Premium Essay

Zakat

In: Business and Management

Submitted By naufal
Words 3465
Pages 14
Running head: CONTRADICTION CONCEPTS IN AAIOFI WITH ISLAMIC BANKING

Contradiction concepts in Islamic Banking in Malaysia

Nor Alina bt Abdul Latip

International Islamic University Malaysia

Abstract

This study investigates the concepts use in Islamic Banking in Malaysia and compares it with guidelines provide by Islamic teachings. It finds that most Islamic banks in Malaysia offer BBA in home financing and Ijarah in car financing as their products. The findings show that concepts of BBA and Ijarah practise in Islamic Institutions in Malaysia are differ from the actual Islamic teachings. The study also reveals that Islamic banks are restricted to the Malaysian requirements in providing their products.

Page no

Abstract 2

Introduction 4

Literature review 5

Methodology 7

Findings 7

Conclusion 13

1.0 INTRODUCTION

Financial Accounting Organization for Islamic Banks and Financial Institutions is known as Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It was established in 1991 (AAOIFI, 2007, p.8). AAOIFI standards are drawn from Islamic teaching. The standards free from three important concepts that are used in conventional institutions which are interest, ambiguity and gambling. These standards help investors or depositors especially among Muslims to invest or deposit their funds in shariah compliance institutions. AAOIFI standards are the best in terms of Islamic shariah principles. Islamic finance is becoming more popular even with non-Muslim investors. Today, Islamic banks are operating in more than 50 countries for example Bahrain, France,

Similar Documents

Free Essay

Zakat

...Classification of zakat [pic] Zakat is divided into two main categories 1. - Zakat of al-Fitr (i.e. the breaking of the fast at the end ofRamadan. It is also referred to as the Zakat of the body. 2. - Zakat of wealth. Zakat of al-Fitr: Muhammad sallallahu alaihi wasallam ordered that this kind of charity should be observed inthe same year in which the fasting during Ramadan was imposed.A day, or two days preceding al-Fitr the Prophet addressed theMuslims saying:"Give for charity, be it corn or dates; give according to what youare, free or slave, young or old."It is also related by al-Bukhari and Muslim that the Prophet(Prayer and God's Peace be upon him) imposed the charity of al-Fitrafter Ramadan, a measure of dates or barley on all Muslims, slave orfree, young or old, male or female. THOSE WHO HAVE TO PRACTISE ZAKAT AL-FITR Zakat al-Fitr does not become nullified if one is a Muslim,provided the Muslim is free and possesses the amount of Zakat aftercovering the expenses of food for himself, and those whom he feedsfor a day and a night, together with the expenditure which he incursin relation to wife, son, servants and those whom he has to providefor such as parents and others. Its amount: The amount is either a measure of dates, or barley, or rice, orcorn, or anything else edible that can be used for food, from eachindividual.If Zakat is to consist of wheat it is half that for each person. A manmust consciously intend Zakat, since without intent it is not...

Words: 2122 - Pages: 9

Free Essay

Zakat

...Zakat Collection and Distribution In 2011, Lembaga Zakat Selangor managed to collect zakat about RM 394,103,904. From this amount, zakat on earning contributed about RM 376,128,338 (95.4%) and zakat al-fitr was only RM 17,975,566 (4.6%). Zakat on earning was levy on wealth and consists from several types. Due to this reasons, amount of zakat on earning collected was more than zakat al-fitr. Besides, for zakat al-fitr, it was imposed on Muslim in the month of Ramadan only. Zakat from earning consist of zakat on income, zakat on business, zakat on saving, zakat on KWSP, zakat on share, zakat on crops, zakat on gold and silver, zakat on livestock and qada’ zakat. Among these types of zakat, zakat on income contribute about RM 218, 265,171 (58%) from the total amount of zakat on earning. Zakat on silver has the least amount which was only RM 6,290. Nowadays, zakat can be collected in many ways such as through counters, salary deductions, corporate payers and others (agents or amil of IPT). Mostly zakat payers use salary deduction to pay zakat with percentage of 41%. There was 37% pay zakat through counters and 16% through corporate payers. Only 5% use others ways to pay zakat. Furthermore, among nine districts in Selangor, mostly zakat payers were from Petaling (20,792 payers) and only 1,883 payers were from Hulu Selangor. Zakat payers for other districts were Sabak Bernam (2,729), Kuala Selangor (2,651), Kuala Langat (2,052), Sepang(1,464), Gombak (9,496) and Hulu Langat (11...

