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Islamic banking and takaful: study guide two

Learning outcomes

Chapter 1: overview of the development of Islamic financial systems and institutions:

  • identify significant phases in the development of Islamic finance
  • describe essential components and features of the Islamic financial system
  • explain important factors influencing the development of the Islamic financial system
  • explain the nature of Islamic financing operations.

Chapter 2: Islamic financial system: Islamic capital market, takaful and settlement system:

  • explain the role of the Islamic capital market
  • identify the products offered in the Islamic capital market
  • explain the nature and importance of takaful (Islamic insurance)
  • identify and distinguish between the various takaful product models
  • outline the procedures and explain the importance of the Islamic banking settlement system.

Chapter 3: financial regulation and market standards:

  • highlight pertinent developments in the industry that influence financial regulation and governance
  • differentiate between the approaches taken by the relevant national authorities to develop the Islamic Finance Regulatory Framework
  • understand the role of a Shari'ah board
  • differentiate between the function of Shari'ah supervisory boards and Shariah advisory boards
  • describe the role and function of the international organisations and international Islamic finance agencies in the development of Islamic finance standards and regulatory frameworks.

Chapter 4: deposits and investment accounts:

  • distinguish between the various types of deposits of Islamic financial institutions
  • explain the nature and types of investment accounts
  • distinguish between restricted and unrestricted investment accounts
  • identify issues on depositor and investor protection
  • state the implications of restricted investment accounts as off-balance sheet funding.

Chapter 5: Islamic banking products and services:

  • explain the financial intermediation process of Islamic financial institutions
  • distinguish equity based forms of financing
  • distinguish sales based forms of financing/debt financing
  • describe lease based forms of financing
  • describe various forms of contracts adopted for banking services.

Chapter 6: trade finance and treasury products:

  • explain the need for Islamic trade finance products
  • explain the underlying contracts used for trade finance products
  • describe Islamic import financing products and facilities
  • describe Islamic credit guarantee schemes based on Kafalah
  • describe Islamic inter-bank money market instruments
  • explain the underlying contracts adopted for money market instruments
  • specify inter-bank money market instruments.

Chapter 7: takaful - an overview:

  • explain the nature and relationship of policy holders with takaful operators
  • categorise and explain types of family and general takaful products
  • Identify salient features of regulatory and governance requirements for the takaful industry.

Chapter 8: takaful products and services:

  • describe the types and features of takaful products
  • explain the role of takaful operator and relevant regulatory requirements
  • distinguish between takaful and conventional insurance
  • describe the underlying contracts for takaful products

Chapter 9: takaful underwriting, deficit, surpluses and retakaful:

  • identify the issues regarding the scenario of deficit of takaful fund
  • explain the issues relating to an underwriting surplus
  • describe the issues relating to retakaful and re-insurer.

Chapter 10: the financial and operational risks of Islamic financial institutions:

  • explain the nature of risk for Islamic financial institutions
  • identify and describe types of Islamic financial institution risk exposures
  • describe the market risk exposures of Islamic financial institutions
  • describe the credit risk exposures of Islamic financial institutions
  • describe equity investment risk, rate of return risk and displaced commercial  exposures of Islamic financial institutions
  • describe operational risk exposures with specific reference to Shari'ah non-compliance
  • identify pertinent issues to be addressed in mitigating different types of risk.