Islamic Instruments basics
Instruments is considered to be practical solution in this new age, regarding commerce and investment, this solution is one of the aspects that shows how flexible the Islamic shari’a is with all solutions it provides in economy to be compatible with the rules of shari’a and guarantee rights. Instruments are based on some basics like:
- The first rule in instruments system is participation in profit and loss, all parties participate in loss and profit, instruments holders gain their share of the profit regardless the type of investment, as the share is set previously with specific percentage mentioned in the contract, and they take their share in the loss too.
- Instruments are certificates or securities equal in value, in other words, the financial value of each instrument is equal the other; they are common shares in the assets of a project.
- The outcome of the instruments should be invested according to the Shari’a rules; it should be used in projects compatible with the Islamic shari’a.
- Instruments’ holders take all the consequences which may be represented in investment expenses or a drop in the instrument’s value or even the loss.
- Instruments’ holders are participants in the project asset; instruments are stable to some extent.
Instruments system opens the door for serious investment which want to be compatible with the Islamic Shari’a and build strong economy away from suspicions.