Shariah compliance
Shariah compliance refers to the adherence to Islamic law as derived from the Quran and Hadith. In the context of finance and business, it means ensuring that practices and products align with ethical and moral guidelines set forth by Islam. This includes avoiding activities considered haram (forbidden), such as gambling, usury (charging excessive interest), and investing in businesses associated with alcohol or pork. Shariah-compliant finance promotes social responsibility and fair dealings, aiming to contribute positively to society while adhering to Islamic values. Institutions often engage Shariah scholars to ensure their operations meet these requirements.
Additional Insights
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Shariah compliance refers to adherence to Islamic law, which derives from the Quran and Hadith (sayings of the Prophet Muhammad). In finance and business, it means ensuring that practices align with ethical and legal principles of Islam. For instance, it prohibits interest (riba), gambling (maysir), and investing in harmful activities (haram). Instead, it encourages profit-sharing, risk-sharing, and investment in socially responsible ventures. Organizations aiming for Shariah compliance usually seek guidance from qualified scholars to ensure their operations and products meet these standards. This approach aims to promote fairness, justice, and accountability in economic transactions.