Download Download attachment

PRE-EXAM QUESTIONS
PES
RE-DISTRIBUTION OF WEALTH
Q. 14. How is wealth accumulated and
mobilized in Islam?
Q.15. What do you understand by the term
compulsory sector? How can this sector
contribute to the development of an economy?
Q.16. What do you understand by the term
voluntary sector? How can this sector
contribute to the development of an economy?
“The Global University in Islamic Finance”
Compulsory Zakah
 Definition of zakah.
 Objectives of zakah
 Why it is compulsory?
 Who must pay the zakah and to whom to be
distributed to?
 Its types and role in the economy?
“The Global University in Islamic Finance”
Types of Zakah
1. Zakah Fitr
2. Zakah Al-Mal (on wealth)
3. Ushr (for agricultural land)
“The Global University in Islamic Finance”
2. Zakah al-Mal (Cont.)
Zakah al-Mal can be subdivided into Zakah on:
 Business
 Rental Income
 Personal Income
 Savings
 Gold and Silver
 Shares
 Livestock
 Crop (ushr)
“The Global University in Islamic Finance”
Jiziah and Kharaj
Non Muslims who live in a Muslim country
have to pay:
Jiziah
Kharaj
“The Global University in Islamic Finance”
Jizyah and Kharaj




Definition of jizyah and Kharaj
Why it is compulsory?
Who must pay the Jizyah and Kharaj?
Its types and role in the economy?
“The Global University in Islamic Finance”
Voluntary
Sadaqah
 Definition of Sadaqah
 Its objective and its role in the society
“The Global University in Islamic Finance”
Voluntary
Takaful/Ta'awun
 Definition of Takaful
 Its objective and its role in the society .
“The Global University in Islamic Finance”
What are the Benefits of
Takaful/Ta'awun?
1. Fulfils the social obligations towards community and
family.
2. Enables financial assistance for the unfortunate and
needy.
3. Avoidance of Al-Riba, Al Maysir and Al Ghirar and
similar prohibited elements within financial dealings.
4. Promotes moral values, ethical dealings and full
disclosure in all its business activities and operations.
5. Protection of lifestyle.
6. Security for the family and the group against misfortune.
7. Through "Tabarru" donations it allows Participants to
achieve self-purification and peace of mind.
“The Global University in Islamic Finance”
Voluntary
Waqf
 Waqf means to stop, to withhold the thing (e.g. the
house is withheld for the mosque, which means that the
revenue of the rent of the house is withheld to spend on
the mosque).
 Waqf is a financial charitable institution established by
withholding one's property to eternally spend its revenue
on fulfilling certain needs depending on the choice and
conditions made by the founder
 Once the property been created as waqf, it can never be
given as gift, or to be inherited, or sold. It belongs to
Allah and the corpus/waqf property always remains
intact.
“The Global University in Islamic Finance”
Waqf in the Hadith
‫(إذا مات االنسان انقطع عمله إال من ثالث؛ صدقة جارية‬
.)‫وعلم يُنتفع به وولد صالح يدعو له‬
The Prophet (s) said: When a man dies his acts come to an end,
except three things, recurring charity, knowledge (by which
people benefit), and pious offspring, who pray for him.
“The Global University in Islamic Finance”
Kinds of Waqf
There are two kinds of Waqfs:
 Immovable property
Includes land, fields, farms, or buildings such as
mosques, schools, hospitals, or basic
infrastructures such as bridges, roads, water
supply etc.
 Movable property
Includes cattle, books, money/cash, crops and
weapons, shares of Joint-Stock Company, etc.
“The Global University in Islamic Finance”
DEFINITION OF CASH-WAQF
The terms, waqf, habs, tasbil mean ‘to stop,
to restrain’ i.e. devoting in the way of Allah
“The confinement of an amount of
money by a founder(s) and the
dedication of its usufruct in
perpetuity to the welfare of society”
“The Global University in Islamic Finance”
Beneficiaries of Cash-Waqf
• Waqf Khayri, Waqf ‘Am (Public Waqf) is a cash
endowment made by the founder to support the general
good and welfare of society, the poor and the needy.
 Waqf Ahl, Waqf Khas al-waqf al-dhurri and waqf ‘al-awlad
are all the same and refer to family waqf/specific waqf.
 Waqf Mushtarak (combined Public and Family Waqf) is a
cash waqf created by a founder to support both the public
and his family or specify certain persons, group of people or
needy areas.
“The Global University in Islamic Finance”
Characteristics of Cash-Waqf
 Irrevocability: This means that once the founder created the
cash-waqf he cannot revoke it back, however, he/she can
benefit from its investment/revenue.
 Perpetually: Once the cash-waqf is created it must be
perpetual. This will ensure regular and continual support from
the cash-waqf to financing needy areas in the Muslim society.
 Inalienability this means that once cash is created as waqf no
one can ever become the owner to alienate it, i.e. it becomes a
‘frozen asset’. It cannot be the subject to be given as gift,
inheritance, or any alienation whatsoever.
“The Global University in Islamic Finance”
Investment of Cash-Waqf
• Mudarabah
(partnership)
has
been
recommended by earlier Muslim jurists.
• The latest fatwa issued by Fiqh Academy
Islam, agreed that cash waqf
can be
invested in any shari’ah compliant mode of
investment,
such
as
Mudharabah,
Murabaha, BBA, Musharakah, Istisna, etc.
“The Global University in Islamic Finance”
Can Non-Muslim Create Cash-Waqf?
The Shafie School permitted the creation of waqf from a non -Muslim even
if it is for the benefit of a Mosque. He based his opinion on the following
hadith :
‫ قال رسول هللا (ص) " ان‬:‫هللا عن انس بن مالك رضي هللا عنه قال‬
‫ال يظلم مومنا حسنة يعطى بها في الدنيا ويجزى بها في االخرة‬
‫واما الكافر فيطعم بحسنات ما عمل بها هلل في الدنيا حتى اذا افضى‬
‫”الى االخرة لم يكن له حسنة يجزى بها‬
The Prophet (pbuh) said “Allah will not oppress any Muslim from his good
deeds, as he gives it in this world and he will be rewarded in this world and
in the hereafter. But for the non- Muslim he will be rewarded for all his good
deeds only in this world”
“The Global University in Islamic Finance”
II. MODERN APPLICATIONS OF CASH
WAQF
The last two decades witness the revival of the
institution of waqf and the creation of movable waqf i.e.
cash waqf in almost all Muslim countries and Muslim
minority countries.
The followings will highlight nine different cash-waqf
models that have been practiced in 15 countries and in 3
international organizations.
“The Global University in Islamic Finance”
The Role of Waqf in Development
The Waqf system had played a vital role in
achieving development in the following areas:
 Reduces government expenditure
 Solve the problem of unemployment
 Creates cities and commercial activities
 Creates financial institutions.
 Enhances the different sectors in the Muslim
countries, agricultural, industrial, social and
service sectors.
“The Global University in Islamic Finance”