“They were enjoined only to worship God, sincere in their faith in Him alone—and of upright religion—and to establish prayer and to give zakah. Such is the upright religion. (Quran 98:5)

An analysis of US and Global Portfolios

SUMMARY Riba is one of the most often misunderstood terms in Islamic finance. More education on this fundamental concept is not only necessary for the preservation of a halal livelihood; it is also important for the preservation of the proper practice of Islam. Riba is prohibited by the Qur’an, Sunnah (Prophetic example), and consensus of the scholarly community. It is mentioned in a number of Qur’anic verses and is contrasted with acts of charity. (Zakah is in fact the opposite of riba.) There is even a narration from the Prophet Muhammad (peace be upon him) that calls deceit in the marketplace a type of riba. In juristic writings, riba is seen as a means of devouring the wealth of others. The process of money creation in a fractional reserve banking system is riba-based and can lead to the devouring of wealth through inflation. And, of course, an interest-based loan (both simple and compound), where a lender charges a borrower for the privilege of using money, is one of the major transactions dealing in riba, according to our scholars. RIBA EXPLAINED What do we really mean when we use the Arabic term riba? The literal translation of the word is “increase,

The Halal Perspective

ABSTRACT Purifying non-halal conventional investments in a savings vehicle like a 401(k) plan and rendering them halal is a difficult subject. This issue is often raised by Shari’ah-sensitive investors who have resolved to make the transition to Halal in their financial affairs. The desire to more fully follow the principles of Islam is in itself commendable and should be considered guidance from God. The purification of assets that are at their base impure is not possible, however, according to the tenets of Islamic Sacred Law. Instead, there are several steps that should be taken to embrace a halal strategy in one’s financial affairs, including the most important step of all—repentance from the previous action. UNDERSTANDING AAOIFI First, note that Halal investing is derived from rules outlined by the major juridical sources in Islam: the Holy Qur’an, the traditions of the Prophet Muhammad (peace by upon him), and the consensus of his companions and our noble scholars. The last category, our scholars, are those that Prophet Muhammad himself referred to as “the inheritors of the prophets.” As such, scholarly opinions should not be taken lightly. Azzad refers to the Accounting and Auditing Organization for Islamic Financial Institutions, or AAOIFI, as the

Sukuk are one of the most commonly used instruments in Islamic finance. They are also the vehicle behind some of the most dramatic growth seen in the capital markets in recent years. Government and corporate issues from both Islamic and other countries have driven the rapid growth of Sukuk. Global sukuk demand is expected to grow from $240 billion in 2012 to $421 billion by 2016. General Electric, Goldman Sachs and the World Bank have all issued sukuk. Major financial firms like PIMCO and Fidelity are active participants in the sukuk market. INTRODUCTION Sukuk are sometimes referred to as Islamic bonds. They are structured to avoid the Islamic prohibition on interest. Generally speaking, this is done by paying sukuk holders with the cash flows generated by specific assets, which are put into a special-purpose vehicle, or SPV. Most sukuk are bought and sold in the over-the-counter (OTC) market, where potential yields, maturities, and risk factors affect price. Like conventional bonds, rating agencies rate sukuk based on their credit quality and the issuer’s ability to pay investors. Sukuk receive ratings that look exactly like conventional bonds. Sukuk demand is broadly driven by three major investment groups – participants in the Islamic capital markets,

Rethinking the Pillars of Borrowing and Lending