Our Shariah Compliance
Learn how shariah compliance is at the heart of ICFAL’s operation and how ICFAL’s finance is different from conventinal banks.
ICFAL’s Shariah Compliance
ICFAL and it’s members have an unwavering committment to shariah compliance which is one of the core purpose of ICFAL’s existence. ICFAL has been serving the community since 1998 and has continued to keep shariah compliance and faith in every action it partakes. Learn how we in fact thrive in Shariah Compliance.
How ICFAL thrives in Shariah Compliance
Source of funding
ICFAL's Shariah Compliance practices start with the source of funds that finances our products. All our finances come from the fund that is pooled/invested by members like yourself from the community.
This gives us and you the peace of mind that the money is not sourced from a 3rd party provider or a tainted source resulting in a more tranparent finance process.
Understanding Musharakah Contract
Musharaka is a partnership contract within the bounds of Shariah. It features two parties who contribute capital (for a business) and share the profits based on a pre-agreed ratio. The ratio extends to sharing of losses between the parties.
At ICFAL, we implement a mode of Musharakah known as the Diminishing Musharakah. Here the principles of contribution and sharing of profit remain. The key difference comes in the time factor where there is a set time frame to which the partnership continues. You will be renting out our remaining portion of the house during the contracted period. Over the course of the financing period, the majority share held by ICFAL will be sold gradually to you. Hence the name *Diminishing Musharakah* as the share of our partnership slowly diminishes into your sole ownership.
Understanding Murabaha Contract
Murabaha entails declaring the profit that is to be earned from the financing. The borrower knows how much is to be paid in addition to the cost of the car. You might think, 'isn't it the same as an interest from the bank?'. No, because the determined amount is a mark-up on the asset. Not the additional percentage to be paid because you took X amount. It can be viewed as trade since the car is bought by the financier to be re-sold to you with a mark-up. This is allowed in Islam.
ICFAL’s Shariah Board
All of ICFAL's processes are screened by our Internal Shariah Board. All our financing & investments are vetted thoroughly before given a green light to proceed. The Shariah Board adheres to a zero-tolerance policy for prohibited elements that makes us a 100% Shariah Compliant.
