Study Notes

Riba (Interest): This is the most well-known prohibition. Riba refers to any excess or predetermined charge over and above the principal amount loaned, whether simple or compound. In Islam, money is seen as a medium of exchange, not a commodity to be traded for profit. Instead of interest, Islamic finance uses profit-sharing, mark-up, or lease payments.
Gharar (Excessive Uncertainty/Speculation): This proscribes transactions with excessive uncertainty or ambiguity concerning the subject matter, price, or terms. It aims to prevent exploitation and ensure transparency. Contracts should clearly define rights and obligations.
Maysir (Gambling): This refers to any activity where wealth is acquired purely by chance, without productive effort or contribution. This includes speculative derivatives or contracts that resemble gambling.
Haram Activities (Unethical Investments): Investments or involvement in industries considered 'haram' (forbidden) are prohibited. This includes businesses related to alcohol, pork products, pornography, conventional weapons, and conventional banking/insurance.
Short Selling: Generally discouraged due to elements of gharar (not owning the asset) and potential for manipulation.

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Course Syllabus