Firm Yet Flexible - Unique Aspects of Islamic Finance

This is how I see the uniqueness of Islamic Finance - It is Firm Yet Flexible.

Firmness is due the strict Shariah prohibition on Interest (Riba), Speculation (Maisir), and Gharar (uncertainty).

Flexibility refers to the various financial contracts that contracting parties (such as Islamic bank and its customers) can enter into, be it Murabahah (Mark-up Sale), Ijarah (Leasing) etc.

However, once contracting parties have chosen a particular contract, the Firmness sets in again as each party is required to adhere strictly to the terms and conditions set up by Shariah in respect of that contract. The terms and conditions of each financial contracts have been laid down by the Shariah scholars so as to ensure fairness between each contracting parties.

Firm, Flexible and Firm again. It is an interesting phenomena of Islamic Finance which you are not likely to find in other banking systems..

I wrote this paper as part of my work for Oracle Financial Services Software Pte Ltd (OFSS), one of the leaders in the provision of Technology Solutions for the Conventional and Islamic Banking industries.

You can read the paper here.

Happy Reading.. And give me your feedback too...