By: Prof.Dr.Cdr(R) Aurangzeb
Head of Department
Business Administration
Dadabhoy Institute of Higher Education (DIHE)
Karachi
A joint pool in which
INVESTORS contribute
their surplus money for the
purpose of its investment to
earn “Halal” profit in strict
conformity with the
percepts ofIslamic Sharia
1. Equity Fund
2. Ijarah Fund
3. Commodity Fund
4. Murabahah Fund
5. Bai'-al-dain
6. Mixed Fund
 Amounts are invested in JOINT
STOCK companies.
 Profit through capital gains.
 Profit through distribution of
Dividends.
 Not involved in Manufacturing ,
Selling or offering “Liquors “ ,Pork
, Haram meat, gambling, night
clubs, pornography.
 Business should “Halal” like
automobile and Textile etc.
 Portion of income of company
based on the interest should be
given in charity.
 Shares negotiable if assets are
non-Liquid.
Assets like Machinery , Equipments,
Vehicles purchased and given to users
on IJARA (Lease).
 Ownership remains with funds and
‘‘Rentals’’ are charged from the users .
 Pro-rated shares of Rentals are
distributed to subscribers on the basis of
“SUKUK” (Certificate).

 Can be sold and purchased in the
secondary Market .
 Only Halal use is permissible.
 Management should act as agent of
subscribers.
 Subscription amount used for
purchasing commodities for re-sale.
 Commodities must be owned by the
seller at the time of sale.
 Forward sales are not allowed.
 Commodities must be Halal.
 Price of commodity must be fixed.
A specific kind of sale where the
commodities are sold on a cost-plus basis.
 Commodities purchased for benefit of their
clients, then sold the same on deferred
payment at an agreed profit margin added to
the cost.
 The portfolio of Murabahah does not own
any tangible assets but cash or receivable
debts.


Dain means "debt" and Bai' means ‘‘sale’’.

If a person has a debt receivable from a
person and he wants to sell it at a discount,
as normally happens in the bill of exchange, it
is termed in Shariah as Bai'-al-dain.

A kind of fund where the subscription
amounts are used in different types of
investments like equities, leasing,
commodities etc.

In this case if the tangible assets of the Fund
are more than 51% while the liquidity and
debts are less than 50% the units of the fund
may be negotiable.

if the proportion of liquidity and debts
exceeds 50%, its units cannot be traded
as per contemporary scholars.

In this case the Fund must be a close
ended Fund.
 Fund size is small.
Lack in strong legal and institutional
framework.
 Lack in supervisory framework.
 Lack of knowledge and
understanding of the Islamic Fund.

 Lack in research and development in
the field of Islamic Finance and
economics.
 Lack in HR development and training
to the banks staff on Islamic Banking
system.
 Lack of guidance and information
system.
 Lack in Marketing of Islamic products
/services and their introduction in
international market.

Lack of financial engineering.

Doubts about instruments used.
Warren Edwardes

Having staff qualified in the Islamic Finance
would produce the best results.

Standard would be developed on the basis of
efficient and effective management
practices.

Transparency and reliability will be increased.
 Interest of investors and society at large
will be enhanced.
 Industry will be driven Ethically and
morally.
 Industry will be run effectively and
efficiently.
 Future depends upon innovative
instruments to enhance liquidity.
 To develop secondary money and capital
markets .
 To Introduce Public Finance instruments
 Having need of appropriate institutional
arrangements, legal framework and
taxation issues .
 Development of Human Resource.
 Products and services are available
for Non-Muslims also and they are
using the same.
Warren Edwardes
 We are Re-inventing the wheel of Islamic
products and services.
 We had developed strong base of Islamic
Economics and finance but we have
forgotten the lesson of research for the
last 1000 years.
 Status of Pakistan’s population
Upto 9 years of age……… 28%
10..........30 years…………...41%
31...........60years…………….26%
6 1 and above………………….05%
100%
Warren Edwardes



New products/services are being developed
and choice of the investors will be increasing.
Standardization and a better overall
education system is required to sustain its
strong upward growth.
This will bring stability and innovation.
1)
•
•
•
Establishment of a ‘‘THINK TANK’’
for development of Islamic
product/services with comparison of
conventional modes.
Proposed members are:
State bank of Pakistan.
Security & Exchange Commission of
Pakistan (SECP)
Stock exchanges.
Warren Edwardes
•
•
•
•
•
Chamber of commerce.
University/DAIs.
Sharia advisory boards/committee of
the banks and financial institution.
Imam’s of all Mosques where Juma
prayers/Eid prayers are offered.
Any other relevant institutions and
departments.
Warren Edwardes
2)
3)
Awareness program for educated and
uneducated people (58% literate) and (42%
illiterate).
Training programs of the staff of Islamic
banking and financial institutional.
Warren Edwardes
Warren Edwardes