Ethical & Sharia Compliant

Ethical and Sharia FAQ

1. What is Islamic finance?

   Islamic finance refers to a financing system which is modelled on Islamic principles such as no interest-based products, transparency, fairness, equitable products, manageable debt products, risk-sharing products and many other noble concepts. Islamic finance includes Islamic banking, Islamic capital markets, Islamic money markets, Islamic insurance (Takaful), Islamic microfinance and Islamic wealth management firms.

2. What is Sharia?

   In Arabic, Sharia means the clear, well-trodden path to water. Islamically, it is used to refer to the matters of religion that God has legislated for His servants. The linguistic meaning of Sharia reverberates in its technical usage: just as water is vital to human life so the clarity and uprightness of Sharia is the means of life for souls and minds. 

   
   

3. What does Sharia compliant mean?

   Any product or structure certified as Sharia compliant means that the product has been reviewed by a Sharia scholar and that the product and structure end-to-end meet Sharia requirements.

   
   

4. What makes Sharia compliant SME financing different to conventional SME financing?

   Sharia compliant SME financing uses only those structures and processes which are according to Islamic principles. Sharia compliant SME financing does not lend on interest. Furthermore, all the features of an SME financing facility uphold the ethical values encouraged by Islam.

   
   

5. Is Qardus only for Muslims?

   Qardus operates within an Islamic framework but is there to meet the financing requirements for all SMEs regardless of their faith. Qardus does not discriminate based on faith and anyone and everyone who qualifies can benefit from the ethical offering of Qardus.

   
   

6. Is Qardus certified as Sharia compliant?

   Qardus has an experienced and renowned Sharia advisor who has reviewed, advised and assisted in developing the Sharia compliant financing facility. The Sharia certification can be viewed above.

   
   

7. Which Sharia structure does Qardus use?

   Qardus uses a Musharakah structure for investors and commodity Murabahah for customers requiring financing. Both structures have been developed based on AAOIFI Sharia Standards.

   
   Musharakah is a joint enterprise or partnership structure in Islamic finance in which partners share in the profits and losses of an enterprise.
   
   Under the commodity Murabahah agreement a Qardus Special Purpose Vehicle (SPV) uses the funding provided by the investors to acquire commodities (usually non-precious metals such as tin or steel available from the London Metal Exchange) from the open market that it sells to an SME at cost price plus a profit margin. The SPV, as the agent, then sells the commodities back to the open market on immediate payment terms and consequently the SME receives an amount of cash equivalent to the cost price of the commodities but has an obligation to pay to the SPV the cost of the commodities plus the agreed profit margin over the term of the facility.
   

8. What assurance do I have that Qardus is Sharia compliant?

   The entire facility has been developed by an experienced Sharia advisor and an experienced law firm who are experts in Islamic finance. Furthermore, our products have been designed to meet the conditions mentioned in the world-renowned Sharia standard-setting body AAOIFI.

   
   

9. What controls does Qardus have in place to ensure Sharia compliance?

   Our Sharia advisor has full access and oversight of our operations and has complete authority in advising our structuring, processes and transactions. Our Sharia advisor conducts semi-annual Sharia audits of the entire facility.