Shariah
Islamic law and its principles; in finance, the rules that contracts, products and institutions are expected to comply with.
In IFSB standards, Shariah is defined as the practical divine law deduced from its legitimate sources: the Quran, the Sunnah, consensus, analogy and other approved sources. In finance the word refers to the rules and principles that contracts, products and institutions are expected to follow. How those rules apply to a given product is decided by qualified scholars, usually through a Shariah board, and the answer can differ between schools and jurisdictions.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Fiqh al-muamalatThe branch of Islamic jurisprudence that governs commercial and financial dealings between people.Maqasid al-ShariahThe objectives of Shariah: protecting people's interests and averting harm, used to guide how rules are applied.Shariah supervisory boardAn independent panel of Shariah scholars that approves an institution's products and oversees its Shariah compliance.FatwaA juristic opinion on a Shariah question; in finance, usually a Shariah board's ruling on a product or transaction.