Islamic finance is based on principles of Sharia law, which prohibits the payment or receipt of interest (riba). Instead, Islamic financial instruments are used to facilitate transactions that are compliant with Islamic law. In the Level 5 Certificate in The Concepts of Islamic Finance and Banking course, students will learn about various types of Islamic financial instruments, including:
| Type of Instrument | Description |
|---|---|
| Mudarabah | A profit-sharing partnership where one party provides capital and the other party provides expertise and management. |
| Musharakah | A joint venture partnership where profits and losses are shared based on the agreed upon ratio. |
| 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 are just a few examples of the main types of Islamic financial instruments taught in the Level 5 Certificate in The Concepts of Islamic Finance and Banking course. By understanding these instruments, students will be equipped to navigate the world of Islamic finance with confidence and expertise.