The structure of any financial system can be classified into one main category, that is the financial market.
False, it is also known as capital markets.
Al-Ijarah Thumma Al-Bay is a leasing (Ijarah) contract with a condition to sell (bay’)
False. No condition to sell, it must be a promise.
In a Musharakah agreement, the distribution of profits and losses but be done strictly according to capital contribution ratios.
False. It is not based on capital contributions.
Bank has discretion to provide gifts or bonuses either in cash or in kind to the Wadi’ah Yad Dhamanah and Mudharabah depositors.
False. In Mudharabah it is profit and loss sharing, no gifts or bonuses are given.
In Musharakah contract, profit and loss are being determined at the conclusion of the contract based on any mutually agreed ratio.
False. The agreement of the contract, not the conclusion.
Bank ABC indicates a rate of potential profit to be given to General Investment Account Holder, but clearly states that it is only “indicative rate” and may change according to actual profit made. This practice is totally Shariah compliant.
In applying Murabahah as a mode of financing, many Islamic banks adopt the conventional interest rate as a benchmark in determining their profit rates. This practice is Shariah compliant.
True. As long as contract elements are sharia compliant
Under the concept of diminishing partnership in home ownership home buyer and the bank jointly acquire and own the property. The bank leases the bank’s share of the property to the home on the basis of ijarah.
True. The Bank does lease its share of the property on the home based off of Ijarah.
Prohibited elements such as riba and maysir (gambling) are absent in takaful. However, the element of gharar is still present in the takaful contract.
True. But tolerated in unilateral charitable contracts.
The main purpose of a sale and leaseback arrangement is to finance the purchase of a specific asset or property.
False. To get cash
Bay’ Bithamin Ajil (BBA) floating rate implies that both ceiling profit rate and effective profit rate are adjustable to the actual market rate.
False. Only effective profit rate reflects market rate.
From the fiqh perspective, for the financing of the purchase of houses under construction, the contract of Istisna’a is more suitable than the contract of bay’ Bithaman Ajil (BBA).
In principle, Murabahah financing is to enable customers to get funds to purchase assets, as well as to pay wages and salaries, overheads, maintenance expenses and other working capital related costs.
False. Only commodities and assets.
Debit card functions the same way as credit card, except that for debit card, the cardholder is only allowed to charge up to actual amount of cash held in account.
Under Wadi’ah yad dhamanah contract deposited property must be kept separately. There is no pooling of funds.
False. deposits need not be segregated
In Al Rahn, the source of profit for the Murtahin is the service or administrative fees for the Qardhul Hassan (benevolent loan).
False. Custodial fee/Storage costs
In Ijarah contract, the lessor is allowed to review the rent at specified intervals, particularly for long term leases.
True. As long as it states in contract mutually agree
In Murabahah contract, the cost and mark-up prices need not necessarily be disclosed.
False. Have to disclose the cost and the profit mark up.
Participation in the stock market is similar to gambling (Maysir) therefore Muslims should avoid the buying and selling of shares.
False. Shares are not gambling, investing is shariah compliant.
In a Mudarabah Investment account, the bank does provide a guarantee that the deposited (invested) funds will be completely safe (that is the bank does provide capital protection).
False. Contractually the deposited amount is not guaranteed (no capital protection).
The Shariah prohibition of Riba implies that Islam does not recognize any time value of money.
False. Shariah does recognize TVM (Time Value Money). Time is a valuable economic resource.
Expertise and skill in equity investment and management is not an important issue for Mudharabah/Musharakah financing.
True. All partners have the right to participate in the business or trade no matter their qualification. However, it should be taken into consideration the skill sets of each individual participating in the business.
Islamic bank are allowed to provide a rebate in case of early repayment in Bay’ Bithaman Ajil (BBA) contract.
True. In a BBA floating rate financing banks are granted to give rebates for early settlement or redemption.
In Al-Rahnu, the Murtahin is allowed to use the pledged asset in the event that the pledger does not re-pay the Qardhul Hassan loan within the agreed time period.
False. Can auction assets
Juristic differences on Bay-Al ‘Inah issue on credit cards centers on the issue of early settlement.
False. Acceptability as sale
The usage of Islamic credit card should be encouraged, since it fulfills all the Shariah requirements and it facilities the payment of goods and services.
False. Unresolved fiqh issues. Islamic perspective on debts.
One of the key features under the Mudarabah contract is that in the event of loss, both the Rabbal-mal and the Mudarib must bear the capital loss.
False. Only Rabbal-mal bears the loss
In a pure Wakalah model of Takaful some part of the underwriting surplus is given to the operator. However, the underwriting loss if any has to be borne by the participants only.
False. It is given to the operator depending on performance.
In a Salam contract both the price and delivery of goods are postponed to a future date.
False. In a Salam contract the price is paid in advance and delivery of goods is at a future date.
In Murabahah contract, the cost and mark-up prices need not necessarily be disclosed
False. In Murabahah contract is a contract of sale where the seller discloses to buyer actual cost of the commodity and the profit margin added.
Under Musharakah/Mutanaqisah arrangement financier and customer participate in joint ownership of property or commercial enterprise with the objective of permanently owning and managing the enterprise together.
False. Diminishing partnership.
In Al Rahnu the source of profit for the Murtahin is the service or administrative fees for the Qardhul Hassan (benevolent loan).
False. The source of profit for the Murtahin is the storage costs.
The use of conventional interest rates as the benchmark to determine the profit rate in a Murabahah financing arrangement does not make that Murabahah contract invalid.
True. As long as the Murabahah contract is Shariah compliant and agreed by both parties it remains valid.
In Itisna’ contract the required materials can be purchased by either the manufacturer or the purchaser.
False. Materials are only to be bought by the manufacturer, not the purchaser.
In Wakalah model of Islamic credit card, bank earns profit from mark up on deferred sale
In Al-Rahnu the Murtahin is allowed to use pledged asset in event that pledger doesn’t pay the benevolent loan within agreed time.
False? Can auction asset.
Juristic differences on Bay al-‘inah issue on credit cards centers on issue of early settlement.
False. Acceptability as sale, etc.
Usage of Islam credit card should be encouraged; since it fulfills all Shariah requirements and facilitates payment of goods and services.
False. Unresolved Fiqh issues, Islam perspective on debt.
One of the key features of Mudarabah contract is that in the event of loss both the rabbal-mal and mudarib bear capital loss.
False. Only Rabbal-mal.