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Course Structure

The Post Graduate Diploma in Islamic Banking is equivalent to Level 7 on the National Qualifications Framework of England, Wales, and Northern Ireland in the United Kingdom.

The course consists of nine modules with 40 lessons covering various aspects of Islamic banking practices and operations. There are assignments at the end of each lesson. The assignments for some lessons is a quiz with Multiple Choice Questions (MCQs) that are designed to also test your in-depth understanding of the core concepts and their practical applications explored within the lessons.

Conventional banking operates on the principle of profit primarily generated from interest income on lending activities and investments, which may entail speculative behaviour and support businesses that have negative social or environmental impacts. The first module emphasises how Islamic economics integrates financial principles such as interest-free banking, profit and risk sharing, and the focus on real economic activities with ethical and moral principles derived from Islam. By aligning economic practices with spiritual and moral values, Islamic economics aims to foster social justice, fairness, and overall well-being within society. This holistic approach ensures that economic activities contribute not only to financial prosperity but also to the betterment of individuals and communities in accordance with Islamic teachings.

Lesson 1. The Conventional Banking System

Lesson 2. Islamic Banking and Financial Intermediation

Lesson 3. Islamic Economics: The Making of Islamic Economic Thought, Divine Guidance for a Moral Economy and Ethics

Lesson 4. Rules Governing Commercial Transactions: Shari’ah, Maqasid al Shari’ah and Muamalat

This module provides an overview of Islamic Commercial Law, Early Sales Contracts on which Islamic banks reply on to generate the bulk of their income, Rules of Sales, Loan and Debt, and the concept of promise. Acessory contracts help Islamic banks design transactions that adhere to Shari’ah principles such as prohibition of interest, uncertainty, and unjust enrichment and are often used alongside the primary transaction to achieve specific objectives or mitigate risks. On the other hand, Hibah is an important concept in Islamic finance referring to a voluntary gift or grant given out of goodwill, typically by Islamic banks to deposit their customers. The module also explains the higher objective (the Maqasid) of Shari’ah that implies ‘well-being’ indicating that whatever action is taken and whatever is done should be in line with the well-being of all the stakeholders including human well-being.

Lesson 1. Islamic Commercial Law, Contracts, Combination of Contracts, and Promise

Lesson 2. Qard (Loan) and Debt – Sale of debt and the Role of Securitisation

Lesson 3. Partnership – Concept of Shirkah, Mudarabah, Musharrakah, and Diminishing Musharakah

Lesson 4. Cash and Credit Sales – Murabaha, Musawamah and Tawarruq (for Cash Flow Financing and Liquidity Management)

Lesson 5. Forward sales and Futures Market – Salam with Parallel Salam, Istisna’a with Parallel Istisna’a, and Jualah

Lesson 6. Ijarah (Lease) and Ijarah wa Itiqna (Lease Finance)

Lesson 7. Accessory Contracts that support non-interest services and Hibah (Gift) – Wakalah, Juala’ah, Kafalah, Rahn, Ujrah, Istijrar, Amanah and Wadiah, and Hibah

Deposit mobilisation is a crucial part of banking activity and plays a significant role in the growth of the economy. Commercial banks, rural savings and credit cooperatives, and private commercial banks all engage in deposit mobilisation to gather savings from individuals, families, groups, and businesses to fud their operations. This module explains ways in which deposits are mobilised by Islamic banks and the method of paying compensation to depositors instead of paying interest.

Lesson 1. Deposits and their importance in funding Banking Operations and Financing

Lesson 2. Types of Deposit Accounts, the underlying Contracts and the Return Structure

Lesson 3. Pooling of Deposits, Investment, Profit Calculation and Profit Distribution

Lesson 4. Takaful for Deposit Protection (Islamic Deposit Insurance)

Interest income from loans and financing stands as the primary source of profit for most conventional commercial banks. However, Islamic banking diverges from this norm, as charging interest is deemed impermissible. Instead, Islamic banks engage in profit-sharing arrangements, wherein a portion of the borrower’s business profit is allocated to the bank, or an agreed-upon share of the profit is determined. This module encompasses a range of financing activities, including responsible finance for small and medium enterprises, as well as low-income individuals and groups.

