CISI UAE FRR Islamic Finance Regulations 2

Question 1

What is the concept of Mudaraba in Islamic banking?

Accepted Answer

A profit-sharing partnership where one party provides capital and the other provides expertise and management

Answer

A leasing arrangement where the bank retains asset ownership throughout

Answer

A cost-plus sale arrangement used for commodity financing

Answer

A joint equity venture where all parties contribute capital and share management equally

Question 2

Under Sharia law, which concept refers to excessive uncertainty or ambiguity in a contract and is prohibited in Islamic finance?

Accepted Answer

Gharar (excessive uncertainty)

Answer

Riba (interest)

Answer

Maysir (gambling)

Answer

Haram (prohibited activity)

Question 3

Which Islamic finance contract involves the bank purchasing an asset and leasing it to the client for agreed periodic rental payments?

Accepted Answer

Ijara

Answer

Murabaha

Answer

Istisna

Answer

Wakala

Question 4

What is Musharaka in Islamic banking?

Accepted Answer

A joint venture or partnership where all parties contribute capital and share profits and losses proportionally

Answer

A Sharia-compliant insurance pool contribution

Answer

A deferred payment sale structure for real estate

Answer

A commodity trading arrangement used for liquidity management

Question 5

Under UAE Islamic banking regulations, how must an Internal Sharia Supervision Committee (ISSC) handle income identified as non-Sharia-compliant?

Accepted Answer

Donate it to charitable or social welfare causes

Answer

Refund it to the clients who paid the charges

Answer

Report it to the CBUAE for collection into a regulatory fund

Answer

Offset it against the bank's operational expenses

Question 6

What is a Wakala contract in the context of UAE Islamic finance?

Accepted Answer

An agency contract where one party acts on behalf of another for a predetermined fee

Answer

A form of Islamic mortgage financing for residential property

Answer

A profit-sharing deposit structure for investment accounts

Answer

A commodity Murabaha arrangement for short-term liquidity

Question 7

Which Islamic finance contract is specifically designed for financing construction or manufacturing projects where delivery occurs in the future?

Accepted Answer

Istisna, a manufacturing or construction contract with installment payments

Answer

A spot Murabaha for immediate asset acquisition

Answer

An Ijara Mawsoofa fi al-Dhimma forward lease

Answer

A Musharaka Mutanaqisa diminishing partnership