Mahyuddin Khalid emkay@salam.uitm.edu.

my

ISLAMIC BANKING AND FINANCE TO CTU351 INTRODUCTION

COURSE BACKGROUND
2

Course code
Course name Level Credit hour Contact hour

:
: : : :

CTU351
Fundamentals of Islamic Banking Diploma 4 4

Part
Status Prerequest

:
: :

5
CORE

COURSE OUTCOMES
3

At the end of this course, students should be able to:

1.

2.

3.

Explain the essentials of Shariah-compliant banking system. Differentiate Islamic Banking System (IBS) against the conventional system. Evaluate the modus operandi of Shariahcompliant investments/instruments and financing facilities under the Islamic Banking System.

COURSE DESCRIPTION
4

This is an introductory course to Islamic Banking for students to understand the fundamentals of Shariah-compliance banking system. Students will be introduced to the concepts and principles adopted/adapted by Islamic banks to comply with the Shariah requirements. The course will equip students with the basics to distinguish between Islamic and conventional banking system, expose students to the modus operandi of selected facilities/instruments offered by Islamic banks and assist them in evaluating the value proposition promoted by Islamic Banking System.

SYLLABUS CONTENT
5

Overview of Financial System

Financial Markets and Institutions Roles of Banks as Financial Intermediaries

Framework of Islamic Financial System

Islamic Banking, Takaful, Islamic Capital Market (ICM) and Islamic Interbank Money Market (IIMM) Historical Development of Islamic Banking Structure of Islamic Bank

Compliance to the Scheme of Shariah Laws

3.1 Primary and Secondary Sources of Shariah Laws 3.2 Aqidah, Akhlaq, Shariah ( Ibadat & Muamalat ) 3.3 Ethics in Islamic Financial System

SYLLABUS CONTENT
6

Principles of Islamic Banking

Investment and Financing of Halal (Permissible) Activities Profit and Loss Sharing vs. Lender-Borrower Relationship Trade-based Financing vs. Interest-based Investments/Loans Prohibition of Riba, Gharar (unnecessary risk) and Maysir (gambling / speculation) Payment of Zakat

Sources of Funds - Savings/Investments and the underlying Shariah Concepts

Al-Wadiah/Al-Mudarabah Savings Accounts Al-Wadiah/Al-Mudarabah Current Accounts Al-Mudarabah General Investment Accounts (MGIA) Al-Mudarabah Special Investment Accounts (MSIA)

SYLLABUS CONTENT
7

Application of Funds - Financing Facilities and the underlying Shariah Concepts

Home/Property Financing (Bai Bithaman Ajil / BBA) Home/Property Financing (Musharakah)(Musharakah Mutanaqisah) Motor Vehicle Financing (Al-Ijarah) (Al-Ijarah Thumma alBai) Personal Financing (Bai al-Inah) Credit Cards (Al-Wadiah)( Bai al-Inah)(Qard al- Hasan) Project Financing (Al-Mudarabah) (Al-Musharakah) Acquisition of Assets (Al-Bai Bithaman Ajil) Working Capital Financing (Al-Murabahah ) Letter of Credit (Wakalah) (Musharakah) (Murabahah) Islamic Accepted Bills (Bai` al-Dayn) Islamic Export Credit Refinancing (IECR)

SYLLABUS CONTENT
8

7. Treasury
Islamic

Inter-Bank Money Market Foreign Exchange Trading

Other Services
Agency

(Al-Wakalah) Guarantee (Al-Kafalah) Commission (Jualah) Fee (Al-Ujr) Remittance (Al-Hiwalah)

COURSE ASSESSMENT
9

Continuous Assessment 50%

Test

Assignment
Presentation

15% 15% 20%

Final Exam
Total

50%
100%

REFERENCES
10

Main Reference:

Rosly, Saiful Azhar. 2005. Critical Issues on Islamic Banking and Financial Markets. Kuala Lumpur: Dinamas Publishing. Haron, Sudin & Shanmugam, Bala. 2001. Islamic Banking System: Concepts & Applications. Malaysia: Pelanduk Publications. Islamic Banking Practice from The Practitioners Perspective. 1994. Kuala Lumpur: Bank Islam Malaysia Berhad. Usmani, Muhammad Imran Ashraf. 2002. Meezanbanks Guide to Islamic Banking. Karachi: Darul Ishaat. Gafoor. A.L.M, Abdul. 2005. Interest, Usury, Riba and The Operational Costs of a Bank. Kuala Lumpur: A.S.Noordeen Shanmugam, B., Perumal.V., & Ridzwa.A.H. (Eds.). 2004. Islamic Banking: An International Perspective. Serdang: Universiti Putra Malaysia Press.

Additional References:

FORMAT OF ASSIGNMENT
11

Font:
Use

Times New Roman Size: 12

Spacing:
Double

10-15 pages Primary references:

THREE

books or FIVE articles from journal

REFERENCING
12

Use the APA (American Psychological Association) referencing system. References in the text should include authors name, publication year and page number if available. Examples of citations in text :

One author (Bean, 1992, p. 33); two authors (Graham & Krugman, 1989); more than two authors (Bernanke et al., 1999) or Bean (1992, p. 33), Graham and Krugman (1989), and Bernanke et al. (1999).

In the case of more than two authors, the first citation includes all the last names of the co-authors. The above examples only apply for subsequent citations. References must be listed in alphabetical order of first author at the end of the paper.

REFERENCING - EXAMPLE
13

Article in Journal:
Dornbusch,

R. (1976), Exchange Rate Expectations and Monetary Policy, Journal of International Economics, 6, 231-44.

Chapter in Book:
Dornbusch,

R. (1977), The Theory of Flexible Exchange Rate Regimes and Macroeconomic Policy, In J. Herin, A. Lindbeck & J. Myhrman (Eds.), Flexible Exchange Rates and Stabilization Policy (pp. 123-43), Boulder, CO: Westview Press.

REFERENCING - EXAMPLE
14

Books:

Helpman E., & Krugman, P. (1985). Market Structure and Foreign Trade. Cambridge: MIT Press. Mishkin, F.S. (2004). The Economics of Money, Banking and Financial Markets (7th ed.). Boston: Addison Wesley Electronic reference formats recommended by the American Psychological Association. (2000, October 12). Retrieved October 23, 2000, from http://www.apa.org/journals/webref.html Eid, M. & Langeheine, R. (1999). The measurement of consistency and occasion specificity with latent class models: A new model and its application to the measurement of affect. Psychological Methods, 4, 100-116. Retrieved November 19, 2000, from the PsycARTICLES database

Electronic Sources:

*If information is retrieved from an aggregated database, and the name of the database is provided and sufficient, no address is needed (as in the second example for electronic sources)*

TABULATION OF MARKS
15

Introduction = Facts = Explanation = Conclusion = Reference = Total =

1% 3% 3% 1% 2% 10%

FORMAT OF PRESENTATION
16

Format:
Power

point presentation

Time of presentation:
30

minutes minutes

Q & A session:
20

TABULATION OF MARKS
17

Explanation of facts = Q&A = Creativity = Time management = Total =

4% 4% 1% 1% 10%

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END