Lesson 1. Personal Loans and Finance

Lesson 2. House Finance (Islamic Mortgages)

Lesson 3. Business Finance and Working Capital Finance

Lesson 4. Trade Finance 

Lesson 5. Asset Finance for Manufacturing and Construction 

Lesson 6. Project Finance, Joint Venture Finance and Real Estate Finance

Lesson 7. Finance for Small and Medium-sized Enterprises (SME), and Microfinance

Fee-based services of Islamic banks encompass a variety of offerings that allow the bank to generate revenue without resorting to interest-based transactions. These fee-based services allow Islamic banks to generate revenue while adhering to Islamic principles that prohibit earning interest income. 
 

Lesson 1. Money Transfers, Letters of Credit, Guarantees, Safe-custody

Lesson 2. Credit Cards and Debit Cards

This module explains how FinTech can enable Islamic banks to provide easy accessibility to financial services, payment systems, and banking dedicated to unbanked or hard-to-reach populations at more affordable costs. Blockchain technology is also explained and the role it can play to amplify the impact of Islamic banking and finance on sustainable development. By using blockchain, Islamic banking has the potential to revolutionise financial transactions, democratise access to financial services and foster accountability and trust in the financial ecosystem.

Lesson 1. Money Market Operations

Lesson 2. Capital Market Operations and Investments

Lesson 3. Foreign Exchange Operations

Lesson 4. Sukuk and its Role in the Development of Economic Growth and the Green Economy

Lesson 5:  Shari’ah Screening for Permissible Investments

This module explains how FinTech can enable Islamic banks to provide easy accessibility to financial services, payment systems, and banking dedicated to unbanked or hard-to-reach populations at more affordable costs. Blockchain technology is also explained and the role it can play to amplify the impact of Islamic banking and finance on sustainable development. By using blockchain, Islamic banking has the potential to revolutionise financial transactions, democratise access to financial services and foster accountability and trust in the financial ecosystem.

Lesson 1. Islamic Fintech

Lesson 2. Blockchain, Crypto and Digital Currencies

This module deals with corporate governance in Islamic banks, supervisory and regulatory issues including liquidity and risk management. The purpose of corporate governance is to facilitate effective leadership and prudential management that can deliver long-term success of the company or organisation. The Maqasid Al Shari’ah emphasises the efforts that Islamic banks should make to contribute to society and the environment beyond their normal operations. Banking regulation and supervision covered in the module explores that the written rules that define the acceptable behaviour and conduct of banks. The scope of Shari’ah and compliance, product development challenges, external audit, financial accounting, and reporting are also covered.

Lesson 1. Regulation and Supervision by Central Banks

Lesson 2. Corporate Governance, Moral Values and Ethics, Leadership, Education and Training

Lesson 3. Liquidity and Risk Management

Lesson 4. Shari’ah Governance – Shari’ah Advisory, Product Approval and Certification, Shari’ah Review

Lesson 5. Maqasid Al Shari’ah, Maslahah and Corporate Social Responsibility

Lesson 6. Product Development and Challenges

Lesson 7. Financial Accounting and Reporting and External Audit

This module introduces the concept of takaful as an alternative to traditional insurance and complies with Islamic principles and explains the importance of insurance that provides vital protection against financial losses from unexpected events. Islamic banks need insurance in the form of takaful to protected assets held as security in lending operations and is also a profitable activity earning interest-free income as commission by selling takaful to the bank’s customers.

Lesson 1. Takaful and Role of Takaful to secure Lending and Assets of Islamic banks

Lesson 2. Bancatakful: Selling Takaful Products to Bank’s Customers to increase interest-free income and build Customer Loyalty