Islamic finance is based on principles that adhere to Sharia law, which prohibits the payment or receipt of interest (riba). The Ofqual Level 5 Certificate in The Concepts of Islamic Finance and Banking course covers the following key principles:
| Principle | Description |
|---|---|
| 1. Prohibition of Riba | Islamic finance prohibits the payment or receipt of interest, as it is considered exploitative and unjust. |
| 2. Risk-Sharing | Parties in Islamic finance transactions share both profits and losses, promoting a more equitable distribution of risk. |
| 3. Asset-Backed Financing | Islamic finance is based on tangible assets, ensuring that investments are backed by real assets and promoting transparency. |
| 4. Ethical Investments | Islamic finance prohibits investments in industries such as alcohol, gambling, and pork, promoting ethical and socially responsible investing. |
| 5. Zakat | Islamic finance encourages the payment of Zakat, a form of almsgiving, to help redistribute wealth and support those in need. |
These key principles form the foundation of Islamic finance and are essential components of the Ofqual Level 5 Certificate in The Concepts of Islamic Finance and Banking course. By understanding and applying these principles, students can gain a comprehensive understanding of Islamic finance and its ethical and sustainable approach to financial transactions.