Islamic Insurance (Takaful) and Stocks (Sukuk)
Is it lawful to hold shares in a local project guaranteed by the government to offer a minimum on returns, at least 6% on capital invested, in the case that profits are realized, in addition to the government’s guaranteeing the security of the initial principle invested? Furthermore, in the event that profits exceed this percentage, then they will go to the shareholders, regardless of how high these may be?
This is a contract signed under the Musharaka certificates. The government here plays the role of the inviter whereby it invites the general public for projects through tenders advertised in the public domain. The winning contractor is awarded certificates. The government and the contractor enter into an agreement that is mutually binding. In this case, the agreement is entered into between the government and the project contractor. The contractor in this case is the certificate holder. The contractor is the owner of the assets of the partnership. The contractor rakes in the profits and shoulders the losses whenever. The contractor is entitled to his or her share of the profits if any arises. The Sharia laws do not the contractor to earn whatever interests in whichever project (Iqbal&Mirakhor, p. 25). However, in case any profits are realized, each partner in the contract is entitled to their own share of profits if any. It is not permissible for the government to guarantee security of the initial capital or principal invested since in any case of profit or loss, each partner should shoulder equally.
Topic: Insuring Cash. Checks and Trade Bills.
Is it lawful for a bank to insure valuable property like sums of cash, checks, and trade bills against fire, loss, theft and destruction?
It is permissible and is considered lawful for a bank to insure property like sums of cash, checks and trade bills against fire, loss, theft and destruction. In a banking institution such valuable items are insured based on the condition that the amount of cash paid for the Takaful coverage is in tandem/commensurate with the sums if the cash, checks and trade bills. Such valuable items are stored in a safe in a bank to ensure that the payments in terms of benefits to be made by the Takaful Company is actually maintained at a rate that is proportional to the actual loss that has been incurred and no more (Karim, Abdel & Archer, p. 110).
Iqbal, Zamir, and Abbas Mirakhor.An introduction to Islamic finance: Theory and practice.
Vol. 687.John Wiley & Sons, 2011.
Karim, Rifaat Ahmed Abdel, and Simon Archer.Islamic finance: the new regulatory
challenge. John Wiley & Sons, 2013.