- Debt Trading [ Bai’ Dayn ]
A transaction that involves the sale and purchase of securities or debt certificates that conforms with Syariah. Securities or debt certificates will be issued by a debtor to a creditor as an evidence of indebtedness.
- Open-Bidding Trading [ Bai’ Muzayadah ]
An action by a person to sell his asset in the open market through a bidding process among potential buyers. The asset for sale will be awarded to the person who has offered the highest bid/price. This is also known as the sale and purchase transaction based on tender.
- Guarantee [ Kafalah ]
A contract of guarantee whereby a guarantor underwrites any claim and obligation that should be fulfilled by an owner of the asset. This concept is also applicable to a guarantee provided on a debt transaction in the event a debtor fails to fulfill his debt obligation. The same definition can be applied for Dhaman.
- Ownership Right [ Hak Tamalluk ]
An asset in the form of ownership rights as classified by Syariah which are tradable.
- Remittance [ Hiwalah ]
A contract that allows a debtor to transfer his debt obligation to a third party.
- Rebate [ Ibra’ ]
An act by a person to withdraw his rights to collect payment from a person who has the obligation to repay the amount borrowed from him.
- Pre-Agreed Contract [ Ittifaq Dhimni ]
A sale and re-purchase of the underlying asset of which the prices are agreed by the parties prior to the completion of the contract. This is an external agreement which must be reached before the contract can be concluded to allow for the bidding process ( Bai` al-Muzayadah ) to take place.
- Collateral [ Rahn]
An act whereby a valuable asset is made as a collateral for a debt. The collateral will be utilised to settle the debt when a debtor is in default.
- Fee [ Ujrah ]
A financial charge for the utilisation of services or manfaat . In the context of today’s economy, it can be in the form of salary, wage, allowance, commission and alike.