Islamic finance is guided by ethical principles that are deeply rooted in Islamic teachings. The Ofqual Level 5 Certificate in The Concepts of Islamic Finance and Banking (fast-track) emphasizes the following ethical considerations:
| Ethical Consideration | Description |
|---|---|
| Avoidance of Riba (Interest) | Islamic finance prohibits the payment or receipt of interest, as it is considered exploitative and unjust. Instead, profit-sharing arrangements and asset-backed transactions are used. |
| Avoidance of Gharar (Uncertainty) | Islamic finance discourages transactions that involve excessive uncertainty or ambiguity, as they can lead to disputes and harm both parties. |
| Avoidance of Haram (Prohibited) Activities | Islamic finance prohibits investments in industries such as alcohol, gambling, and pork production, as they are considered sinful and harmful to society. |
| Promotion of Social Responsibility | Islamic finance encourages ethical business practices, philanthropy, and the equitable distribution of wealth to promote social welfare and justice. |
By adhering to these ethical considerations, practitioners of Islamic finance can ensure that their financial transactions are not only compliant with Islamic principles but also contribute to the greater good of society.