Islamic finance is based on the principles of Sharia law, which prohibits the payment or receipt of interest (riba) and promotes risk-sharing and ethical investing. In the Level 5 Certificate course, students study the main components of Sharia-compliant financial transactions, which include:
| 1. Mudarabah | This is a profit-sharing partnership where one party provides the capital (rab-ul-maal) and the other party provides the expertise and management (mudarib). |
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| 2. Musharakah | This is a joint venture partnership where all parties contribute capital and share profits and losses based on their investment ratio. |
| 3. Murabaha | This is a cost-plus financing arrangement where the seller discloses the cost and markup to the buyer. |
| 4. Ijarah | This is a leasing agreement where the lessor transfers the right to use an asset to the lessee in exchange for rental payments. |
| 5. Istisna | This is a contract for manufacturing goods where the buyer pays in advance for the seller to produce the specified product. |
These components form the foundation of Sharia-compliant financial transactions studied in the Level 5 Certificate course, providing students with a comprehensive understanding of Islamic finance principles and practices.