Islamic Finance Primer

A quick introduction to Islamic finance principles and how they apply to the Islamic Open Finance™ platform.

Core Principles

Islamic finance is governed by Shariah (Islamic law), which prohibits:

1. Riba (Interest) - Any predetermined return on money lent
2. Gharar (Uncertainty) - Excessive uncertainty in contracts
3. Maysir (Gambling) - Speculative transactions
4. Haram Activities - Investments in prohibited industries

Shariah-Compliant Contracts

Islamic Open Finance™ supports these contract types:

Murabaha (Cost-Plus Sale)

A sale where the seller discloses the cost and adds a markup:

const contract = await iof.contracts.create({
  type: "MURABAHA",
  counterparty: { id: "cpty_123" },
  terms: {
    cost: 100000,
    markup: 5000,
    paymentSchedule: "monthly",
    tenure: 12,
  },
});

Ijarah (Leasing)

An asset leasing arrangement:

const contract = await iof.contracts.create({
  type: "IJARAH",
  asset: { id: "asset_456" },
  terms: {
    rentalAmount: 2000,
    frequency: "monthly",
    duration: 24,
  },
});

Musharakah (Partnership)

Joint venture profit-sharing:

const contract = await iof.contracts.create({
  type: "MUSHARAKAH",
  partners: [
    { id: "partner_1", share: 60 },
    { id: "partner_2", share: 40 },
  ],
  terms: {
    profitRatio: { partner_1: 50, partner_2: 50 },
    lossRatio: { partner_1: 60, partner_2: 40 },
  },
});

Sukuk (Islamic Bonds)

Asset-backed certificates:

const sukuk = await iof.sukuk.issue({
  type: "SUKUK_IJARAH",
  underlyingAsset: { id: "asset_789" },
  totalValue: 10000000,
  certificateCount: 1000,
});

Compliance Integration

All contracts are automatically validated for Shariah compliance:

const validation = await iof.compliance.check({
  contractId: "contract_123",
  rules: ["shariah", "jurisdiction"],
});

// {
//   isCompliant: true,
//   checks: [
//     { rule: "no_riba", passed: true },
//     { rule: "asset_backed", passed: true },
//     { rule: "transparent_terms", passed: true }
//   ]
// }

Next Steps

• Contracts API - Create and manage contracts
• Compliance Rail - Shariah compliance checks
• Getting Started - Begin integration