CIFE Islamic Banking Products 2

Question 1

What is Istisna'a financing used for in Islamic banking?

Accepted Answer

Manufacturing or construction financing where the bank commissions the creation of an asset to customer specifications with deferred delivery and payment

Answer

Only for real estate purchases

Answer

Short-term trade financing only

Answer

Personal consumer financing

Question 2

What is Salam (forward sale) and what conditions make it Sharia-compliant?

Accepted Answer

An advance payment sale where full price is paid upfront for delivery of specified goods at a future date, with quantity, quality, and delivery date precisely defined

Answer

Any forward contract is Salam

Answer

A sale on credit with deferred payment

Answer

A spot sale of existing goods

Question 3

What is Wakala (agency) in Islamic banking?

Accepted Answer

An agency contract where one party (wakil/agent) acts on behalf of another (muwakkil/principal) for a fee or commission

Answer

A type of partnership

Answer

A profit-sharing investment

Answer

A sale contract with markup

Question 4

What is an Islamic credit card and how does it work?

Accepted Answer

It uses structures like Bai al-Inah, Tawarruq, or Ujrah where fees replace interest charges, with a Sharia-compliant fee structure

Answer

It charges interest like conventional cards

Answer

Islamic credit cards do not exist

Answer

It only allows cash payments

Question 5

What is the concept of Islamic windows in conventional banks?

Accepted Answer

Dedicated departments within conventional banks that offer Sharia-compliant products, with segregated funds and independent Sharia oversight

Answer

Physical windows in bank branches

Answer

Any conventional bank product labeled as Islamic

Answer

Online-only Islamic banking services

Question 6

What is Diminishing Musharaka and how is it used for home financing?

Accepted Answer

A joint ownership arrangement where the bank's share is gradually bought by the customer through rental payments plus purchase installments until full ownership transfers

Answer

A standard mortgage with declining balance

Answer

A lease-only arrangement

Answer

A fixed-rate financing product