Words: 404 - Pages: 2

Premium Essay

Five Pillars of Islam

...required on all Muslims. They were taught by theologians after the death of the Prophet Muhammad as the actions was defined on what it meant to be a member of the Muslim community. The first pillar of Islam is the Shahadah to believe in and to profess the unity of God and the messenger-ship of Muhammad: “There is no god but God, and Muhammad is the Messenger of God,” to which Shi’ites add “and ’Ali is the Master of the believers.” The Second pillar of Islam is the Salaat which is the performance of a continual round or prayers. For five times a day they are to perform ablutions with water or with sand/dirt if water is not available, face Mecca, and to recite a series of prayers and passages from the Qur’an, bowing and kneeling. The third pillar Zakat which is charity or almsgiving which the Qur’an links with prayer. A payer is only accepted if the person also shares it amongst others. At the end of the year all Muslims have to donate some of their accumulated wealth to needy Muslims this is to help decrease any inequalities in wealth and to prevent any personal greed. The fourth pillar is fasting, frequent fasting are recommended, but there is only one that is obligatory which is during Ramadan. This fast is to commemorate the first revelations of the Qur’an to Muhammad which requires a dawn to sunset abstention from food, drink, sexual intercourse, and smoking for the month to everybody who are beyond puberty, but not the ones that are sick, menstruating, or even nursing a child. The...

Words: 414 - Pages: 2

Free Essay

Zakat

...GLOSARI ZAKAT NO | ARABIC WORD | MALAY WORD | ENGLISH WORD | DESCRIPTION | 1 | نقود | DUIT/WANG | MONEY | HASIL YANG PERLU DIKELUARKAN ZAKAT. | 2 | ذهب | EMAS | GOLD | HASIL YANG PERLU DIKELUARKAN ZAKAT. | 3 | فضة | PERAK | SILVER | HASIL YANG PERLU DIKELUARKAN ZAKAT. | 4 | ثقل | BERAT | WEIGHT | BERAT BAGI SESUATU BARANG. | 5 | أوق | KURANG | LESS/OZ | TIDAK BANYAK. | 6 | نماء | TUMBUH | GROWTH | SESUATU YANG MEMBESAR. | 7 | دفع | BAYAR | PAY | MENGELUARKAN ZAKAT DENGAN KADAR YANG DITETAPKAN. | 8 | ثمار | BUAH-BUAHAN | FRUITS | SEJENIS TUMBUHAN. | 9 | معدن | LOGAM | METAL | BAHAN GALIAN YANG DIPEROLEH DALAM BUMI. | 10 | حلي | PERHIASAN | JEWELERY | BARANG KEMAS WANITA DARIPADA EMAS. | 11 | لؤلؤ | MUTIARA | PEARL | SESUATU YANG BERADA DI DASAR LAUTAN. | 12 | غنيمة | HARTA RAMPASAN | BOOTY | HARTA YANG DAPAT HASIL DARI PEPERANGAN. | 13 | زرع | TANAMAN | PLANT | SEJENIS TUMBUH-TUMBUHAN DARI SAYUR-SAYURAN. | 14 | ربح | UNTUNG | PROFIT | HASIL YANG DIPEROLEH. | 15 | رأس المال | MODAL | MODAL | SEJUMLAH WANG YANG DIKELUARKAN UNTUK MEMULAKAN PERNIAGAAN. | 16 | المرجان | KARANG | CORAL | BEMDA YANG MEMBENTUK DI DASAR LAUT. | 17 | قيمة | NILAI | VALUE | HARGA BAGI SESUATU. | 18 | الجواهر الكريمة | PERMATA | GEMS | SESUATU YANG BERADA DI DASAR LAUTAN. | 19 | سلع | BARANG | GOODS | BENDA ATAU SESUATU YANG BERBENTUK. | 20 | نصاب | NISAB | NISAB | KADAR YANG DIWAJIBKAN ZAKAT. | 21 | ركاز | BIJIH | ORE | SESUATU YANG BERADA DI DALAM PERUT BUMI. | 22 | يصرف | DIAGIHKAN...

Words: 405 - Pages: 2

Premium Essay

Five Pillars of Islam

...* What are the central beliefs of Islam, and how are they reflected in the “Five Pillars” (Mclnerney, 2003)? The central beliefs of Islam are the “Five Central Beliefs of Islam” -The first pillar of Islam is believing and professing the unity of God and the messenger ship of Muhammad. “The only god is God and Muhammad is the messenger.” (Living Religions, Sixth Edition, Pearson’s 2005 p.381) -The second pillar of Islam is the performance of a continual round of prayers. Faithful servants perform a ritual five times a day with water, dirt or sand. Servants recite prayers and passages Qur’an. (Living Religions, Sixth Edition, Pearson’s 2005 p.381) - -The third pillar of Islam is zakat, or spiritual tithing and almsgiving. Muslims have to donate at least two and a half percent of their yearly earnings to Muslims that are in need. (Living Religions, Sixth Edition, Pearson’s 2005 p.382) - The forth pillar of Islam is fasting. Repeated fasting is recommended but only one is required for Muslims the fast during Ramadan, commemorating the first revelations of the Qur’an to Muhammad. (Living Religions, Sixth Edition, Pearson’s 2005 p.383) * The fifth pillar of Islam is hajj, the pilgrimage to Mecca. All Muslims are expected to make the pilgrimage at least once in their lifetime. This is a series of symbolic rituals designed to bring the faithful closer to God. (Living Religions, Sixth Edition, Pearson’s 2005 p.383-385) * Which of the Five Pillars do you...

Words: 400 - Pages: 2

Free Essay

Explain Three Principles of Islamic Economic System?

...Islam views life as a compact whole and does not divide it into many separate and conflicting parts. The economic aspect is one of the most important parts of our life, while not being the whole of it. The Islamic system is balanced and places everything in its right place. Islam has given detailed regulations for the conduct of our economic life which concerns mainly the earning and use of wealth. Man needs bread to live but he does not live for bread alone. This means that earning and spending money is essential for our living, but we do not live only for this. We have a greater purpose in life. We are Allah’s agents (Khalifah) on earth. We not only have a body but we also have a soul and a conscience. Without our soul and conscience, we would be considered little more than animals. Everything in Islam is for the benefit and welfare of mankind. The economic principle of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly, and not as ‘cunning foxes’ fighting for as big a share of something as possible without regard for honesty, truth, decency, trust and responsibility. The principles of Islamic first is Rububiyyah. Tawhid Ar-Rububiyyah can be roughly translated as “Unity/Oneness of Lordship”. It pertains to Allah , and His lordship. We combine these to get the Islamic definition of rabb: Allah is the one who creates, sustains, and owns the entire creation. He alone is the Master, the Controller, the Nourisher, the one who creates...

Words: 487 - Pages: 2

Premium Essay

Shab-E-Mairaaj

...Importance of Shab-e-Mairaaj The Night of Ascension 27th Rajjab A brief description of the Mairaj Just one year before his exodus from Mecca to Madina, on the 27th night of Rajab, Prophet MuhammadPBUH had a unique experience in the history of all religions. The ProphetPBUH, accompanied by Angel Gabriel was taken for Night Journey-(ISRA) from Mecca to Aqsa Mosque in Jerusalem. There he led a congregation of the souls of all the earlier ProphetsPBUT. Then accompanied by Angel Gabriel he had the Ascension-(MAIRAJ) to Heavens. In the heavens he met again with the ProphetsPBUT individually. Then he was taken to see the Paradise and the Hell. He was shown what the fate of the humans would be after the Day of Judgment. How the Believers and the Righteous would be rewarded in the Paradise and also how the non-believers and the wicked would be chastised in the Hell. After seeing several important divine Signs (Ayaat) he was led by Gabriel to the Sid’rah (The Berry Tree). Gabriel stopped there. The ProphetPBUH proceeded from there to the Divine Proximity. The ProphetPBUH had the Vision of Allah, Lord of the Universe. Five obligatory prayers were ordained by the way of Thanksgiving. The ProphetPBUH was brought back to the earth and to his own place before the Dawn prayers in the same night. Importance of Shab-e-Mairaj The most important things we believe about the Mairaj are noted below: 1) The night journey (ISRA) and the Ascension (MAIRAJ) both did not take place spiritually” nor...

Words: 3512 - Pages: 15

Free Essay

Guaranteed Income Scheme

...Income Guarantee Schemes Amir Hasanat ECON 3505 - Critique of Capitalism Abstract Canada and the United States grapple with situations that necessitate income guarantee schemes but have not implemented the schemes. Income guarantee schemes are social welfare provisions in which governments offer incomes to the citizens to enable them meet their needs as long as they meet established conditions. The origin of this scheme lies in the understanding that every citizen has a right to wealth and property of the state. It is also based on the reality that not all citizens are capable of earning income or sustaining themselves. Income guarantee schemes are based on social welfare models, which conceptualize that it is the role of the government to cater for the needs of the citizenry. Therefore, income guarantee schemes undermine the ideals of capitalism that call for individual efforts for purposes of meeting needs. Income guarantee schemes have a long history of evolution, implementation, and success. Introduction The United States has a number of anti-poverty programs that guarantee economic support to the vulnerable in society (Economist, 2013, p. 1). Income guarantee schemes can be of great relief to a number of poverty stricken people in the country. In Canada, a four-year experiment with income generation schemes was successful but due to economic period of the time, the schemes were discontinued (Belik, 2011, p. 1). Though they intend to end poverty...

Words: 3623 - Pages: 15

Free Essay

Zakat

...DEFINISI ZAKAT Zakat adalah sebahagian daripada rukun Islam yang lima dan merupakan suatu ibadah dan tanda kesyukuran kita kepada Allah. Zakat dari segi bahasa bererti suci, bersih , berkat , bertambah dan subur manakala dari sesi istilah pula membersihkan harta dan membersihkan diri orang kaya daripada bersifat kedekut dan bakhil. Zakat pada istilah syarak pula bermaksud mengeluarkan harta tertentu mengikut syarat-syarat yang ditentukan oleh syarak, dengan kadar tertentu dan diberikan kepada golongan yang tertentu. Secara umumnya, zakat merupakan kadar kutipan yang diwajibkan ke atas harta dan hasil pendapatan di peringkat paling minima mengikut peraturan dan syarat-syarat tertentu untuk diagihkan kepada golongan tertentu yang bertujuan untuk menjamin biaya sosial masyarakat pada peringkat asas dan mengurangkan jurang pendapatan yang tidak seimbang sehingga mencapai satu tingkat hidup yang lebih baik di atas paras nisab. JENIS-JENIS ZAKAT a) Zakat Fitrah(erti) Zakat Fitrah ialah zakat diri yang difardhukan ke atas setiap individu lelaki dan perempuan muslim yang berkemampuan dengan syarat-syarat yang ditetapkan b) Kadar Fitrah(Kaedah) Kadar fitrah ialah satu gantang Baghdad bersamaan 2.70 kg beras atau senilai dengannya.Kadar ini berdasarkan ketentuan oleh Pihak Berkuasa Agama Negeri-Negeri. Waktu wajib harus dibayar apabila terbenam matahari akhir 30 Ramadhan sehingga terbit matahari esoknya manakala waktu yang paling afdal adalah sebelum sembahyang Hari Raya...

Words: 2738 - Pages: 11

Premium Essay

Zakat

...Economics of Zakat (ECON 4550) SECTION 1 GROUP MEMBERS: NAME | MATRIC NO | Muhammad Adib Asyraf bin Muhammad Shafiai | 1223883 | Muhammad Abid Zaidan bin Fauzi | 1224513 | Muhammad Alif bin Abd Aziz | 1225027 | INSTRUCTOR: DR. SOUFIANE BOUREGA INTRODUCTION In contemporary world today, people could earn income and salary in many different ways. People has become more creative than ever when it comes to create jobs and opportunities in order to increase their level of livings and survive in this world. Earning income in variety of means has led to discussion among Muslim scholars about the zakat that imposed upon it. How do we define earned income? How many categories are there? Is it legal to collect zakat from earned income? What is the opinions from scholars regarding this issue? And how we calculate it? It is really important to reach a strong ruling on this issue because earned income has become a major category of wealth in our time, including wages and salaries, professional income, gains from invested capital and so on. Now, we want to define earned income, we have also look at the technical meaning with related to zakat calculation. According to Investopedia.com, the definition of earned income is “active participation in a trade or business, including wages, salary, tips, commissions and bonuses”. By active participation means the income has been earned by the workers, in other words, the job has been done...

Words: 1653 - Pages: 7

Premium Essay

Intern Report

...Welfare Services of Islamic Banks Introduction Welfare is a condition of having good health, comfortable living and pleasant working conditions (Hornby). Hence, it can be said that welfare services are those which ensure conditions of having good health, comfortable living and working conditions, which are generally one's basic needs. Islam views work as the primary means of earning and acquiring income and wealth. As such, a well-known example may be cited here, Recall a beggar who approached the Prophet Muhammad (Pbuh) for alms, he (the beggar) was asked to bring what he had in his house. Accordingly, the man brought a blanket. The Prophet (Pbuh) asked him to sell it out and buy an ax, which could then be used to cut wood from the jungle to sell at the market for income. Thus, instead of begging, he could be self-reliant which is more dignified life than begging. Therefore, in the Islamic way of life, productive and remunerative work (employment and self-employment) and consequently real income becomes the primary source for buying necessities such as food, clothing, shelter, household goods, transportation, fuel and medicines. But if real income is not sufficient to purchase necessities of life, then welfare services become essential in a society to maintain the minimum standard of living of the people. In fact, in every society, there are many people who lack the necessary income and, consequently, face inadequate lifestyles due to unemployment and under-employment. Their...

Words: 4224 - Pages: 17

Free Essay

The Religion of Islam

...IMPLICATION OF AKHIRAT ON MAN’S LIFE. aimed to establish the various ways we can work efficiently to gain the favour of Allah (Subhanahu wa Ta’ala) and working for our Hereafter Individual. Believe in akhirat is listed in the six pillars of iman. That is important for an individual to believe in it.  There are many ways that we can establish to archive the benefit and working for akhirat. As an individual, first and foremost we should live our life as a muslim. Such as maintaining our salah since that one of the main acts which distinguishes a Muslim from a non-Muslim. The importance of prayer in Islam cannot be understated because it is one of the most essential elements of obtaining a place in Paradise. Our Prophet (Peace be upon him) has said what means: “The first matter that the slave will be brought to account for on the Day of Judgment is the prayer. If it is sound, then the rest of his deeds will be sound. And if it is bad, then the rest of his deeds will be bad.” Apart from the five pillars of Islam establishing good relationships with family and maintaining pure friendships can also help to promote good deeds. Other righteous deeds include being kind to others, being hospitable to family, friends and neighbours, not backbiting or judging others. We should rush to perform good deeds before something hinders us from doing so. Working towards bettering ourselves will help us improve our eman. There are many things we need to do as Muslims to ensure that our eyes, mouth...

