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Glossary of Financial Terms: A

This glossary is not limited to Islamic terms and contains Arabic and English terms that are also referred to in the study of Islamic economics, banking and insurance.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A'yaht

See Ayat.

Aakhira

Life in the Hereafter.

Aaqilah

Mutual Help, which was an arrangement of mutual help or indemnification customary in some tribes at the time of the Prophet Muhammad (pbuh). This is a foundation doctrine based on which Islamic insurance practices, known as Takaful, have been developed.

Adl

A general term which conveys the meaning of justice, equity and fairness.

Ahad

One. Inherently one (God).

Ahkam

Plural of Hukum.

Ajr

A payment or compensation such as commission, fees or wages charged for services.

Ajr-un-kareem

A generous reward.

Al-Ajr

See Ajr.

Al-bai

See Bai.

Al-Ghurm bil Ghunm

The principle that one is entitled to a gain only if one agrees to bear the responsibility for the loss. Earning profit is legitimised only by risk-sharing and engaging in an economic venture. This provides the rationale and the principle of profit-sharing in Shirkah (partnership) arrangements.

Al-Ihsan

See Ihsan.

Al-kharaj bil daman

Link of exposure to risk, one can claim profit only if one is ready to bear the business risk, if any. The principle in Islamic jurisprudence that entitlement to return or yield ( al-kharaj) is for the one who bears the liability ( daman) for something, say an asset, and one who does not bear the liability has no claim to the yield.

Al-mal

See Mal.

Al-Quran

See Qur’an.

Al-Rahn

See Rahin.

Al-Sar-al-Adl

The just price.

Al-Sarf

See Sarf.

Al-wadia

See Wadiah.

Al-Wakala

See Wakalah.

Al-Wakala al Mutlaqa

Absolute power of attorney.

Alim

One who knows. See Ulama.

Allah

The name for God in Islam.  It is used by Arabic-speakers of all Abrahamic  faiths, including Christians and Jews. The concept of Allah, is the only real supreme being, all-powerful and all knowing Creator, Sustainer, Ordainer, and Judge of the universe. There is no plural, masculine or feminine form of this word in Arabic. This denotes the One True God, the Almighty Creator, Who is neither male nor female . Islam puts a great emphasis on the conceptualisation of God as strictly singular ( tawhid). God is unique (wahid) and inherently one ( ahad), all-merciful and omnipotent. Islam teaches that Allah is the same God worshiped by the members of other Abrahamic religions such as Christianity and Judaism.

Amanah

Trust. Lit.: reliability, trustworthiness, loyalty, honesty. Technically, an important value of Islamic society in mutual dealings; it also refers to deposits in trust. A person may hold property in trust for another, it entails the absence of any liability for loss, except for breach of duty. By extension, the term can also be used to describe different financial or commercial activities such as deposit taking, custody or goods on consignment. Deposits in current accounts (usually non-interest bearing) with Islamic banks are regarded as Amanah. If the bank obtains authority to use the funds in the current accounts to invest in its business, Amanah transforms into a loan from the depositor to the bank and the bank is liable to repay the full amount in the current account, irrespective of profit or loss made by the bank.

Ameen

See Amin.

Amil

Literally it means worker. One who performs a task, an agent. One who deserves compensation for performing a task, such as the mudarib (manager) in a mudarabah contract or a zakat collector.However, inFiqh it also refers to the working partner inmudarabah contract. Under this contract, one partner provides the capital and the other provides the labour who is called amilor mudarib.

Amin

One who holds honestly the trusts of other people; trustworthy.

Amwal

Plural of Mal which means worldly possessions including both property and money (wealth).

Aqd

Contract, Agreement, Bond. Synonymous with the word “contract” in modern law.

Aqd Batil

See Batil.

Aqd Ghair Lazim

A contract in which any one of the parties has a unilateral right to revoke it with the consent of the other(s).

Aqd Lazim

A contract in which none of the parties has a unilateral right to revoke it without the consent of the other(s).

Aqd Tabarru

See Tabarru.

Aqd-al-Bay

A contract of sale.

Aqd-al-Ijara

See Ijara.

Aqd-al-Muawadah

A contract of exchange in which compensation is given against the goods or services received.

Aqd-al-Musharakah

See Musharakah.

Aqd-al-Qard

A loan contract. Also known as Qard.

Aqd-al-Wadia

See Wadia

Aqidah

Belief, faith.

Aqilah

Kin or persons of relationship who share responsibility.

Aql

Intellect.

Arbun

A non-refundable down payment or deposit paid by a buyer for the right to purchase goods at a certain time and certain price in future; if the right is exercised, it becomes part of the purchase price. If the buyer does not complete the purchase or backs out for any reason, the seller has the option to forfeit the deposit. Also known as Urboun and Bai al-Arbun. Also see Hamish Jiddiyah.

Ariya

Loan, which means to give any non-fungible commodity to another for use, without taking any return for its use.

Assets

Anything of value which may be tangible or intangibe. Any interest in real or personal property which can be appropriated for the payment of debt.

The Financial Accounting Standards Board (FASB) describes an asset as having three essential characteristics: (a) it embodies a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflows, (b) a particular entity can obtain the benefit and control others’ access to it, and (c) the transaction or other event giving rise to the entity’s right to or control of the benefit has already occurred. See Fictitious Asset

Awqaf

Plural of Waqf, meaning trust. Also see Waqf

Aya

See Ayat.

Ayah

See Ayat.

Ayat

A verse or passage in the Qur’an.

Ayn

Monetary wealth. A tangible (physical) asset. Also, refers to currency or ready money. Ayn is often contrasted with Dayn.