Bahria University

(Islamabad Campus) Department of Management Sciences

Course Title:
Islamic Finance: Theory & Practice
CATALOGUE DESCRIPTION

Course Code: FIN684

Instructor Name: Khalid Hussain
Credit Hours: Three (3)
Class: MBA
Prerequisite: Fundamentals of Finance, Financial Management
Section: N

COURSE DESCRIPTION

This course introduces and explains the basic pillars of Shariah Law as applied to finance,
explores its various interpretations, and highlights the best practice. The course discusses the
functions of the Islamic financial System including their products and services and compares it
with conventional systems. The resource person will discuss recent trends and developments,
along with emerging issues that will influence the future of Islamic finance.

COURSE OBJECTIVES

Take the participant through those principles of Islam which are relevant to Islamic
banking.
Stress the implications of the Shariah for appreciating the framework within which
Islamic banking takes place.

Emphasize practical banking principles rather than the Islamic jurisprudence perspective
of Islamic banking.

Illustrate, with practical examples, the applications of the key Islamic banking and
financial instruments together with some of the central issues affecting their application.

RECOMMENDED TEXT BOOK(S) & REFERENCE BOOK(S)

Ayub, M. (2007) Understanding Islamic Finance, John Wiley & Sons, Ltd, Thomson/South-
Western.
Kettell Brian. (2008) Introduction to Islamic banking and Finance, John Wiley and Sons

Additional readings

Mohammed Obaidullah, (2005), Islamic Financial Services, Islamic Economics Research Center,
King Abdulaziz University, Jeddah, Saudi Arabia.
Hennie van Greuning , Zamir Iqbal, (2008)Risk analysis for Islamic banks, The
International Bank for Reconstruction and Development / The World Bank
Bahria University
(Islamabad Campus) Department of Management Sciences

Omar Mustafa Ansari, Managing Finance: A Shariah Compliant Way, Time Management Club,
DHA, Karachi.
Azmi Muhammad, Umar. () Fundamentals of Islamic Money and Capital Markets, John Wiley &
Sons, Ltd, Thomson/South-Western.

ASSESSMENT EVALUATION

Final Exam 40%

Midterm Exam 25%
Quizzes 15%
Project 15%

{Assignments 5%
Cases / Articles
Any other}

LECTURES DELIVERY PLAN

Week
# Outline
PART : I Fundamentals of Islamic Finance
1-2 Introduction: The Philosophy and Features of Islamic Finance
Chapter 1. Islamic Financial System: An Overview on Principles and
Development of Islamic Finance
Reading Materials:
Hennie van Greuning , Zamir Iqbal, (2008) Principles and Development of Islamic
Finance
Mohamed Ali Trabelsi, (2011) The Impact of the financial crisis on the global
economy: can the Islamic financial system help? The Journal of Risk Finance,
Vol.12 No.1. pp.15-25
3-4 Chapter 2. Major Norms of Islamic Finance
Norms relating to Riba, Gharar and Tawun

PART: II Contractual Bases in Islamic Finance

5 Islamic Law of Contracts and Business Transactions
Theory of contract, Importance of Contract
Definition of Contract
Essential Elements of Contract
Objective of Contract
Processes of Contract
Classification of Contract
PART: III Islamic Finance Products and Procedures
Overview of Financial Institutions and Products: Conventional and
Islamic
6 Chapter 4. Deposit Products

Current (Wadiah/Qard) Deposits

Bahria University
(Islamabad Campus) Department of Management Sciences

Savings(Wadiah/Qard) Deposits
Investment (Mudarabah) Deposits
Issues in Product Management & Areas of Application
Financing Products ( Mudarabah, Musharakah & Areas of Application)

7 Chapter 5. Financing Products (Equity Based)

Trustee Partnership( Mudarabah) Facility

Joint Venture( Musharakah) Facility
Declining Partnership ( Diminishing Musharakah) Facility
Issues in Product Management & Areas of Application
8 Mid Term Exam
9 Chapter 6. Financing Products ( Debt Based)-I

Deferred Payment ( Bai Bithaman Ajil with Cost Plus Sales Murabaha Facility)
Leasing (Ijarah) Facility.
Issues in Product Management & Areas of Application

10 Chapter 7. Financing Products ( Debt Based)-II

Deferred Delivery Sale( Salam) Facility

Manufacture Sale( Istisna) Facility
Recurring Sale( Istijrar) Facility
Benevolent Loan (Qard) Facility
Issues in Product Management & Areas of Application

11 Chapter 8. Financing Products ( Debt Based)-III

Repurchase ( Bai al Einah)

Credit Cards based on Bai al Einah
Bill Discounting (Bai al Dayn)
Monetization ( Tawarruq)
Issues in Product Management & Areas of Application

12 Some Accessory Contracts

PART: IV Islamic Finance Investment Banking Products
13 Sukuk and Securitization: Vital Issues in Islamic Capital Markets
&14
PART: V Islamic Finance Takaful Products
15 Takaful: An Alternative to Conventional Insurance

16 An Appraisal of Common criticism of Islamic banking and finance

Final Project Submission
Final Exam