Words: 1588 - Pages: 7

Premium Essay

Zakat Accounting

...(KENMS) DEPARTMENT OF ACCOUNTING ACC 4563: ZAKAT ACCOUNTING THE PRIORITY OF DISTRIBUTING THE ZAKAT AMOUNT TO THE EIGHT BENEFICIARIES BASED ON FOUR PHASES (4 FASA) Lecturer’s Name: ASSOC. PROF. DR. SITI NORMALA SHEIKH OBID Prepared By: ABDUL HADI BIN MOHAMAD, 0813783 MUHAMMAD AZFAR BIN KAMAR RUDDIN, 0811067 MOHD. ZAE’EM KHAN BIN MOHAMAD AZLAN, 0621747 Section No: 1 ABSTRACT This paper aims to study the distribution of zakat during the Prophet, companion, khalifah and contemporary time, and examine the priority among eight asnaf in distributing the zakat amount. The study was conducted by analyzing secondary data including books, journal, and article. The study revealed that effective and efficient of zakat administration including method and ways of distribution of zakat become important indicator on the successful Islamic era. Misused of zakat fund had leaded previous khalifah reign stumble. (Keyword: Prophet, khalifah, companion, contemporary time, zakat administration, eight asnaf) TABLE OF CONTENTS CONTENT | PAGE | Chapter 1: Introduction | | 1.1 Study of Background | | 1.2 Research Questions | | 1.3 Research Objectives | | Chapter 2: Literature Review | | Chapter 3: Methodology | | Chapter 4: Findings and Discussions | | Chapter 5: Conclusion | | 5.1 Summary and Implications | | 5.2 Limitations | | References | | CHAPTER 1 INTRODUCTION 1.1 STUDY BACKGROUND Zakat literally means growth and purification....

Words: 5651 - Pages: 23

Premium Essay

Five Pillars of Islam

...especially Muhammad. They believe God sees all and knows all, he is the creator, they believe in the Angels of God, the Qur’an, which is God’s book; his teaching and no other book expresses that, Day of Judgment, the afterlife, and the supremacy of God’s will. The Five Pillars are reflection of the beliefs because the focus is about professing the unity of God and the messenger of Muhammad. The faithful are expected to tell others of Allah so they can make inform decisions in their lives. They have to practice the religion through the Five Pillars of Islam, doing so allows them continuous insight into what the religion is teaching. Each pillar. The Five Pillars of Islam consists of daily prayers, fasting, belief and witness, Zakat or spiritual tithing and almsgiving, and hajj, which is the pilgrimage to Mecca. All of these are aimed toward having a closing walk or relationship with God. Although adhering to the Five Pillar of Islam is an essential part of the Islamic faith, I find that prayer five times a day is not an easy task. You really have to be committed and faithful in your spiritual journey to practice this ritual. You would also have to know the Qur’an extremely well because you have to recite prayers and passages from the Qur’an in order to do the daily prayers. The other issue I would have is finding a place of solitude when praying. This is not an easy thing to maneuver especially when working in busy offices and especially when working in a...

Words: 294 - Pages: 2

Free Essay

The Five Pillars of Islam

...uniqueness of Allah, the need to care for the poor, orphaned and widowed, and the inevitability of the final judgement. But the entire teachings of the Muslim religion focus on the five basic elements also known as the Five Pillars of Islam. The first pillar of Islam (the Shahadah) is believing and professing the unity of God and the messengership of Muhammad. There is no God but God and Muhammad is the messenger of God. The second Pillar is the performance of a continual round of prayers. Five times a day, the faithful are to perform ritual ablutions with water ( or sand or dirt if necessary) face Mecca and recite a series of prayers and passages form the Qur’an bowing and kneeling. The third pillar is spiritual tithing and Alms Giving (Zakat). At the end of the year all Muslims must donate at least two and a half percent of accumulated wealth to needy Muslims. This provision is designed to help decrease inequalities in wealth and to prevent personal greed. In addition Muslims in general are also encouraged to donate and give whatever amounts each can afford not only to mosque, the place of worship, but also for the support of the poor of the community. The fourth pillar is fasting (swam). Frequent fasts are recommended to Muslims, but the only on that is obligatory is the fast during Ramadan, commemorating the first revelations of the Qur’an to Muhammad. During Ramadan all who are beyond puberty, but not infirm or sick or menstruating or nursing children are required from...

Words: 566 - Pages: 3