Islamic finance is based on principles of Sharia law, which prohibits the payment or receipt of interest (riba). Instead, Islamic finance utilizes a variety of financial instruments that comply with Islamic law. Some of the main financial instruments explored in the Ofqual Level 5 Certificate in The Concepts of Islamic Finance and Banking course include:
| Mudarabah | A profit-sharing partnership where one party provides the capital and the other party provides the expertise and management. |
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| Musharakah | A joint venture partnership where both parties contribute capital and share profits and losses. |
| Ijara | A leasing agreement where the lessor retains ownership of the asset and the lessee pays rent for its use. |
| Sukuk | Islamic bonds that represent ownership in a tangible asset or project, providing investors with a share of the profits. |
These financial instruments are designed to facilitate transactions and investments in a way that is compliant with Islamic principles. By studying these instruments in the Ofqual Level 5 Certificate course, students gain a comprehensive understanding of how Islamic finance operates and the various tools available for conducting financial activities within the framework of Sharia law.