Islamic Financial Management

1. What do you understand about Islamic finance?

Finance is the science of the management of money, banking, investment, and credit, or it could be said as supplying of funds or capital. Nowadays we knew that Islamic finance also give a great influence or take an important role in financial environment. Islamic finance is a finance that is regulated by a set of rules based on outlines set by the Islamic Shariah, every activity must in line with Islamic Shariah which means prohibited to take any riba (interest), gharar (uncertainty), maisir (gambling), and also investing in haram (unlawful) business & product. Islamic finance promoting partnership, profit & loss sharing, and also other activity, Islamic finance ensure that each activity always carried out with justice.

The main thing in Islamic finance is all activity must be in accordance with Shariah. We often see Islamic finance as an interest free financial system, it’s because prohibition of riba, the rationale behind this rule is consider as unacceptable any growth or increase that is not driven by effort or risk-sharing. It’s totally different with conventional western approach that makes interest as a customer attraction (in term of deposit) and also as an income (in term of paying credit) for conventional bank institutions especially. Islamic finance attract customer with the ultimate truth, which is financial system that in accordance with the Shariah, and also from the aspect of justice. As a Muslim we are expected to follow the Shariah in order to obtain mercy from Allah SWT. Riba much discussed in Al-Quran. One of them is said as: “Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat...