There was a famous television advert in the UK run by a varnish company. It used the strapline ‘it does what it says on the tin’. The strapline caught on and came to be used to express a job well done.
Mufti Taqi Usmani’s (Karachi, Pakistan) book does exactly what it says on the tin (or in this case, the book cover). The 246-page book was written in 1998 still holds relevance today. In fact, today, the book may be even more relevant for Western Muslims than when it was first published. Recently, there has been an explosion of Islamic financing products, such as Home Purchase Plans, which are often based on Musharaka principles. An Introduction to Islamic Finance deals with issues such as Musharaka finance and a lot more.
The book introduces readers to different aspects of Islamic finance in self-contained sections. In total, there are seven main sections:
1. Preliminary Points
2. Musharaka
3, Murabaha
4. Ijarah
5. Salam and Istisna
6. Islamic Investment Funds
7. The Principle of Limited Liability
There is also an opinion piece on the performance of Islamic banks at the end.
Of course, the MuslimShareTrader website is primarily interested in stocks. And Mufti Taqi Usmani does dedicate a section to stock. However, the section on stocks is not comprehensive and omits a discussion on an all-important topic: zakat.
Nonetheless, Mufti Taqi Usmani brings thought-provoking discussions to the reader’s attention. For instance, on the topic of potential impermissible income, he entertains the idea that there is such a thing as ‘incidental income’ and ‘intentional income’. Similarly, he grapples with the idea of intention and accountability. This may sound like a heavy read, but Mufti Taqi is an expert at converting complex ideas into easy-to-understand ideas that the average Muslim can understand (and this book is aimed at such a reader).
The section on stocks starts off with a brief explanation of what stocks are and how they work, before dealing with ikhtilaf (difference of opinion) issues. I appreciate how Mufti Taqi Usmani took into consideration the views of other scholars with respect, yet explained why he held a different opinion.
Following this, the discussion moves onto the conditions or rules that Muslims need to adhere to before they can own stocks.
There is an interesting condition (the requirement of ‘illiquid assets’) that the Mufti discusses at some length. However, this very condition is no longer a requirement according to AAOIFI.
And talking of the AAOIFI, there is a condition which it stipulates that is not covered in the book: the 30% debt:market cap rule.
All in all, this is a very good book to read and hold on to for reference purposes. As times move on, there is often a need for a new set of guidance, which can be provided by more contemporary scholars. Nonetheless, the world of Islamic Finance is indebted to Mufti Taqi Usmani for his pioneering work in this field. Whilst this book cannot offer guidance on the very latest developments, such as Non-fungible tokens, it’s still a great read and a very useful book to understand foundational principles.
An Introduction to Islamic Finance is one of the core books that is used in the 30 Day Trading Programme. To enrol, click here.
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