Ltd (Labuan Branch)
* Macquarie Bank Limited (Labuan Branch)
* Maybank International (L) Ltd (Labuan Branch)
* Morgan Stanley Labuan Investment Bank Limited (Labuan Branch)
* Natexis Banques Populaires (Labuan Branch)
* OSK Investment Bank (Labuan) Limited (Labuan)
* OCBC Bank Limited (Labuan Branch)
* Public Bank (L) Limited (Labuan)
* Rabobank Nederland (Labuan Branch)
* RHB Bank (L) Ltd (Labuan)
* The Royal Bank of Scotland PLC (Labuan Branch)
* RUSD Investment Bank Inc (Labuan)
* Schroders Malaysia (L) Berhad (Labuan)
* Societe Generale (Labuan Branch)
* Sumitomo Mitsui Banking Corporation (Labuan Branch)
* UBS AG (Labuan Branch)
* United Overseas Bank Limited (Labuan Branch)

Development Financial Institutions (Government-owned banks)
* AGRO Bank Berhad
* Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
* Bank Simpanan Nasional Berhad
* Export-Import Bank of Malaysia Berhad (Exim Bank)
* Bank Perusahaan Kecil & Sederhana Berhad ((Small Medium Enterprise) SME Bank Berhad)
* Sabah Development Bank Berhad (SDB)
* Sabah Credit Corporation Berhad
* Lembaga Tabung Haji
* Credit Guarantee Corporation Malaysia Berhad (CGC)
* Malaysian Industrial Development Finance Berhad (MIDF)
* Bank Pembangunan Malaysia Berhad (BPMB) (The development bank of Malaysia)

15 Islamic banks (local & foreign)
* Alliance Islamic Bank Berhad
* Asian Finance Bank (M) Berhad
* Bank Islam Malaysia Berhad
* Bank Muamalat Malaysia Berhad
* Hong Leong Islamic Banking Berhad
* CIMB Islamic Bank Berhad
* RHB Islamic Bank Berhad
* AmIslamic Bank Berhad
* Affin Islamic Bank Berhad
* Al Rajhi Banking & Investment Corporation (Malaysia) Berhad
* EONCAP Islamic Bank Berhad
* Kuwait Finance House (Malaysia) Berhad
* Maybank Islamic Berhad
* Public Islamic Bank Berhad
* Koperasi Bank Persatuan Malaysia Berhad (Bank Persatuan)