Transactions in Islamic banks are governed by Islamic Shari’a and jurisprudence, as extracted from the Holy Quran and prophetic traditions.
The values guiding Islamic finance are the same as those of Islam. These principles are inspired from ‘transactional jurisprudence’. The rules and practices of ‘transactional jurisprudence’ are taken from the Holy Quran; the prophetic traditions;
The basic rules of Islamic banking are:
Any form of interest, either paid or collected, is prohibited.
Any investment in activities such as alcohol, pork, weapons, immoral businesses or transactions against the tenets of Islam is prohibited.
Any transaction that includes fraud or gambling is prohibited.
Sharing loss, profit and risk as per the agreement of partners.
A trader should own and possess the items to be sold.