| Qard al hasana |
| A virtuous loan. A loan with the stipulation to return the principal sum in the future without any increase. |
| Qard Hassan |
| An interest-free loan given for either welfare purposes or for fulfilling short-term funding requirements. The borrower is only obligated to repay back the principal amount of the loan. |
| Qard Hasan (Interest free loans) |
Most of the Islamic banks also provide interest free loans (Qard Hasan) to their customers. If this practice is not possible on a significant scale, even then, it is adopted at least to cover some needy people. Islamic view about loan (Qard) is that it should be given to borrower free of charge. A person is seeking a loan only if he is in need of it. Hence, it is a moral duty of the lender to help his brother who may be in need. The borrower should not make an effort to take advantage of somebody needs. He should help the needy by lending him money without any charge. The reward of this act is with the God. Hence, it is referred as Qard Hasan (benevolent loan) which signifies the benevolent nature of the act of lending.
The practices of various Islamic banks in this respect differ. Some Islamic banks provide the privilege of interest free loans only to the holders of investment account with them. Some extend to all bank clients. Some restrict it to needy students and other economically weaker sections of the society. Yet some other Islamic banks provide interest free loans to small producers, farmers and entrepreneurs who are not qualified to get finance from other sources. The purpose of these loans is to help start them their independent economic life and thus to raise their incomes and standard of living. |
| Qard Hasan |
| An interest-free loan given mainly for welfare purposes. The borrower is only required to pay back the amount borrowed |
| Qimer |
| Lit: gambling. Technically, an agreement in which possession of a property is contingent upon the occurrence of an uncertain event. By implication it applies to those agreements in which there is a definite loss for one party and definite gain for the other without specifying which party will gain and which party will lose. |
| Qirad |
| Mudaraba |
| Rab-al-maal |
| In a mudaraba contract the person who invests the capital. |
| Rabbul-mal |
| Owner of Capital |
| Riba |
| Lit: an excess or increase. Technically, an increase, which in a loan transaction or in exchange of a commodity, accrues to the owner (lender) without giving an equivalent counter value or recompense in return to the other party. It covers interest both on commercial and consumer loans. |
| Riba |
| This term literally means an increase or addition. Technically it denotes any increase or advantage obtained by the lender as a condition of the loan. Any risk-free or "guaranteed" rate of return on a loan or investment is riba. Riba, in all forms, is prohibited in Islam. In conventional terms, riba and "interest" are used interchangeably. |
| Riba |
| Literally, an increase or addition. Technically it denotes in a loan transaction any increase or advantage obtained by the lender as a condition of the loan. In a commodity exchange it denotes any disparity in the quantity or time of delivery. |
| Riba al-buyu |
| A sale transaction in which a commodity is exchanged for the same commodity but unequal in amount and the delivery of at least one commodity is postponed. To avoid riba-al-buyu, the exchange of commodities from both sides should be equal and instant. Riba-al-buyu was prohibited by the prophet Mohammad to forestall riba (interest) from creeping into the economy from the back door. |
| Riba al-fadl |
| Usury of trade. It is an alternative term for riba al-buyu. |
| Riba al-diyun |
| Usury of debt. |
| Riba al-nasia |
| Increment on the principal of a loan payable by the borrower. It refers to the practice of lending money for any length of time on the understanding that the borrower would return to the lender at the end of this period the amount originally lent together with an increment in consideration of the lender having granted him time to pay. The increment was known as riba al-nasia. It was in vogue in Arabia in the days of the Prophet Muhammad. |
| Ruq'a |
| Banking instrument of the early Muslim period. It was a payment order to draw money from the bank. |
| Sadaqah |
| Charitable giving. |
| Shari'a |
| The way of Allah as shown by the Qur'an and the Sunnah of the Prophet Muhammad. The term is used to refer to the Islamic law. |
| Sharia |
| Islamic law derived from three sources - the Quran, the Hadith, and the Sunnah. |
| Shariah |
| Islamic cannon law derived from 3 sources: the Quran; the Hadith (sayings of the Prophet Muhammad); and the Sunnah (practice and traditions of the Prophet Muhammad). |
| Shirkah |
| A contract between two or more persons who launch a business or financial enterprise to make profit. |
| Shirka |
| Musharaka |
| Suftajal |
| A type of banking instrument used for the delegation of credit during the Muslim period, especially the Abbasides period. It was used to collect taxes, disburse government dues and transfer funds by merchants. It was the most important banking instrument used by traveller merchants. In some cases suftajahs were payable at a future fixed date and in other cases they were payable on sight. Suftajah is distinct from the modem bill of exchange in some respects. Firstly, a sum of money transferred by suftajah had to keep its identity and payment had to be made in the same currency. Exchange of currencies could not take place in this case. Secondly, Suftajah usually involved three persons. 'A' pays a certain sum of money to 'B' for agreeing to give an order to 'C' to pay back to 'A'. Third, a Suftajahs could be endorsed. The Arabs had been using endorsements (hawala) since the days of the Prophet Muhammad. |
| Sallallahu alaihi wassallam (SAW) |
| This is a salutation used by Muslims whenever referring to the Prophet Muhammad. It is abbreviated as 'SAW'. It means 'peace and blessings of God be upon him'. |
