Shariah-Compliant Loan

A Shariah-compliant loan is financing structured to adhere to Islamic principles, avoiding interest (riba), speculation (gharar), and forbidden activities, using profit-sharing, leasing, or cost-plus structures.


Prohibited ElementsExclusion
Riba (interest)Fixed return on capital
Gharar (uncertainty)Ambiguous contract terms
Maysir (gambling)Speculative transactions
Haram activitiesProhibited business involvement
Permitted StructuresMechanism
MurabahaCost-plus sale
IjaraLease-to-own
MusharakaPartnership financing
Diminishing MusharakaProgressive ownership
Certification RequirementsValidation
Shariah boardScholar committee approval
FatwaReligious ruling
Annual auditOngoing compliance verification
CertificateIssued to borrower

Related Terms

Islamic FinanceIslamic MurabahaDiminishing MusharakaIslamic Finance CertificateIslamic Finance, Ijara

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