Islamic finance is based on principles that adhere to Sharia law, which prohibits the payment or receipt of interest (riba). The Level 5 Certificate Concepts of Islamic Finance and Banking (fast-track) 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 involved 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 transactions are backed by real economic activity. |
| 4. Ethical Investments | Islamic finance promotes ethical investments that are in line with Islamic principles, such as avoiding investments in industries like alcohol, gambling, and pork. |
These key principles form the foundation of Islamic finance and are essential components of the Level 5 Certificate Concepts of Islamic Finance and Banking (fast-track) course. By understanding and applying these principles, students can gain a comprehensive understanding of how Islamic finance operates and its significance in the global financial landscape.